DPIIT Amends Air Conditioner QCO: Major BIS Compliance Relief for Hermetic Compressors and Heat Exchangers

“Indirect Tax I Indirect Tax Litigation I Customs & FTP I Central Licensing I Arbitration I Advisory”

Dated: 07.10.2026

DPIIT Amends Air Conditioner QCO: Major BIS Compliance Relief for Hermetic Compressors and Heat Exchangers

The Government of India has introduced an important compliance relaxation for the air-conditioning and refrigeration industry by amending the Quality Control Order (QCO) governing air conditioners, related parts, hermetic compressors and temperature sensing controls.

The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, through S.O. 5438(E) dated 1 October 2026, has notified the Air Conditioner and its related Parts, Hermetic Compressor and Temperature Sensing Controls (Quality Control) Second Amendment Order, 2026.

The amendment has been issued under Sections 16(1) and 16(2), read with Section 25(3), of the Bureau of Indian Standards Act, 2016, after consultation with the Bureau of Indian Standards (BIS). The amendment comes into force from the date of its publication in the Official Gazette.

The notification is particularly significant for manufacturers of air-conditioning and refrigeration equipment that require compressors and heat exchangers for maintenance, replacement and after-sales requirements.

Two Major Changes Introduced

The 2026 amendment makes two important changes to the existing QCO framework.

First, the description “Rotary hermetic compressor of rated capacity” appearing in the ninth proviso has been substituted with:

“Scroll or Rotary hermetic compressor of rated capacity”
This expressly brings Scroll Hermetic Compressors into the relevant provision alongside Rotary Hermetic Compressors.
Second, and more significantly for industry, the Government has introduced a conditional exemption permitting a specified quantity of hermetic compressors and heat exchangers, whether domestically manufactured or imported, for maintenance and sales.

Up to 6,000 Hermetic Compressors and Heat Exchangers Per Year

Under the newly inserted proviso, the QCO will not apply to up to 6,000 numbers of hermetic compressors and heat exchangers domestically manufactured or imported for maintenance and sales per year by each manufacturer of air-conditioning and refrigeration equipment and related parts.

However, this is not an unrestricted exemption.

It is available to manufacturers who are either:

certified by BIS; or
have applied to BIS for certification for the relevant goods or articles.
The exemption is available for a period of three years from the date of commencement of the Second Amendment Order, 2026.
This represents a significant regulatory accommodation for the air-conditioning and refrigeration sector, particularly where specialised replacement components are required for servicing equipment already installed in the market.

Domestic Manufacture as Well as Imports Covered

An important feature of the amendment is that the exemption is not restricted only to domestically manufactured components.

The notification expressly refers to hermetic compressors and heat exchangers that are:

“domestically manufactured or imported”.
Consequently, subject to satisfaction of the prescribed conditions, the exemption may also have direct relevance for importers and manufacturers dependent upon overseas suppliers of compressors and heat exchangers.
This is particularly relevant for equipment manufacturers whose installed base may require replacement components matching specific technical configurations or legacy equipment designs.

The 6,000-Unit Exemption Is Manufacturer-Specific and Annual

The language of the notification deserves careful attention.
It permits up to 6,000 numbers for maintenance and sales “per year by each of the manufacturers”.
Accordingly, the exemption should not simply be viewed as a general industry-wide quota of 6,000 units. The text structures the relaxation with reference to each qualifying manufacturer and each year, subject to the other conditions prescribed in the notification.

Businesses intending to rely upon this relaxation should therefore maintain clear documentary records demonstrating:

the identity of the manufacturer claiming the benefit;
whether the manufacturer is BIS certified or has applied for certification;
quantities domestically manufactured and/or imported;
utilisation or supply for maintenance and sales;
year-wise quantities; and
compliance with the declaration requirements contained in the amendment.

Mandatory Declaration of Old Stock and Year-Wise Records

The relaxation comes with specific record-keeping obligations.

A manufacturer claiming the benefit is required to declare its old stock of domestically manufactured or imported hermetic compressors and heat exchangers.
The manufacturer must also maintain year-wise records of the relevant goods or articles and furnish the same to the Central Government, together with a declaration made to BIS.
This makes documentary compliance particularly important.
For businesses importing these components, internal records should ideally allow the exempted quantity to be correlated with relevant commercial and import documentation, including purchase orders, invoices, Bills of Entry, inventory records and subsequent utilisation or sale records.

Treatment of Existing Stock

The Second Amendment Order also introduces a separate proviso dealing with goods manufactured domestically or imported before commencement of the 2026 amendment.

According to the Gazette, the QCO will not apply to such goods or articles where they were manufactured domestically or imported before commencement by a manufacturer who was:

certified by BIS; or
had applied to BIS for certification for the relevant goods or articles.

The provision further states that such manufacturer would be permitted to sell, display or offer to sell the declared stock up to 30 September 2026, subject to submission of the required declaration to BIS.

