Chinese air-conditioner compressor maker, Highly India looks to double its manufacturing capacity from the existing one million units a year to 2 million at its only facility outside China, at Changodar near Ahmedabad.

The company, currently having 15 per cent localisation to make compressors for 1-tonne to 2-tonne domestic ACs, further plans to double the localisation of components to upto 30 per cent by 2016.

The company has already announced a total investment of US $ 72 million, of which so far it has invested US $ 40 million for setting up the unit.

"We will make additional investment to increase the capacity to 2 million units by 2016. We are currently selling 400,000 units in Indian market from our Changodar facility. We expect sales to be 1.5 million units with increasing consumer demand in the country," said Shen Hong, Managing Director, Highly Electricals Appliances India Pvt Ltd, a JV between Shanghai Highly Group and Hitachi Appliances of Japan.

The compressor market in India is believed to be around 4 million units, while the AC market is expected to grow at 10-12 per cent in 2016 and 2017. The company currently caters to only Indian market, however it plans to export about 50,000 units in 2016 to Middle East region and parts of Asia including Thailand and Malaysia.

Highly sells about 1.4 million units of compressors in India, out of which one million units are exported from its China facility to Indian market. With increased localisation, company expects to manufacture more units within India to cater to the local market.

India's one of the largest compressor makers has already started feeling the heat of complexity in the India taxation system. Raising the concern, Shen Jianfang, Chairman of the parent company, SHEC (Shanghai Hitachi Electrical Company) mentioned that uneven and illogical tax structure is hurting the industry badly.

"It is not logical to have almost equal duty on the imports of components as well as on the finished products. The Central government should ensure that customs duty on raw material and components be cheaper than that on finished products," he said adding that it is needed to achieve Make In India objective of the Prime Minister Narendra Modi. 

"There should be logical taxation so that we can make more in India. In the case of current tax structure, sometimes we challenge to our own products. There will be more processing and manufacturing of goods in India and create more employment opportunities in the country. This will further increase the country's GDP," said Jianfang here.

Published on December 19, 2015