DGFT's new rules for AC imports: Right move with little impact, say experts

While companies cannot import gas-filled AC units, there are no curbs on importing similar AC units without refrigerant

The latest rules for importing AC units issued by the Director General of Foreign Trade (DGFT) is in line with the government's stated objective of making India self-reliant. However, its actual impact could be insignificant.

The DGFT has now prohibited import of air conditioning units that are filled with 'refrigerants'. The refrigerant or cooling agents are gases that fall in the category of Hydrochloroflurocarbon (HCFC) and hydroflurocarbon (HFC). Some of the most common varieties that can be found in Indian households are R22 (HCFC) and R410A (HFC).

While the new rules prohibit companies from importing gas filled AC units, there are no restrictions on importing similar AC units without the refrigerant. Further, the significant chunk of fully finished units that are imported in India are from countries that India has 'free trade agreement' with. According to industry experts, this allows brands to import AC units at zero duty.

 

"The authorities have banned only the refrigerant filled AC units from being imported. However, anybody can still import the same type of units without the refrigerant and fill them here", said B. Thiagarajan, managing director at cooling major Blue Star.

As per industry experts, filling the AC units with refrigerant does not require any major investment.

Overall, the move has been welcomed by leading brands. 

"This decision of prohibiting AC imports is in line with the Government’s Aatmanirbhar Bharat vision and we welcome this decision whole heartedly. We believe the companies who have invested in their own manufacturing facility will 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 crores", said Anil Rai Gupta, CMD, Havells India.

According to Abhishek Jain, Tax Partner, EY,  now importers would be required to evaluate manufacturing in India.

Manish Sharma, president and CEO, Panasonic India and South Asia, said, the step is in the right direction.