The concern follows a May 8 order by the Department for Promotion of Industry and Internal Trade (DPIIT), which links compressor imports in the current fiscal to a percentage of volumes imported in FY25.
Under the order, manufacturers can import compressors for refrigerators up to 40% of FY25 import volumes and for air-conditioners up to 30%, both for capacities of up to two tonnes, a segment that accounts for more than 85% of sales.
For capacities above two tonnes, imports are allowed up to 90% of FY25 import volumes for both ACs and refrigerators.
Chief executives of leading manufacturers said the move may have been aimed at conserving foreign exchange and accelerating localisation, but warned the sector was unprepared for such restrictions at a time when demand has surged amid a heatwave.
India currently produces nearly half its AC compressor requirement locally and about 60% of refrigerator compressor demand. Domestic production for compressors above two tonnes remains negligible.
Blue Star managing director B Thiagarajan said a quota-based import regime could end up favouring companies that historically depended more on imports.”The industry has taken up the matter with DPIIT to work out the best way forward, keeping in mind the foreign exchange situation while ensuring production is not disrupted. It will take at least until end-2028 for India to become self-sufficient in compressor production,” he said.
According to industry estimates, India’s annual AC compressor manufacturing capacity is 7-8 million units against demand of around 15 million units. Chinese companies GMCC and Highly are among the largest manufacturers in India, while LG Electronics and Daikin also have manufacturing capacity in the country.
For refrigerators, annual demand is estimated at 14.5-15 million compressors, against domestic production capacity of 8.5-9 million units. Besides component makers, LG Electronics, Samsung Electronics and Godrej are among the major local producers of refrigerator compressors.
The head of a leading refrigerator and AC maker said an immediate shift to locally sourced compressors was not feasible, even where supplies were available, because products require at least six months of testing and validation.