Regarding capacity, 80 percent are concentrated among the top six OEMs, while the contract manufacturers are limited to 3-4 major companies.
The Investment Information and Credit Rating Agency of India Limited (ICRA) has mentioned in its latest survey that the room air conditioning (RAC) market in India is highly expected to grow by 20-25 per cent year-on-year with record sales of 12.25 million units in FY25. The sudden spike in sales growth and demand among the people is contributed by numerous issues such as rising heat waves, higher economic growth among individuals, easy EMI options, and increased urbanization.
Experts also predicted that the increasing demand for energy-efficient products and growing replacement demand will further grow AC sales in India. Amid the vast growing demand for ACs, concerns are also raised about their widespread contribution to environmental imbalances. This is because the longer usage expels a huge amount of heat outside, negatively affecting the environment and the atmosphere.
Srikumar Krishnamurthy, Senior Vice President and Co-Group Head of Corporate Ratings at ICRA, added that people are not currently caring about the environmental crisis because the rate of heatwaves has escalated, with CY2024’s record high in this regard. During the last summer, it was observed that most OEMs had reported substantial sales growth of around 40-45 percent year-on-year.
The ICRA SVP also hinted that by FY26, growth is also expected to flatten by 10-12 percent, mostly in North India, which accounts for 3-40 percent of the overall sales. Speaking of supply, the capacity of RAC is highly anticipated to soar by over 40 percent in the coming three years. In an effort to meet this demand, contract manufacturers and OEMs are working strenuously to increase production at a large scale.
The Production-Linked Incentive (PLI) scheme, unleashed to boost domestic value addition within the sector, largely encourages 75 percent indigenization in the coming 3-4 years through an ongoing backward integration policy.
