AC imports halve last fiscal
In Oct. low festival sales seen as reasons
Imports in the air-conditioner segment halved in
FY21 following a ban in October last year and lower summer sales. Imports are unlikely to recover to pre-pandemic levels in FY22 either, with brands still holding high inventory levels.
In October 2020, the government banned import of air-conditioners up to two tonnes with refrigerants. As gas-filled AC units cannot be brought in, many companies import them as components only. Total imports in the AC segment halved to Rs 1,800 crore in
FY21 against Rs 3,600 crore in FY20. Import of compressors of refrigerators too fell 19 per cent in line with the decline in the sales in refrigerators and AC categories in FY21.
Further, the summer of 2020 was a washout in terms of sales due to the nation-wide lockdown. This also affected the imports in FY21. “The summer of 2021 too was hit by the localised lock-downs in most states. Summer accounts for a large chunk of the annual sales of ACs. Though there is demand during the festive season, it cannot match the summer sales,” said B. Thiagarajan, joint managing director, Bluestar.
With a washout summer season and lower imports of finished goods, most brands are left with higher inventory for this festive season. Brands are likely to push sales using incentives during the festive season. However, the festive sales won’t be large enough to revive the imports this year.
“While there could be an uptick in sales during the festive season, it is not expected to be significant owing to non-seasonality. At the brand level, new material procurement is anticipated to take place from December 2021 onwards. We expect RAC (residential AC) industry volumes to be 6.2 million units in FY22, higher than FY21 levels of 5.2 million units, but lower than FY20 levels of 7 million units,” said brokerage Motilal Oswal Financial Services.
Once the companies, which have applied for Production Linked Incentive Scheme, start operations, the imports may not grow at the pace prior to FY21.
In 2018, India had doubled import duty on a few Chinese products, including ACs, refrigerators and washing machines from 10 to 20 per cent. However in FY19, the imports went up as Chinese products found an easy way into the market through Asean countries with which India has a free trade agreement. The imports grew in FY20 as well. That led to the ban last October.