| |February - 20219on other long-term ecosystem benefits like domestic IP creation.I firmly believe that for the market to truly flourish, free enterprise must be supported by conducive policy. The government's touch while ever present, must be as light as possible, policy interventions should nudge (sometimes sternly) industry into taking action and should under all circumstances avoid pushing industry off the proverbial cliff with sudden thoughtless actions.I'm happy to report that recent policy announcements fall into the light touch category.Trade Intervention ­ The government on October 16, 2020 imposed a blanket ban on the import of air- conditioners with "refrigerants". 35% of the approximately 7 million AC's sold in India are imported into the country as fully built units; a large portion of which enter the country duty-free as a result of Free Trade Agreements (FTA) with countries like Thailand, Malaysia and Vietnam. The recent DGFT order will all but eliminate the import of fully built units into the country creating a supply vacuum that will need to be filled by locally manufactured units.Further strengthening the domestic aggregate demand story through the reduction of net imports.Government Investment ­ The DPIIT announcement of a production linked incentive scheme (PLI) will incentivise the investment in manufacturing capacity by offering approved stakeholders credits up to 6% on incremental sales. These incentives will be passed onto stakeholders on the achievement of incremental investment and sales targets.Increased manufacturing capacities and production incentives will mean reduction in the relative cost of products manufactured in India making them attractive export candidates. This is one of the main agendas of the PLI scheme, ambitious short term incremental sales targets will force stakeholders to seek demand beyond the growth driven sales in the Indian market. Nothing is a certainty but this might be India's decade, we are poised to become a manufacturing powerhouse fuelled by strong internal demand and an international situation that is conducive to export growth.The policy interventions described above are by no means a silver bullet, but they definitely have the ACE sector excited about the possibilities. Increased manufacturing capacities and production incentives will mean reduction in the relative cost of products manufactured in India making them attractive export candidatesOmer Basith, Co-Founder & CEO
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