India: Performance of HVAC Industry · government has announced incentives for manufactures to promote Make in India • Voltas is considering to setup new manufacturing plant in

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India: Performance of HVAC Industry

Quarterly Update: Q1 FY 2021 (Apr’2020 – Jun’2020)

August, 2020

Authored by: Saurav Nayak, Consultant


Key Economic Indicators

5th

Largest economy in the world

35.1 % PMI Rate in Q1

FY 21

63rd Ease of Doing

Business. India improved its rank

from 77

3rd Largest Producer and Consumer of

Electricity

AC: Air Conditioning; Bn: Billion; CAPEX: Capital Expenditure; CPI: Consumer Price Index; FDI: Foreign Direct Investment; GDP: Gross Domestic Product; GoI: Government of India; GST: Goods and Services Tax; HVAC: Heating, Ventilation and Air Conditioning; Mn: Million; PMI: Private Mortgage Insurance; Sq. Ft.: Square Feet; USD: United States Dollar

Source : Tecnova Research, GoI, Industry Reports, SBI Report

6+ Mn New Employment Generated, Direct & Indirect (FY20)*

4.2 % CPI Rate in FY

2020

USD ~50 Bn

FDI in Indian Economy in FY20*

*: Metrics in FY20 across sectors and industries, manufacturing and service


Bn: Billion; GoI: Government of India; HVAC: Heating, Ventilation and Air Conditioning; USD: United States Dollar

HVAC Industry Trend HVAC Market (Bn USD)

Source : Tecnova Research, GoI, Industry Reports

3 3.3

3.6 3.9

3.3

2016 2017 2018 2019 2020 (E)

Photo by Victor Garcia -Unsplash


Government /Association Initiative Policies & Guidelines • GoI launched three special schemes

aimed to ramp up production of electronics product in India

‒ Production liked scheme: Monetary Incentive of USD 7 Bn to increase production and exports

‒ Promotion of Electronic Component Manufacturers : Incentive of 25% on CAPEX investment

‒ Promoting Cluster : In-order to build up the supply chain GoI is planning to provide CAPEX support for setting up infrastructure facilities

• Import duty of Electronic items and spares are doubled from earlier 10%

to 20%. This will increase the cost of AC systems

• In the view of introducing Self Reliant India, GoI also increased Real Estate completion timeline to 6/9 months under Real Estate Act

• In the view of COVID-19 pandemic , Indian Society of Heating Refrigerating and Air Conditioner Engineers (ISHRAE) has issued guidelines in-order to contain virus spread. A temperature of 24-30 degree centigrade should be maintained while operating AC with a relative humidity level of 40-70 percent

AC: Air Conditioning; Bn: Billion; CAPEX: Capital Expenditure; GoI: Government of India; GST: Goods and Services Tax; HVAC: Heating, Ventilation and Air Conditioning; ISHRAE: Indian Society of Heating, Refrigerating and Air Conditioning Engineers; Mn: Million; PMI: Private Mortgage Insurance; RAMA: Refrigeration and Air conditioning Manufacturers Association; Sq. Ft.: Square Feet; USD: United States Dollar


Key Headlines

• Johnson Control- Hitachi Air Conditioning India has announced joining hands with Andhra Pradesh State Skill Development Corporation to offer skill development training to youth in air conditioning and refrigeration

• After the recent standoff between India and China in Ladakh and killing of 20 Indian soldiers, Johnson Control and Hitachi are planning to halve their import from China and double export from India in a year

• Due to Covid-19 and widespread fear of virus spreading through Air Conditioning system, Indian Manufacturers in guidance of RAMA and ISHRAE plan to launch a nationwide awareness drive around the safe usage of air conditioning systems


Major Investments

• In spite of the disruption caused by COVID-19 Daikin is going ahead with its investment plan for setting up a third manufacturing unit in India. Daikin is ready to take the advantage of Phase Manufacturing Program under which the government has announced incentives for manufactures to promote Make in India

• Voltas is considering to setup new manufacturing plant in South India as a part of its expansion plans and is exploring locations for the same

New Trends in HVAC Industry

• Ventilation system is getting prominence. With the focus now moving to Indoor Air Quality (IAQ) with the help of using a better ventilation system of adding fresh air in the system and using products like Bipolar Ionization (Plasma) and UVGI (Ultraviolet Germicidal Irradiation) in air distribution system

• Cloud based AI system for HVAC will gain traction in the market. The industry will drive towards Cloud based AI system that captures the data and further analyses to provide meaningful insights

• In-order to beset the lost sales of April and May manufacturers are opting for discount routes and are hopeful to bounce back soon

• Upgradation of existing HVAC facility to make it compliant with COVID-19 free air , operational and safety features are added at 15-20% extra cost

AC: Air Conditioning; GoI: Government of India; HVAC: Heating, Ventilation and Air Conditioning; Mn: Million; Sq. Ft.: Square Feet; USD: United States Dollar


Upcoming Events

• ACETECH Bangalore on 2nd Oct 2020

• REFCOLD India , Greater Noida on 29th Oct 2020

• ACREX India 2021 , 25th Feb 2021. ACREX India, has been able to successfully created a unique a platform and launch pad for potential business-enabling collaborations in the HVAC & R sector


Tecnova’s Views on Indian Air Conditioning Market

Tecnova’s Experience in HVAC Industry

• Market Research for UK based Precision Air Conditioning Company

• Market Research and Distributor search for Italy based Condensing unit manufacturer

• Market Research for Belgium based Radiator manufacturer

AC: Air Conditioning; Bn: Billion; GoI: Government of India; HVAC: Heating, Ventilation and Air Conditioning; Mn: Million; USD: United States Dollar


Indian manufacturers are primarily dependent on sourcing of components from China and due to COVID-19 and recent military standoff between the two nations, trade and business deals can get on a backseat till the time situation resolves. It has effected Indian manufacturers in a negative way but some manufacturers are still hopeful to capitalize the present situation and develop local sourcing partners. This step in turn would help India to develop its medium scale value chain which suffered a tragic loss due to lockdown

The Industry is bracing itself up post COVID-19 pandemic and will revive by early 2021 facing a drop of 10% in 2020. As per experts 2020 was forecasted to be driven mostly by consumer sales rather than commercial segment, so the effect of poor sales in month of April, May due to national lockdown will be the major contributing factor in the dip in revenue

Considering the increasing demand for sustainable solution with high levels of energy efficiency, sustainable HVAC solution with end to end applications are expected to pave way in the post COVID-19 era. Since Airborne viruses causes a serious concern , experts are expecting stringent building construction laws with more focus on digitalization and remote monitoring. This will promote better air quality ,energy efficiency and Smart HVAC solutions


For any further enquiries, please contact

Jagadeesh Govindaraj

Head - Execution

Execution

Tel: +91 124 4356 357

Mobile: +91 9643818349

Email: [email protected]

Ashish Garg

Manager - Marketing

Sales and Marketing

Tel: +91 124 4356 347

Mobile: +91 9871750121

Email: [email protected]

mailto:[email protected]

mailto:[email protected]

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India: Performance of HVAC Industry · government has announced incentives for manufactures to promote Make in India • Voltas is considering to setup new manufacturing plant in