As climate change continues to push global temperatures higher, India is bracing for another scorching summer in 2025. The India Meteorological Department (IMD) has already reported that February 2025 was the warmest February since 1901, signaling an early and intense summer ahead. With rising heat waves and soaring temperatures, the demand for room air conditioners (RACs) is expected to surge significantly, fueling rapid growth in the industry.
India’s room air conditioner market has been experiencing an upward trajectory, driven by both changing weather patterns and evolving consumer behavior.
According to a study by ICRA, the Indian RAC industry is expected to witness a year-on-year (YoY) sales growth of 20-25% in FY 2024-25, reaching record levels of 12-12.5 million units. This growth is attributed to factors such as rising urbanisation, increasing disposable incomes, greater affordability due to financing options, and more households opting for multiple RAC units.
The past few years have seen a steady increase in heatwave days, further accelerating the need for cooling solutions. The previous summer saw a robust YoY growth of 40-50% for most original equipment manufacturers (OEMs), setting a strong precedent for the coming years. While ICRA predicts a growth rate of 10-12% in FY 2025-26, the overall industry outlook remains optimistic.
To meet this growing demand, India’s domestic RAC manufacturing capacity is set to expand by over 40% in the next three years. Leading OEMs and contract manufacturers are ramping up production facilities, aided by government initiatives such as the Production-Linked Incentive (PLI) scheme for the consumer durables sector. This scheme has boosted localisation in AC component manufacturing, reducing reliance on imports and strengthening the domestic supply chain.
The Indian RAC market is projected to grow at a compound annual growth rate (CAGR) of 12%, reaching an estimated value of $5.6 billion (₹50,000 crore) by FY 2028-29, as per Voltas’ annual report in June 2024. The market is becoming increasingly competitive, with both domestic and foreign brands vying for a larger share.
Voltas, a market leader in India’s RAC segment, sold over 2 million AC units in FY 2023-24, marking the highest number of ACs sold by a single brand in one year. Between January 2024 and April 2024, the company reported selling 1 million AC units within just 110 days. The company maintained its leadership position in both Split and Window AC categories, holding an exit market share of 20.5% as of December 2024.
Blue Star has also witnessed remarkable growth in its RAC segment, capturing a quarterly market share of 14%. The company continues to strengthen its presence in the premium and energy-efficient AC categories.
Johnson Controls-Hitachi remains a contender in the Indian RAC market, offering a range of cooling products, including air conditioners, refrigerators, and chillers. For the quarter ending December 2024, the company reported revenue of ₹4,184.6 million from its cooling products segment, reflecting steady demand growth from ₹3,830.0 million during the same period in the previous year.
Amber Enterprises, a key contract manufacturer for AC components, has seen growth driven by the industry’s rising demand. The company’s Consumer Durables division reported a 67% YoY revenue increase in Q3 FY 2024-25, mainly due to RAC industry channel inventory stocking ahead of the peak summer season. The RAC and its components segment alone registered a 71% YoY growth, reflecting strong industry momentum.
As India continues to experience extreme summers, the demand for air conditioning is expected to grow at an accelerated pace. Rising temperatures, combined with changing consumer habits and increasing affordability, may drive further expansion in the market.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
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Published on: Mar 17, 2025, 2:02 PM IST
Nikitha Devi
Nikitha is a content creator with 6+ years of experience in the financial domain. Specialising in personal finance, investments, and market insights, Nikitha simplifies complex financial topics, making them accessible to readers.
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