AC makers unsure about gas import rule

Published: Saturday 15 February 2003

manufacturers of air-conditioners (acs) and producers of refrigerant gas are at loggerhead. With the Union government denying the former the licence to import refrigerant gas hydro-chlorofluorocarbon (hcfc-22 or r22), they allege that they are being forced to buy it at higher rates from domestic producers. Gas producers, in turn, contend that their product is cheaper.

While curbs on r22 imports have been in place since 1997, the impact is being felt only now since the demand for refrigerant gas has shot up recently. This is because production of chlorofluorocarbon (cfc) based products has been banned in India from January 1, 2003. Earlier, ac manufacturers were using cfc as a refrigerant gas.

Though r22 is also an ozone-depleting gas, it is considered less damaging than cfc. As per the Ozone Rules formulated by the Union government , a licence is required to import r22.

While the ac industry alleges that the government is trying to shield a few producers, r22 producers have a different story to tell. They point out that their rates are cheaper than the European and the us rates. r22 produced by Chinese companies, though, is priced lower. The reason for this is that the raw material for it - fluorspar - is mined in China itself.

Sources reveal that in an application submitted by Whirlpool India Limited in August 2002 to the Directorate General of Foreign Trade (the licensing authority), the price quoted by a us-based seller was us $2.6 per kilogramme. This converts to Rs 178.76 including all charges and duties, and is higher than the price quoted by domestic producers. "We have been charging a stable Rs 165 since 1996,"says S C Wadhwa, vice-president, corporate marketing, Gujarat Fluoro-chemicals Limited (one of the four Indian producers of r22).

But, there are other ac manufacturers who counter this argument by pointing out that they are keen on buying r22 from China. "Buying the gas from Chinese companies is economical; they charge Rs 105.90 per kilogramme," avers S Ramakrishnan, deputy manager, global sourcing, Voltas and Fedders Universal Comfort Product Private Limited.

On their part, gas producers are calling the demand for import licence a motivated campaign. "Some multinationals, who have got patents on r22 substitutes, want to enter the Indian market. Their eventual aim is to establish a market for their substitutes," contends Wadhwa.

The Union ministry of environment and forests (mef) is, at present, looking into the matter. "We have not issued any licence to import r22 since 1997. It was a policy decision taken on the recommendation of the department of chemicals, since the indigenous capacity to produce the gas is thought to be adequate to meet the domestic demand," points out R Chandramohan, joint secretary, mef.

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