In an attempt to boost domestic manufacturing and production, the Centre has imposed a ban on import of air conditioners with refrigerants. But, this decision may not affect big companies.
“Major players in India such as Voltas/ Blue Star primarily import compressors and refrigerants versus the entire unit and will not see a material impact. On the other hand, smaller companies who import the entire AC unit are likely to be adversely affected,” said analysts from Jefferies India Pvt Ltd in a report.
“This may lead to some market share gains for the bigger players. Value segment AC players like Voltas/LG/Samsung could see some marginal market share gains,” added the analysts.
The Director-General of Foreign Trade announced that split and other systems of ACs with refrigerants have been moved from ‘free’ to ‘prohibited’ categories. However, the notification mentions only the import has been prohibited.
“This move is consistent with the government’s twin objective of making India fully self-reliant in manufacturing air conditioners and capturing a greater share of the global AC market through export,” Kamal Nandi, president, Consumer Electronics and Appliances Manufacturers Association, was quoted as saying by The Hindu.
General of Trade Remedies (DGTR) has also recommended an anti-dumping duty for five years on Choline Chloride imports from China, Malaysia and Vietnam, following complaints by domestic manufacturers. Border tensions with China have fuelled anti-China sentiments all over the country. Imports from China have also declined around 27% during April-August this year, when compared to the same period last year, the government informed Parliament recently.
While most ACs are currently imported, this ban around a festive season can prove to be beneficial for Indian producers. Festivals like Diwali and Dussehra automatically spike the sale of electronic products.
Market Shares of Voltas Ltd has rose by more than 4% just days after the ban. The ban is expected to result in market share gains for bigger companies in the AC business. Big companies like Voltas, Blue Star, and Lloyd won’t be impacted much because they don’t import full AC units. This ban, however, will be a big boost for domestic manufacturers.
Earlier this year, the government had banned the import of agarbattis, tires, and TV Sets to stop the entry of non-essential goods in the country. This was done as part of the Atma Nirbhar Bharat campaign.
While around August, India imposed an official embargo on approximately 101 Defense Goods like light combat helicopters, transport aircraft, armoured fighting vehicles, and assault rifles, all of which will be manufactured in India to promote self-reliance.