One of the important highlights of the market research report, HVAC Market – Global Outlook & Forecast 2023-2028, is the finding that the major economies in the Asia-Pacific region – namely India, China and Japan – witnessed an increase in commercial construction activities arising out of an influx of foreign companies in multiple sectors. Their coming in has meant setting up of their offices in the three countries with a view to capturing the potential customer base.
Interestingly, the participation of global HVACR companies in the 22nd edition of ACREX, one of the largest HVACR exhibitions in the world, clearly reflects the enormous potential of the HVACR sector in India. Indeed, the country is becoming an attractive destination for organisations interested in investing in the HVACR sector in India. ACREX, organised by the Indian Society of Heating, Refrigerating, and Air Conditioning Engineers (ISHRAE), in collaboration with Informa Markets, ran from March 14 to 16 in Mumbai, in the western Indian state of Maharashtra.
Simultaneously, India is flush with manufacturing units engaged in producing equipment or components. The reported consistency of their quality is as much a magnet for foreign HVACR organisations.
Perhaps reading the global sentiment for investment, and for procuring components and equipment, ISHRAE earlier in the year opened a sub-chapter in the UAE. Come ACREX time, and the President of the sub-chapter, Moan Abraham, led a delegation of HVACR companies from the UAE to Mumbai. Ramachandran Pillai, Regional Product Manager – Airside, Daikin Middle East and Africa, was one of the members of the delegation. Speaking to Climate Control Middle East at the exhibition, Pillai said he travelled to Mumbai to identify component suppliers for Daikin’s air-handling unit (AHU) manufacturing bases in the UAE and Saudi Arabia. Sourcing from India brings cost advantages and lead-time advantages, Pillai added. “We have been observing the emergence of numerous small companies that produce high-quality products, and our interest in looking for component suppliers in India, stems from this fact,” he said. Equally interesting is the diversity of products available in India. Pillai said he was happy to discover a company that produces UV lamps, which he said would be a perfect fit for its specialised AHUs. Similarly, he said, he discovered manufacturers of large motors. “And one of the advantages this brings is that we can treat the motor as a ‘just in time’ item, and we do not need to keep stock of motors, because their lead time is as low as two weeks,” he said.
S P Sarangan, General Manager, Trosten Industries, was another member of the delegation from the UAE. He said he travelled to India to stay updated on the latest technologies available in the Indian market. “And secondly, we are looking to expand our product portfolio, and we have specific products in mind, such as indirect evaporative cooling,” Sarangan said.
Elaborating, Sarangan said Trosten is in the process of developing a refrigeration system to launch by the end of the year in the UAE and Saudi Arabia. “We are actively searching for suppliers in the UAE and Saudi Arabia, as components sourced regionally seem to have wider acceptance,” he said. However, we will source from the Indian market, if it is cost-effective.” Sarangan said that for a high-value component, like a compressor, Trosten would first choose to procure from markets it has traditionally bought from. But in instances where customers are not particular about the origin-country, Trosten would turn to India for the key component.
N S Chandrasekhar, President, ISHRAE, is pleased with the intense global gaze of the HVACR sector in India. He said that the India HVACR story is about addressing the rapidly shifting requirements of the consumers in the country. He said that HVACR is a demand-driven industry and that it is evolving in terms of making sure the needs of Indian consumers for sustainable and healthy buildings are met. The billion-plus population in India, combined with increasing affordability of air conditioning, rising urbanisation and the impact of heat islands, has created a high demand for air conditioning. “People have disposable income and are willing to spend it on air conditioning to combat the heat,” he said. “Therefore, the demand for air conditioning is expected to continue to grow.” This, he added, has created a strong manufacturing base in the country and fostered lucrative opportunities for business growth.
It is little wonder, then, that many countries with large manufacturing bases are interested in setting up factories in India. “The availability of skilled labour at a nominal cost; cost of living, which is not extremely high, except in the case of a few urban centres, and the high quality of products made in India, are among the benefits of manufacturing in India,” he said. Furthermore, a compelling reason for setting up manufacturing units in India is the one-time cost of setting up a factory, with recurring expenses, in the forms of shipping and logistics, available at a low cost, he said.
And there is more to the India story. “The abundance of raw materials makes India an attractive destination for many foreign manufacturers to set up operations,” he said. “India can supply materials quickly, affordably and at a high level of quality that is on par with other countries. As a result, businesses are likely to choose India as their manufacturing location when all necessary materials and resources are readily available.”
Pillai, agreeing with Chandrasekhar, said one of the most significant advantages of sourcing from India is the reduction in costs. “For instance, the cost of the motor will get reduced by 8-10% if the component is supplied from India compared to Turkey or Europe,” he said. “It also leads to reduction in logistics cost.” He also noted that the regulations implemented by the government of India, including the relaxation in customs duty, which in turn reduced the trade barriers, is also increasing the attractiveness of the HVACR industry in India.