The Indian room air-conditioners (RAC) market is poised for significant growth, projected to reach Rs 50,000 crore by FY 2028-29 with a healthy CAGR of 12 per cent, according to Tata group firm Voltas in its latest annual report. As a market leader, Voltas highlighted the increasing competition in the sector, driven by both domestic and international players, and anticipates even greater competitive intensity in the near future.
Several factors are contributing to this growth trajectory. The intensifying summer heat, coupled with rising disposable incomes and an aspiration for enhanced lifestyles, is driving the demand for room air conditioners. Additionally, easy access to consumer finance options has made purchasing air conditioners more accessible to a broader consumer base.
Voltas reported a record-breaking sales performance in 2023-24, with over 2 million AC units sold, the highest ever recorded by any brand in a single year. Notably, the company sold 1 million units in just 110 days from January 1 to April 20, 2024. This surge in sales was particularly pronounced during the scorching summer months of April and May, where temperatures soared to around 45 degrees Celsius, resulting in a two-fold increase in sales for several companies.
Looking ahead, Voltas aims to solidify its market dominance through the expansion of Exclusive Brand Outlets (EBOs) and other distribution channels. The company is also keenly aware of the competitive pressures in the Commercial Air Conditioning (CAC) sector, where international players are increasingly focusing their efforts. The demand for CAC is growing across various industries and commercial establishments, driven by the twin objectives of comfort and sustainability.
The Consumer Electronics and Appliances Manufacturers Association has forecasted record RAC sales this year, with an estimated annual sale of around 14 million units in 2024. However, the industry faces challenges due to the recent implementation of Quality Control Orders (QCO) norms, which impact the importation of components. Despite the dependency on imports for approximately 65 to 70 per cent of the product value, the industry is adapting to these new regulations.
Voltas’ annual report also projects robust growth in the commercial refrigeration (CR) segment, expecting an annual growth rate of over 10 per cent until FY 2028-29. Many product categories within this segment are anticipated to achieve high double-digit growth rates.
Under the ‘Make in India’ initiative, numerous brands have established new facilities and expanded local manufacturing capabilities. This has created a substantial local manufacturing base in key categories, intensifying competition and posing challenges in terms of market share and profitability.
In summary, India’s air-conditioner market is on a strong growth trajectory, driven by favorable economic and climatic factors. Companies like Voltas are strategically positioning themselves to capitalize on this growth, despite the challenges posed by increased competition and regulatory changes. The industry’s reliance on imported components remains a significant hurdle, but initiatives like ‘Make in India’ are fostering a more competitive and self-sufficient manufacturing landscape.
