The Department for Promotion of Industry and Internal Trade (DPIIT) has extended conditional import exemptions for specified hermetic compressors used in air conditioning and refrigeration manufacturing until 31 March 2027, according to a notification issued by the Ministry of Commerce and Industry on Friday, 8 May 2025. The move is aimed at ensuring supply-chain continuity for domestic manufacturers while simultaneously pushing localisation under India's quality control framework.

Key Details of the Amendment

The revision has been notified through the Air Conditioner and its Related Parts, Hermetic Compressor and Temperature Sensing Controls (Quality Control) Amendment Order, 2026. The framework allows manufacturers to continue importing select categories of compressors for captive manufacturing purposes, with import limits pegged to their FY25 import volumes.

Category-wise Import Limits for FY27

Under the revised framework, manufacturers will be permitted to import up to 40% of reciprocating hermetic compressors below 2 Ton of Refrigeration (TR) capacity used in refrigerators and similar appliances. Separately, up to 30% imports of rotary hermetic compressors below 2 TR capacity meant for air-conditioners and heat pumps will be allowed.

For higher-capacity applications, the Centre has permitted imports of up to 90% for scroll and rotary hermetic compressors of 2 TR and above used in refrigeration, air conditioning, and heat pump equipment. In the case of Variable Refrigerant Flow (VRF) air-conditioning systems, manufacturers will be allowed to import up to 100% of rotary hermetic compressors of 2 TR and above.

Compliance and Indigenisation Roadmap

The DPIIT has directed manufacturers availing the exemption to maintain monthly import records and submit the details to concerned authorities. Crucially, they must also submit a phased indigenisation roadmap to the Central government — a condition that underscores the policy's dual intent of short-term supply relief and long-term domestic manufacturing development.

The amendment came into force with immediate effect following its publication in the Official Gazette. This is not the first such extension; the DPIIT has periodically calibrated import exemptions in the compressor segment as part of a broader strategy to build domestic manufacturing capacity without disrupting existing production lines.

Why This Matters for Indian Manufacturing

Hermetic compressors are a critical component in the air conditioning and refrigeration supply chain. India's domestic production capacity in this segment, while growing, has not yet scaled sufficiently to meet the full demand of a rapidly expanding market — particularly as room air-conditioner and commercial refrigeration sales continue to rise. The conditional exemption structure is designed to prevent supply shocks while creating a compliance-linked incentive for manufacturers to accelerate localisation. Notably, the 100% import allowance for VRF rotary compressors of 2 TR and above signals that high-capacity segments remain heavily import-dependent, and the government is not yet pushing for forced localisation in those categories.

The next milestone for industry and policymakers will be the indigenisation roadmaps submitted by manufacturers, which will indicate how quickly the sector can reduce its import dependence ahead of the March 2027 deadline.