UG4 INDIA in conversation with Japan based MITSUBISHI HEAVY INDUSTRIES to contract soon.
Updated: Feb 27, 2022
UG4 INDIA in its manufacturing segment through Mr. Kkalpit Pattel (Chairman and MD UG4 India), Mr Govind Tulsiyan founder Skyland (CTO and board member) Mr. Kunal Jain (COO and board member) is in conversation with Mr Rishabh Mahajan founder of UNIQUE AIRCON to contract for MITSUBISHI HEAVY INDUSTRIES air conditioner stand and accessory network to cater over 2 lac units annually.
The deal is in sampling and testing stage and soon UG4 INDIA going to add Japanese brand MITSUBISHI in UG4 family.
Currently Mitsubishi is managed and imported in India by IAPL group.
Rising urbanization, increase in disposable incomes, a gradual shift towards nuclear families aspiring for advanced tech appliances has created a demand for indigenous ACs that are energy-efficient, connected, and improve indoor air quality. Despite this demand, the Indian AC market stands at just over 7 million units with penetration of just 8%. In comparison to China (penetration of 138% as of 2019) showcases a large gap. Interestingly, till last year, of these 7 million units, only 67% units were assembled in India with 25% local value addition (components), while the rest were imported.
PLI, aims at incentivizing the manufacturing of AC components and sub-assemblies such as compressors, motors, aluminum sheets and copper tubes, which are currently not manufactured in adequate capacity across India, will help reduce our dependencies on imports. By just manufacturing these components the local value addition can go up to 75% from the current 25%, which spells a great opportunity for large electronic & commodity players, MSMEs, and SMEs. Not only will the component manufacturing drive the Make in India agenda, but can also help optimise the production cost of finished goods over next 4-5 years, thereby passing on the benefits to consumers.
It is estimated that the INR 16,000 Cr Indian AC industry has the potential to expand to INR 65,000 Cr [sic 2] by 2029, with exponential opportunities for allied industries. In fact, another INR 34,000 Cr can potentially come through exports of Finished Goods and components (as per BCG). The industry is expected to generate nearly 3.5 lakh jobs by 2029, a four-fold jump from the 75,000 jobs in 2019 by employing workforces across manufacturing, warehousing & logistics, retail and services segment. At present, the AC industry creates four times more employment than the mobile phone industry – to manufacture 10 lakh units. Let me explain why so? – not only it is labor intensive for component and finished goods manufacturing, but also requires supply chain capabilities for warehousing & logistics, after sales operations for installation and subsequent annual maintenance.
PLI is progressive and a key catalyst for the air conditioning industry. Through collaborative efforts, not only will it help drive scalability thereby, reducing costs, subsequent economies of scale will also encourage investment in R&D ensuring innovation and customisation in components. The AC industry can serve as the benchmark for transforming India into a manufacturing hub for the world, aligned with the vision of an Aatmanirbhar Bharat. What the auto industry did in terms of localizing component manufacturing, the AC industry can achieve with the PLI advantage.