The government’s move to ban import of air conditioners with refrigerants is unlikely to impact major players, who mostly import components, industry players said. On the other hand, it would help create jobs and increase exports, they added.
The move is consistent with the government’s twin objective of making India fully self-reliant in manufacturing ACs air conditioners and capturing a greater share of the global AC market through exports, Kamal Nandi, president of Consumer Electronics and Appliances Manufacturers Association, and business head & EVP, Godrej Appliances, said.
“The decision will boost AC manufacturing in India and create more jobs,” he said adding that currently, about 30% of air conditioners are imported into India as completely built-up units.
As per a CEAMA-Frost & Sullivan report, the market for household ACs stood at 6.5 million in 2019, and is estimated to grow to 16 million units by 2025. The industry presently employs over 62,000 people directly and about 1.20 lakh indirectly.
The statement follows the government’s decision to ban imports of air conditioners with refrigerants with a view to promote domestic manufacturing and cut imports of non-essential items.
Mr. Nandi pointed out that India has one of the lowest penetrations of ACs in the world at 5%, while also pitching for a lower GST slab of 18% for ACs, from 28%.
Global research firm Jefferies said in a note that top seven players, accounting for 90% of the market, should not be impacted by the move as they primarily import compressors/refrigerants versus the entire unit. Smaller brands and labels, however, who account for less than 10% of the market and possibly import the entire unit are likely to be affected.
It estimated the financial impact of the ban at the upper limit ₹3,600 crore. “Directorate General of Foreign Trade data indicates that overall imports of these product codes was ₹36 billion in FY20. AC with refrigerants is likely to be the bulk of this based on the description. Value implies less than 15% of the overall AC industry size in India,” it said.
Manish Sharma, president and CEO, Panasonic India South Asia, said Panasonic had set up its AC factory in 2012 in Haryana and has been manufacturing 100% in India. “We currently export ACs 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 Air Conditioners reducing dependency on imports and driving the Make in India agenda,” he said.
Anil Rai Gupta, CMD at Havells India, said that the decision was in line with the Aatmanirbhar Bharat vision and the companies that had invested in their own manufacturing facility would be well-placed to benefit from it.” Lloyd air conditioners are now being manufactured in-house at our new state-of-the-art plant developed with an investment of around ₹400 crore, which is amongst the most integrated and modern facilities in Asia.”
