The Indian room air-conditioner (RAC) market is projected to reach Rs 50,000 crore by FY 2028-29, driven by a healthy compound annual growth rate (CAGR) of 12 percent, according to Tata Group firm Voltas. The company highlighted this optimistic forecast in its latest annual report.
As a market leader in the RAC segment, Voltas noted the increasing competition within the Indian RAC market, which has intensified with the entry of both homegrown and leading foreign players. The company anticipates that this competitive intensity will continue to grow in the coming years. Key factors contributing to the market’s expansion include increasingly hot summers, rising disposable incomes, and a growing quest for better lifestyles supported by easy access to consumer finance.
“The Indian RAC market is expected to grow at a healthy CAGR of 12 percent to reach Rs 50,000 crore by 2028-29,” stated Voltas in its report. In the fiscal year 2023-24, Voltas achieved a significant milestone by selling over 2 million AC units, the highest number ever sold by any brand in a single year. Remarkably, the company also sold 1 million AC units within just 110 days, from January 1, 2024, to April 20, 2024.
The recent blistering summer, with temperatures soaring to around 45 degrees Celsius in several regions, fueled an unprecedented surge in AC sales. Multiple companies reported over two-fold growth in sales during April and May, setting new records.
Voltas plans to bolster its market leadership by expanding its network of Exclusive Brand Outlets (EBOs) and enhancing other distribution channels. However, the competition is not limited to the residential segment. The commercial air conditioning (CAC) sector is also witnessing increasing competition, with leading foreign players turning their focus to this market. The rising demand for commercial air conditioning across industries and commercial establishments is being driven by a focus on comfort and sustainability.
Despite the promising outlook, Voltas acknowledged the challenges posed by the recent implementation of Quality Control Orders (QCO) norms, which impact the imports of components essential for manufacturing. The Indian air conditioning industry remains heavily reliant on imports for components, which account for approximately 65 to 70 percent of the product value.
In addition to room air-conditioners, Voltas’ report also highlighted the commercial refrigeration (CR) segment, which is expected to grow at over 10 percent per annum until FY 2028-29. The company anticipates high double-digit growth in many product categories within this segment.
The report also underscored the impact of the ‘Make in India’ initiative, which has led to the establishment of new manufacturing facilities and the expansion of local production by many brands. This development has intensified competition, posing challenges to market share and profitability.
The Consumer Electronics and Appliances Manufacturers Association had previously predicted record sales of RAC units in 2024, expecting annual sales to reach around 14 million units. Voltas’ robust performance and strategic initiatives underscore its commitment to maintaining its leadership position in the rapidly growing Indian air-conditioner market.
