India’s Import Restrictions on Personal Computers and Laptops: Boosting Manufacturing or Hindering Global Investments?

India’s abrupt import restrictions on personal computers and laptops in August have caught major suppliers off guard and raised concerns about protectionism. The move, aimed at boosting manufacturing under the “Make in India” program, seems contradictory to India’s efforts to enhance its global reputation. As India’s strategic importance increases due to shifting geopolitical alliances, such restrictions add to the challenges for global investors seeking alternatives to a slowing China. While the government has shown interest in international investment and manufacturing, there has also been a creeping increase in protectionism. The new regulations, effective from November, limit imports of specific computer devices. However, there are exemptions for single purchases from online vendors. Analysts believe the restrictions will benefit established domestic players and foreign vendors with a manufacturing base in India but could weigh on foreign vendors’ demand. India, with its potential scale comparable to China, could become an attractive market for investors. The Modi government has taken steps to bolster the Indian economy, such as liberalizing foreign direct investment policies and investing in infrastructure and digitalization. The country’s large domestic market, policy continuity, and youthful demographic profile make it appealing to investors. Despite risks like declining labor force participation, India is expected to be the second-largest economy by 2075, according to Goldman Sachs. Global investors have been pouring into Indian equity markets, but capital controls may limit corporate India’s fund-raising capacity. India’s exclusion from a major bond index raises concerns about its bond markets, and easing rules for Indian companies to raise debt externally would help broaden its funding sources. The government’s balancing act between capital controls and financial stability will determine the speed at which India’s capital markets catch up with its development plans.