Shares of electronic goods manufacturer Dixon Technologies (India) Ltd. surged as much as 8 percent on Friday to a 52-week high after analysts said that the homegrown assembler would be a significant beneficiary of the import duty hike on laptops, computers and other items.

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Analysts at Investec India expect Dixon to emerge as a significant beneficiary of the import duty hike by the government.

Dixon already has a contract with Acer to assemble a part of its requirement for laptops and tablets. The company also indicated it is in discussions with a few more customers, the brokerage stated.

Investec also said that some PC assembly players could also benefit from the duty hike. Players like Syrma SGS Technology Ltd. had participated in the initial Production-Linked Incentive (PLI) scheme for IT hardware.

The government has placed import of items falling under HSN code 8471, including laptops, tablets, computers, under the “restricted” category to curb imports.

Currently, these products are placed under the “Free” category with NIL import duty.

Placement of these products into “restricted” categories would mean importers will have to obtain a valid licence after furnishing extensive details (incl. quantity, reasons for import amongst many others) to import laptops, tablets, computers.

This creates significant operational challenges, with delays in obtaining licences impacting companies’ operations in India.

Investec said laptops are estimated to be a $5 billion market in India. Such curbs could drive significant import substitution, given 85-90 percent of the laptops and tablets are currently imported in the country.

“We recall that the government had placed import of LED TVs under the restricted category in July-20, which resulted in their imports falling from 4 million units in FY20 to negligible today,” it stated.

Earlier this year, the government also rolled out a revised PLI scheme for IT Hardware, with significantly higher incentives than the earlier version.

The revised PLI scheme also offers additional incentives for localisation of each component.

Shares of Dixon Tech are off the day's high but are trading with gains of 4.6 percent at Rs 4,647.7. The stock continues to gain after Thursday's 7 percent surge.

First Published:Aug 4, 2023 11:43 AM IST