An Apparent Date Anomaly Deserves Attention

There is, however, an important drafting issue in the notification.
The Second Amendment Order is stated to come into force from the date of its publication in the Official Gazette, while the Order itself is dated 1 October 2026. Yet, the old-stock proviso states that declared stock may be sold, displayed or offered for sale only up to 30 September 2026.
On the face of the Gazette text, therefore, the specified sell-through date precedes the date of the amendment itself.
Businesses should be cautious about assuming that the notification provides a fresh post-notification disposal period for old stock. Where reliance upon this provision is commercially important, clarification from the competent authority/BIS may be advisable.

What Does the Amendment Mean for Importers?

The amendment can have substantial implications for importers of compressors and heat exchangers.
The specific inclusion of imported goods in the exemption is important because mandatory BIS/QCO requirements can affect customs clearance once a product falls within the scope of an operative QCO.
An importer seeking to rely upon the newly introduced relaxation should therefore be in a position to establish that the goods satisfy the precise conditions of the exemption.
Import documentation should clearly identify the goods, quantity, manufacturer and intended purpose, and should be supported by evidence concerning the manufacturer’s BIS certification or pending certification application, as applicable.
The amendment should not be treated as a blanket exemption for every import of hermetic compressors or heat exchangers.

Three-Year Window for Maintenance and After-Sales Requirements

Another commercially significant aspect is the three-year duration of the newly introduced relaxation.
The notification provides that the exemption for up to 6,000 hermetic compressors and heat exchangers per year will remain available until three years from commencement of the Second Amendment Order, 2026, subject to the specified conditions.
This appears designed to provide a transitional mechanism for manufacturers that need components for maintenance and sales while simultaneously moving toward the mandatory BIS certification framework.
For companies with a substantial installed base of air conditioners and refrigeration equipment, availability of compatible spare components is crucial for warranty support, repairs, maintenance contracts and after-sales servicing.

Compliance Checklist for Industry

Manufacturers and importers intending to use the exemption should undertake a product- and transaction-specific compliance review covering:

Product classification: Determine whether the imported/manufactured item is a hermetic compressor or heat exchanger falling within the relevant QCO.
Quantity: Monitor the annual ceiling of 6,000 numbers per qualifying manufacturer.
Purpose: Maintain documentation supporting the stated purpose of maintenance and sales.
BIS status: Keep evidence demonstrating that the manufacturer is either BIS certified or has applied to BIS for certification for the relevant goods/articles.
Stock declaration: Ensure old stock is appropriately declared as required by the notification.
Year-wise records: Maintain a separate and auditable year-wise record of domestically manufactured and imported quantities.
Import documentation: Importers should maintain consistency between invoices, packing lists, Bills of Entry, product literature, BIS-related documentation and exemption declarations.
Three-year period: Establish an internal compliance mechanism for monitoring the expiry of the three-year relaxation.

Background: QCO Has Undergone Multiple Amendments

The principal Air Conditioner and its related Parts, Hermetic Compressor and Temperature Sensing Controls (Quality Control) Order was originally notified through S.O. 4354(E) dated 5 December 2019.
The Gazette records subsequent amendments through notifications issued in 2020, 2021, 2022, 2024, 2025 and 2026, with the immediately preceding amendment being S.O. 2324(E) dated 8 May 2026.
The latest amendment therefore forms part of the continuing recalibration of the mandatory BIS framework applicable to India’s air-conditioning and refrigeration sector.

Key Takeaway

The Air Conditioner and its related Parts, Hermetic Compressor and Temperature Sensing Controls (Quality Control) Second Amendment Order, 2026 provides meaningful but conditional regulatory relief.

Most importantly:

Scroll compressors have now been expressly included alongside rotary hermetic compressors in the relevant provision.

At the same time, up to 6,000 hermetic compressors and heat exchangers per manufacturer per year, whether domestically manufactured or imported for maintenance and sales, can remain outside the QCO for a period of three years, provided the manufacturer satisfies the BIS certification/application and declaration/record-keeping conditions.

For the air-conditioning and refrigeration industry, the amendment could ease difficulties associated with sourcing specialised components for servicing and maintaining existing equipment. However, because the exemption is quantity-based, time-bound and conditional, manufacturers and importers should establish a robust documentary trail before relying upon it.

In case you face any issues related to Indirect Tax-Customs, GST, Foreign Trade Policy (FTP), Arbitration matters and Central Licensing and related advisory matters in India then please feel free to get in touch with SJ EXIM Services.

We offer Legal advice and litigation support in matters related to Indirect Tax-Customs, FTP, other Indirect Tax matters & Arbitration law, all sorts of Central licensing and related matters. Come and explore the new way of doing business with us!

We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

Source: DPIIT

Disclaimer

Handy Download:

Amendment to AC and its related Parts, Hermetic Compressor and Temperature Sensing Controls QCODownload

Connect with us for more-

@ Team S J EXIM SERVICES, New Delhi, IN

CP: Ms. Shubhra Jha, Founder

Tel: +91-11-4999 2707 I +91-9999005693

Web: www.sjexim.services

EMAIL: operations@sjexim.services I shubhra@sjexim.services

Facebook: www.facebook.com/sjeximservices

LinkedIn: https://www.linkedin.com/company/90794255/admin/feed/posts/