Indian companies can potentially begin selling only from 2027.
Stringent Regulations
This is after meeting the region’s stringent certification and product standards. “While we had been studying opportunities in Europe since last year, this year’s heatwaves have opened our eyes,” said Kamal Nandi, head of appliances business at Godrej Enterprises Group. “Immediate sales are not possible because of stringent certification requirements, but we definitely plan to launch by next summer.”
In Europe, sales of cooling equipment and enquiries have surged up to two to three times. The Centre has viewed the ACs category as a high-value manufacturing opportunity akin to smartphones since last year. Commerce and industry minister Piyush Goyal and electronics & information technology minister Ashwini Vaishnaw had asked AC makers to step up exports.
They have been slow in exports so far, with even their domestic penetration levels at 10-11% only. ACs are also the only white goods category covered under the production-linked incentive scheme. Hence, the government wants export revenue from the category. Noida-based Havells plans to be gin exporting ACs and fans to Europe through distributors, after initially focusing on the US market.
Contract manufacturers such as Amber Enterprises — who supply to the likes of LG, Daikin, Samsung and Blue Star — too are evaluating export opportunities. LG, Daikin, Haier and other global brands are expanding their own AC production capacities in India, with export-oriented units. This would enable them to ship some of the production directly to Europe, said industry executives.
Challenges
Godrej’s internal assessment showed heat pump ACs, which provide both heating and cooling, currently account for nearly 80% of residential AC sales in Europe. Similar models are sold in markets such as Jammu & Kashmir and DelhiNCR, although companies said some products would require design modifications to suit European homes, where professional installation costs are extremely high. Also, many European buildings are not built for traditional AC units. There are strict rules on heritage buildings whereby outdoor split units can’t be installed.
Manufacturers are also working to comply with Europe’s energy-labelling, stringent CE (conformity) marking, and eco-design requirements. “It’s not that easy,” said Jasbir Singh, chief executive at Amber Enterprises, India’s largest AC contract manufacturer. “First, we have to get the product ready for those countries and clear their energy-efficiency norms.” Industry executives, however, acknowledge that the bigger challenge lies in competing with established global brands such as Daikin and LG, and Chinese manufacturers including Midea, Gree and Haier.
“Matching the Chinese competition in Europe will not be easy,” said B Thiagarajan, managing director at Blue Star. “It also remains to be seen whether this is just a oneor two-month phenomenon that fades when winter sets in.” Blue Star is currently focused on exporting commercial AC systems.
The World Health Organization (WHO) has warned that Europe’s “once-in-a-generation” heatwaves are becoming an almost annual occurrence because of climate change. WHO Director General Tedros Adhanom Ghebreyesus said more than 1,300 excess deaths have been recorded since June 21 due to high temperatures, adding that Europe is “the fastest-warming continent on Earth,” warming at twice the global average. WHO noted that 150 million people are living under extreme heat in Europe.