Voltas and other AC companies are positioned to capitalize on India’s growing air conditioning market, projected to reach Rs 50,000 crore by FY29
The competitive terrain of the Indian room air-conditioner (RAC) sector is heating up, not just in temperature but in market dynamics too. According to Voltas, a major player in this domain and a Tata group entity, the industry is forecasted to escalate to an impressive Rs 50,000 crore by the fiscal year 2028-29, achieving a solid compound annual growth rate (CAGR) of 12%.
Voltas reports an “intensification” in rivalry as both local and international companies vie for supremacy. This escalating competition is expected to surge even further, propelled by several factors. Sweltering summers, rising disposable incomes, and the pursuit of enhanced living standards, facilitated by accessible consumer financing, are key drivers in this growth narrative.
In the fiscal year 2023-24, Voltas broke records, distributing over 2 million AC units—the highest ever for any brand within a single year. Remarkably, 1 million of these units were sold in an incredibly brief span of just 110 days, from January 1, 2024, to April 20, 2024. This unprecedented sales surge was fueled by an exceptionally hot summer, with temperatures frequently reaching around 45 degrees Celsius, driving demand through the roof.
To strengthen its market leadership, Voltas plans to expand its network of Exclusive Brand Outlets (EBOs) and other sales channels. Meanwhile, the commercial air conditioning (CAC) arena is also experiencing heightened competitive intensity as prominent foreign companies focus on this lucrative segment. The demand for CAC is rising across industries and commercial buildings, driven by a heightened focus on comfort and sustainability.
Despite the flourishing market, challenges loom. The recent implementation of Quality Control Orders (QCO) norms has affected the import of crucial components, posing significant obstacles for the industry. The Indian air conditioning sector remains heavily reliant on imports, with imported components constituting approximately 65-70% of the product value.
In the commercial refrigeration (CR) division, Voltas projects a steady annual growth rate of over 10% until FY 2028-29. Several product categories within this segment are expected to register high double-digit growth rates. Under the ‘Make in India’ initiative, many brands have increased local manufacturing capabilities, leading to intense competition, which has, in turn, created challenges related to market share and profitability.
The Consumer Electronics and Appliances Manufacturers Association echoes these sentiments, forecasting record sales of RACs in 2024, potentially reaching 14 million units annually.
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