Daiken investment in India

Japanese Airconditioning King Invests Rs 1400 Crore into Indian Market in Two Phases, Boosting Local Manufacturing and Creating Jobs

India’s rapidly growing electronics market just got a Rs 1400 crore boost from the world’s largest air conditioner manufacturer, Daikin. In a strategic move to bid on India’s growing air-conditioning market, Japan’s Daikin Industries announced a massive two-phase investment.

According to regulatory filings by Daikin Airconditioning India with the Registrar of Companies (RoC), the capital was injected in two phases—Rs 600 crore in June and Rs 800 crore in August 2023.

This infusion, also the largest done by Daikin ever, is part of a broader strategy to increase local production, reduce dependency on imports, and capitalize on the rising demand for air conditioners in India. This major investment by Japan’s Daikin also marks a major milestone for the company and also signals its long-term strategy to capitalize on the burgeoning demand for air conditioning in India.

Strategic Expansion & Local Manufacturing Tidbit

As this investment takes place in the Indian market, Daikin is bound to fuel the company’s ambitious plans for local manufacturing. With this influx, Daikin is focused on increasing the production of critical components such as compressors, which play a vital role in the air-conditioning supply chain. However, by boosting its manufacturing capabilities, Daikin aims to further localize its products, increasing the share of locally sourced components from the current 75% to nearly 90%.

As per the official statement by Daikin Airconditioning India's Chairman and Managing Director, KJ Jawa, “The funds will be utilized to augment manufacturing capacity, with a focus on boosting compressor production.”

This master plan to localise manufacturing in India will also prove beneficial for Daikin as it will elevate its position and strengthen its leadership in India’s Production-Linked Incentive (PLI) scheme for air conditioners.

In the localisation effort, the Government of India’s PLI scheme will offer financial incentives to companies that increase domestic production and sourcing. Meanwhile, a major reason for this partnership with Daikin involves Daikin’s investment being aligned with this initiative, positioning the company as a key player in the scheme.

Investment Phases & Financial Outline

As per reports, The Rs 1,400 crore investment was executed in two stages, with Rs 600 crore injected in June and another Rs 800 crore in August 2023. Additionally, after the second phase of this capital infusion, Daikin Airconditioning India’s paid-up share capital increased to Rs 1,582.9 crore.

Then in May 2023, the company expanded its authorised share capital from Rs 1,500 crore to Rs 3,000 crore, providing a space for future capital infusions and ensuring long-term financial flexibility. In light of this expanded capital base, Daikin’s ongoing business expansion efforts will foster the development of its massive manufacturing plant in Sri City, Andhra Pradesh.

KJ Jawa, Chairman and Managing Director of Daikin Airconditioning India, emphasised the utilisation of this expansion and said, “This investment will enhance our ability to produce high-quality components locally and reduce our reliance on imports, which will be key to our long-term growth strategy.”

This momentous partnership with Daikin will state its confidence in the Indian market and its long-term growth potential across the globe. This echoing investment not only supports Daikin’s growth ambitions but also aligns with India’s broader push toward self-reliance and local production.