In a bid to promote domestic manufacturing, the government has banned the import of completely built units of air-conditioners with refrigerants. Air-conditioner imports have been on the radar of the government for some time and had been identified as among the priority sectors for reduction of imports in-line with the government’s Self-Reliant India initiative.

The government’s move is also expected to give a boost to capacities dedicated to third-party manufacturing in the country. However, experts pointed out that most companies that make ACs in India are heavily reliant on imports for critical components such as compressors from markets such as China. The AC segment in the country has a large number of players and several brands rely on AC imports not only from China but also from FTA countries such as Thailand, Vietnam and Malaysia.

According to a DGFT notification, import of all types of split air-conditioners and window air-conditioners with “refrigerants” have been now put in the ‘prohibited” category from the “free” category. As per industry estimates, completely built units of imported ACs currently account for about 28-30 per cent of the air-conditioners segment. The total annual market size of air-conditioners sold in India is pegged at over 65 lakh units.

Pradeep Bakshi, Managing Director & CEO, Voltas Ltd, said, “This is a step in the right direction and will give a boost to domestic manufacturing of air-conditioners. Government authorities had been in discussion with the industry stakeholders on this issue for some time now. Several brands have been importing ACs into India through the FTA route. So this will pave the way for ramping up the manufacturing capacity of air-conditioners in India. At the same time, we must also focus on strengthening the component ecosystem of ACs in the country.”

Over the past few years, leading international and Indian companies have been heavily investing in creating manufacturing capacities in the country. Vijay Babu, VP-Home Appliances at LG Electronics India, said that the “entire line up” of the company’s ACs are made-in-India and that the company “will continue to invest in manufacturing facilities” in the country.

Kanwaljeet Jawa, CEO & Managing Director of Daikin India, said, “This will enable a level playing field for players that have invested in setting up manufacturing facilities in the country. We are already exporting ACs to several markets from India. With the penetration of ACs hovering in single digits, this segment has a huge growth potential.”

Manish Sharma, President and CEO, Panasonic India & South Asia, also said the company has been catering to domestic demand and exporting ACs from its factory in Haryana. “We currently export air-conditioners from India to SAARC, Middle East and Africa. Recently we also announced our intention to share Panasonic’s manufacturing technology and help select companies manufacture refrigerators and ACs reducing dependency on imports and driving the ‘Make in India’ agenda,” he added.