WSJ: “India has proposed sweeping curbs on the import of technology products ranging from laptops to Wi-Fi devices to computer-network equipment.
The proposed regulations, which were reviewed by The Wall Street Journal, would create an expansive “Buy India” mandate requiring a large percentage of the high-tech goods sold in the country to be manufactured locally.
If implemented, the rules could wreak havoc on the business plans of a wide range of U.S. and other foreign firms, including hardware-makers Cisco Systems Inc. CSCO -0.40% and Dell DELL -2.22% Inc.; services companies such as International Business Machines IBM -0.64% Corp.; and telecom-gear suppliers such as Nokia Siemens Networks B.V. and Telefon AB L.M. Ericsson ERIC-B.SK -3.89% .
To comply with the rules, foreign companies would have to set up factories in India quickly—possibly as soon as April—or significantly expand their existing manufacturing capacity in a country where the infrastructure is poor and building plants can take years because of red tape and other hassles.
Or they could face the loss of current business—collectively the industries affected generate billions of dollars in sales here annually—and the chance to tap into what is expected to be a booming technology market in years to come. Spending in India’s technology and electronics market is expected to reach about $400 billion by 2020, up from $45 billion in 2009.
Proposed regulations would require most high-tech goods sold in India to be made there. A Dell factory in India.
The rules are in draft form, and their sweep may reflect some brinkmanship on the part of the Indian government, which wants foreign firms to increase manufacturing in India. The government could still choose to delay or scale back its plan.
Still, U.S. lobbyists and industry are strenuously opposing the proposals, which have quickly become the most serious point of tension in commercial relations between the two countries. The proposals also aren’t the U.S. government’s only concern. It is also trying to head off Indian anti-tax-avoidance rules that would expose foreign investors to huge potential liability if they take effect in April as planned.
“India is the largest free-market democracy in the world. To mandate local manufacturing is antithetical to the very concept of a free marketplace,” said Ron Somers, president of the U.S.-India Business Council, a lobby group for U.S. firms in India.”
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