Air Conditioners Import with Refrigerants are Prohibited

The government on Thursday, 15 Oct 2020 banned imports of air conditioners with refrigerants with a view to promote domestic manufacturing and cut imports of non-essential items.

This adds to a list of recent import restrictions as the government is intent to reduce import bill of non-essential goods and promote domestic manufacturing under the Atmanirbhar India policy.

China and Thailand are the top exporters of air conditioners to India, as per government data. Together the two contribute over 90% of India’s imports of the good.

Even well established brands like Voltas and Blue Stars are importing. They are charging very high prices from the consumers by capitalizing their brand names. Similar factors are not able to get into the market due to competition from established brands and also imports from China. Current move will stop the flow of duty free imports from ASEAN FTA in the nature of QRs (Quantitative Restrictions)

A notification issued by the directorate general of foreign trade (DGFT) moved split and “other” ACs with refrigerants into the “prohibited” category from the “free” list. They join the list of products such as tyres, TVs sets and agarbattis where import restrictions have been imposed.

It is not possible to import an AC without gas. Each model has its own specs, filling gas of branded ACs in India is not practical.

ACs have been identified as potential items for focus on domestic manufacturing as components are imported in large quantities. The domestic market is said to be worth $5-6 billion with a large chunk of ACs being imported into the country. Separately, depending on the segment, 85-100% of the components, where the market is estimated to be around $2 billion, are imported.

As part of the plan prepared for the commerce and industry ministry by a group of CEOs led by Mahindra Group’s Pawan Goenka, a duty hike and reworking of the trade agreement with Thailand had been proposed.

[DGFT Notification No. 41/2015-2020 dated 15 October 2020]

Effect of the Notification: Import Policy of Air Conditioners with refrigerants under HS codes 84151010 and 84151090 is amended from 'Free' to 'Prohibited'.

Subject: Amendment in import policy of items under ITC HS Codes 84151010 and 84151090 of Chapter 84 of ITC (HS), 2017, Schedule -I (Import Policy).

S.O.(E): In exercise of powers conferred by Section 3 of FT (D&R) Act, 1992, read with paragraph 1.02 and 2.01 of the Foreign Trade Policy, 2015-2020, as amended from time to time, the Central Government hereby amends the Import Policy of items under ITC HS Code 84151010 and 84151090 of Chapter 84 of ITC (HS), 2017, Schedule- I (Import Policy).

ITC HS Code	Item Description	Present Policy	Revised Policy	Revised Policy Condition
84151010	Split System	Free	Prohibited	Only import of Air Conditioners with refrigerants is 'Prohibited'
84151090	Other	Free	Prohibited	Only import of Air Conditioners with refrigerants is 'Prohibited'

This issues with the approval of Minister of Commerce & Industry.

(File No. 01/89/180/23/AM-20/PC-2[A]/E-23395)