To cater to increasing demand, the room air conditioner (RAC) capacity is set to increase by 40 to 50 per cent in the near term
Driven by continued healthy demand, the Indian room air-conditioner (RAC) industry is likely to report double-digit volume growth in the medium term. A report by Icra has expected the country’s RAC industry volumes to grow at around 20 to 25 per cent on a year-on-year (YoY) basis and reach 12 to 12.5 million by the end of the current financial year (FY25).
Icra has revised the RAC industry’s volume growth upwards post the robust volume growth in the recently concluded summer season. Driven by climatic changes, the volume projections are expected to be the highest ever in FY25.
The long-term industry growth is set to be driven by structural drivers such as rising temperature levels, growing need for the number of RACs per household, increasing urbanisation, disposable incomes and easier consumer financing options, as per Icra.
To cater to increasing demand, the RAC capacity is set to increase by 40 to 50 per cent in the near term. As per Icra, the current domestic India’s household RAC capacity is 18 to 19 million units on an annual basis and is likely to grow to 25 to 26 million by FY27.
As far as 2024 is concerned, the fiscal year 2024 is estimated to have ended with a volume of 9.5 to 10 million, registering a volume growth of 10 to 15 per cent YoY. The early onset of summer in March 2024 helped push up the volumes in FY24. Due to high to very high temperatures coupled with the higher number of heat wave days, the sales in northern India contributed more to the summer season, as per Icra.
As per Icra, the industry is expected to achieve substantial indigenisation up to 75 per cent in the medium term due to the ongoing backward integration by most industry players. Out of the top six original equipment manufacturer (OEMs) brands, four have capacity enhancement plans in the next three years, according to the report by Icra.
