The Indian government has recently eased regulations for the transfer of used IT hardware goods from Special Economic Zones (SEZs) to Domestic Tariff Areas (DTAs). Previously, SEZs were considered as deemed foreign territories under customs laws, making the transfer of goods from these zones to DTAs equivalent to imports. This required companies in DTAs to obtain a license to import these goods from SEZs.
The Directorate General of Foreign Trade (DGFT) announced that used IT assets like laptops, desktops, monitors, and printers can now be moved from SEZs to DTAs without a license, but only for further use in DTA operations. However, there are certain conditions attached to this relaxation. The equipment must have been used in SEZ units for at least two years and should not be older than five years from the date of manufacturing.
This change is significant for companies operating in SEZs that are shutting down or relocating to DTAs, as it allows them to import these items without a license, provided the products meet the age requirement. Nonetheless, any used IT assets that do not meet these criteria will still require a license for restricted import.
In addition to this, the government has implemented a new ‘import management system’ aimed at monitoring IT hardware shipments into the country. This system, which has been described as simple and less cumbersome than a traditional licensing regime, requires importers to apply for authorizations online, providing details of past import, export, and turnover. These authorizations are valid until September 30, 2024, and are applicable for multiple consignments.
This easing of norms and the introduction of the new system reflect the government’s intent to promote the manufacturing of electronic hardware in India. By monitoring imports and encouraging local production, the government aims to make electronics the largest manufacturing sector in India and globally.
These measures are part of a broader strategy to ensure a trusted supply chain in the electronics sector, balancing the ease of doing business with the need to safeguard against potential risks in the import of critical technology components.