Daikin to Establish Rs 1,000 Crore Air Conditioner Factory in Andhra Pradesh

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Japanese air conditioning giant Daikin has become the first company to acquire land for a new factory under the Production Incentive Program (PLI) for white goods.

The Indian unit of the multinational Daikin India on Friday finalized the contract to purchase a 75-acre factory in Sri City (Andhra Pradesh) to set up a large air conditioner (AC) manufacturing plant, which will be carried out by phases. Internal estimates suggest that Daikin should invest Rs 1,000 crore in the first phase.

The plant, which is expected to start operations from 2023, will have a total capacity of 1.5 million units per year and could create up to 3,000 jobs. It will serve national and international markets.

“Daikin wants to make India its manufacturing hub to serve markets such as West Asia, Sri Lanka, South America and Africa,” the company said.

According to industry sources, Daikin has so far invested more than Rs 2,000 crore in India to set up its two factories and a research and development (R&D) center in Neemrana, Rajasthan.

The company said the new plant would fall under the PLI scheme for air conditioners, for which it had previously applied.

Besides finished AC units, it plans to manufacture key AC components that the government is pushing aggressively. Currently, 75% of the AC components (by value) used in India are imported from China, Taiwan and Vietnam.

Daikin plans to export air conditioners after the third plant is installed. With the penetration of air conditioners being lowest – at 5-6% of Indian households – compared to other major household appliances, domestic demand has seen healthy double-digit growth in recent years (except in 2020).

“For the AC segment, as a strategy, we are focusing more on markets that are growing rapidly. India is the fastest growing market for us. Daikin has a very clear strategic intention to improve its air conditioning, air filtration and refrigeration portfolio, for which India has been identified as a development pole. We believe India has the potential to become our offshore delivery center for R&D and exports, ”said Kanwal Jeet Jawa, President and CEO of Daikin India.

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