Daikin India, the Indian subsidiary of Japan’s Daikin Industries, on Tuesday announced that it has formed a joint venture with Taiwanese AC compressor maker Rechi Precision to manufacture, design and sale of rotary compressors. Under the JV, a new manufacturing plant will be set up in Sri City, Andhra Pradesh, with products catering to both domestic and overseas markets.
Daikin will hold a majority stake in the joint venture, making the Sri City facility its second compressor manufacturing plant in India. The first facility, fully owned by Daikin, is located in Neemrana, Rajasthan.
The move aligns with the government’s push to localise the air conditioner manufacturing ecosystem, as stricter regulations by the Bureau of Indian Standards (BIS) have delayed recertification of over 50 component suppliers from China and Vietnam. This has raised concerns about potential shortages of ACs and refrigerators in India next summer.
The Daikin-Rechi factory is expected to begin production in the fourth quarter of this fiscal. Daikin Industries, which has infused ₹1,400 crore into its Indian arm this year, is targeting a localisation rate of over 90% for its ACs, up from the current 75%.
“This JV formation is in line with our mid-term business strategy to establish a major hub in India,” said Shoji Uehara, executive officer, global operations division, Daikin Industries. He added, “This new company will produce and sell compressors domestically to alleviate supply shortages and cater to both Daikin internal and external demand.”
KJ Jawa, chairman and managing director of Daikin India, said, “This partnership marks a significant milestone in broadening Daikin India’s offerings, enabling us to deliver a wider array of advanced rotary compressor technologies tailored for residential HVAC solutions.”
Amid rising urbanisation, AC is fast becoming a necessity in India. However, this market still has very low penetration.
“This collaboration plays a pivotal role in accelerating the shift towards AC adoption by the rising middle class, meeting both affordability & availability, relevant for India & overseas consumption,” the statement said.
“In this joint venture, Rechi Precision will bring technical knowhow, R&D, continuous product development, production engineering capability etc and play a key role in setting up sales and service capability in India for Rotary Compressor Business,” said Chen, Shen Tien chairman of Sampo Corporation, Holding Company of Rechi Precision.