India mandates registering chip imports, but move may delay shipments

India chip imports
Large group of cardboard boxes connected to microchip. 3D illustration.

The Indian government has started tracking chip and processor imports to the country by making import registration mandatory for chipmakers. The new order also covers a range of electronic integrated circuits under the chip imports monitoring system (CHIMS) from August 1.

Experts said that the move is in line with the Indian government’s ongoing assessment of the viability of setting up semiconductor fab in the country. While the move will help authorities capture various data that may help in policymaking, experts fear that it may also create import hurdles for companies due to extra checks on companies.

India’s Directorate General of Foreign Trade (DGFT), in its latest notification, said that the Chip Imports Monitoring System (CHIMS) will now require importers to submit advance information in an online system for import of items and obtain an automatic Registration Number by paying registration fee under the amended policy of integrated circuits (ICs). 

“The facility of online testing of CHIMS will be available on with effect from 01.05.2021 on a trial basis. The CHIMS will be effective from 01.08.2021,” the DGFT notification said.

A senior executive of an Indian electronics company said that by tracking IC (integrated circuit) chip import data, the Indian government could assess the viability of a semiconductor fab in the country and downstream ecosystem. 

“The idea is good, but it may lead to a lot of paperwork for the industry and red-tapism could flourish at the lowest level,” he was quoted as saying by the Economic Times.

Another executive told the publication that “large importers” can currently bypass their shipments through the green channel, where they are given priority customs clearance and speedy checks.

“But if a smooth integration with customs is not ensured, it could create a backlog of shipments on ports beginning August 1,” the second executive was quoted as saying. 

Notably, India is reportedly working on a plan to offer around $1 billion in cash to every company that sets up a semiconductor fabrication plant in the country. The country’s Ministry of Electronics and IT recently invited expressions of interest for setting up a fab in India.

The ministry said that setting up semiconductor plants is critical since India will increase its share in the global manufacturing of mobile phones, IT hardware, automotive electronics, industrial electronics, medical electronics, IoT and other devices in the near future. India aspires to have $400 billion of electronics manufacturing by the year 2025.

Interestingly, the Indian government had in 2013 tried to attract semiconductor fab companies through various incentives but failed due to a non-existent electronics manufacturing ecosystem and relevant policies.

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