Shares of companies involved in air conditioning and refrigeration, such as Voltas and Havells India, saw an early surge on March 19. This uptick followed the government’s decision to waive mandatory BIS certification for crucial components, easing supply concerns ahead of what is expected to be an intense summer.

According to a report in the Economic Times, the Department for Promotion of Industry and Internal Trade (DPIIT) has removed the BIS certification requirement for grooved copper tubes and air conditioning compressors of 2 tonnes and above, including imports from China.

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Industry Impact and Market Reaction

This policy change, driven by industry demands, aims to prevent potential shortages as temperatures rise. It also aligns with broader government measures to tackle climate change-related challenges amid forecasts of unusually high temperatures. The move is expected to provide relief to air conditioning manufacturers who rely heavily on imported components. By removing these regulatory hurdles, companies can streamline their production processes, potentially reducing costs and improving supply chain efficiency.

Last month, Chief Economic Advisor V. Anantha Nageswaran acknowledged concerns about the economic impact of February’s exceptional warmth, stating that the government was implementing strategies to adapt and mitigate the effects of rising temperatures. The relaxation of import regulations is seen as part of this broader approach to ensuring that the market remains well-supplied during peak summer demand.

Following the announcement, Voltas’ share price climbed 3.97% to an intraday peak of ₹1,525.75 on the NSE, making it the top performer in the Nifty Consumer Durables index, which rose nearly 1%. Havells India’s share price saw a 2.47% gain, while Blue Star’s share price advanced 3%, and Godrej Industries’ share price edged up 1.01% to ₹1,144.45.

Amber Enterprises’ share price, a manufacturer of room air conditioning (RAC) solutions and printed circuit boards (PCBs), experienced a 2.42% rise in its stock price, reaching ₹6,794 at its highest point. Meanwhile, Whirlpool’s share price, known for its refrigerators and home appliances, gained 2.34% to ₹973 per share.

Growing Demand Amid a Hotter Climate

The surge in stocks linked to summer products follows the India Meteorological Department’s (IMD) recent projection of higher-than-usual temperatures and an increase in heatwave days from March to May. The forecast has prompted concerns about higher electricity consumption and increased demand for cooling solutions, leading to a bullish outlook for air conditioning and refrigeration companies.

Experts believe that the demand for air conditioners, refrigerators, and cooling appliances is likely to witness significant growth this year, given the prolonged and extreme summer conditions expected across India. Several cities have already recorded above-normal temperatures in early March, reinforcing fears of a severe heatwave season.

This demand surge could also lead to higher sales for companies involved in the cooling sector, benefiting not just manufacturers but also component suppliers, retailers, and service providers. Analysts anticipate a strong revenue boost for major players in the industry as consumers rush to buy cooling appliances ahead of peak summer months.

Government Policies and Future Outlook

Beyond easing regulatory constraints, the government has been exploring long-term solutions to mitigate the effects of rising temperatures. Policy discussions have included promoting energy-efficient appliances, incentivizing domestic manufacturing of cooling components, and enhancing green building initiatives to reduce heat retention in urban areas.

Additionally, market experts suggest that as temperatures continue to rise globally, air conditioning and refrigeration will become even more essential, driving sustained growth in the sector. This ongoing trend could lead to increased investment in research and development, fostering innovation in energy-efficient and eco-friendly cooling technologies.

On February 28, the IMD reported that maximum and minimum temperatures are expected to remain above average in most parts of the country, with only a few exceptions. As the summer season progresses, further policy adjustments and market shifts could influence the trajectory of cooling-related stocks in the coming months.