India Air Conditioner Market report covering INR 365 Bn market size in 2022 and forecast to INR 660 Bn by 2028 with industry outlook, trends, demand analysis and insights.
Market Overview
India Air Conditioner Market Overview
The India AC market is anticipated to reach a market value of INR 660 Bn by 2028, growing at a CAGR of 15% between 2022–2028. In 2022, the India AC market was valued at INR 365 Bn. The northern region of India is dominating the India AC market with 30% of the market share. The primary growth drivers of the market are increasing disposable incomes, changes in climate, urbanization, and growing demand for energy-efficient ACs. Supply chain disruptions, price sensitivity, high-electricity costs, and foreign policy are some of the restraining factors of the market. Voltas is leading the market with 21% of the market share.
India AC Market Definition
Market Definition of India AC Market: India Air conditioner market has been defined as the sum total of revenues earned by sales of domestic air conditioners. The report provides market size based on value in INR Bn. The market incorporates segmentations including by product type (Window AC, Split AC, Packaged Air Conditioner, and others), by distribution type (Retail Stores, Online Retail, Distributions & wholesalers, and others), and by end-users (Residential, Commercial, and Industrial). The report includes prominent players such as Voltas, LG, Daikin, Blue Star, and Llyod.
Taxonomy
Market Ecosystem of India AC Market
India AC Market Size 2017-2022 (INR Bn)
The Indian air conditioning (AC) market exhibited remarkable growth from 2017 to 2022, achieving a Compound Annual Growth Rate (CAGR) of 11%. In 2017, the market held a value of INR 202 billion, and within a span of five years, it witnessed substantial expansion, reaching a market valuation of INR 365 billion in 2022. The India AC industry is anticipated to reach INR 660 Bn by the end of 2028, driven by growth trends such as rising disposable income, changes in climate, urbanization, and growing demand for energy-efficient ACs.
India AC Market Industry Analysis
Increasing Disposable Income
India’s disposable income has increased significantly in the last 5 years, However, the year 2020 has been an exception for growth due to the global pandemic Covid-19. In 2022, India’s disposable income stands at USD 2.76 trillion which is USD 0.72 trillion more compared to USD 2.04 trillion in 2018. Although, the growth declined in 2020 to USD 2.19 trillion compared to USD 2.26 trillion in 2019. This growth has impacted the AC market in India positively. In 2022, around 16% of Indians have AC access and the number is projected to double in the next five years.
Urbanization
In 2022, one-third of the Indian population lives in the urban cities of India. The urbanization rate in India has grown by 5% in the last decade. The urbanization rate of the country has increased from 33.40% in 2017 to 37.40% in 2022. The growing urbanization has given a significant boost to the AC industry in the country.
Growing Awareness for Energy-Efficient ACs
In 2022, Energy-efficient ACs cover around 50% of the market in India and the number is anticipated to increase by 15% in 2022-2028. The efficient AC market share increased by 20% in 2022 compared to 30% in 2020. Different factors are driving the market of efficient ACs such as low electricity consumption and technological advancements.
Climate Change in India
Climate change in India is booming the AC industry. In the last decade, the country’s climate has changed drastically due to various factors. In 2016, the highest temperature recorded was 51.0 °C in India. Furthermore, Heatwaves in India are arriving before time, India’s average temperature has increased from 25.15 °C in 2018 to 26.10 °C in 2022.
Cooling Capacity
This element mostly affects customers and businesses that have to choose their air conditioning equipment according to the size of the room. Usually expressed in British Thermal Units (BTUs) or tons, an AC unit's cooling capacity. It speaks about how much heat an air conditioner can take out of a space in an hour.
Energy Efficiency
Energy efficiency is a crucial consideration for individuals and businesses worried about energy costs and the environment. Star ratings serve as a measure of energy efficiency as the higher star ratings such as a 5-star rating indicate greater efficiency. For the same amount of cooling, more energy-efficient air conditioners use less power.
Brand and Reputation
Customers who look for dependability, high-quality products, and post-purchase support give importance to brand and reputation. In order to guarantee they obtain a product that is supported by an efficient service network and warranty coverage, consumers frequently opt for well-known and established brands.
Price and Budget
Budget constraints are pivotal in the choice of air conditioners for both businesses and consumers. With economic considerations at the forefront, individuals and organizations seek cost-effective solutions. In recent years, the demand for affordable AC units has risen with a notable increase in sales of energy-efficient models, reflecting the balance between budget constraints and environmental consciousness.
Features and Technology
Customers and companies with particular needs or preferences for cutting-edge features and technology consider this feature and technology. Air filtration, sleep modes, Wi-Fi control, and other functions are some of the standard technologies on modern air conditioners. The features chosen are determined by the needs of the company or the individual.
Energy Efficient Standards
The government of India has made some energy efficiency standards for Acs in India like The star rating system categorizes air conditioners based on energy efficiency, ranging from 1 to 5 stars, where a higher rating signifies superior efficiency. Bureau of Energy Efficiency (BEE) assesses parameters such as Energy Efficiency Ratio (EER) and Coefficient of Performance (COP) to determine ratings. EER quantifies cooling capacity relative to power consumption, while COP measures heating or cooling performance compared to power input.
Import Duties
Several import duties have been put by the Indian government on the import of ACs in the country. However, these import duties depend upon the type of AC and the origin of the country. Non-efficient ACs segment faces higher import duties. Overall, a 10-12% import duty has been imposed by the government on ACs.
Subsidies for Energy-Efficient ACs
In 2022, the central government announced PLI 2.0 (Production Linked Incentive) scheme for the manufacturing of white goods under the “Make in India” initiative. A total of six companies were selected with a committed investment of INR 9.08 billion for the manufacturing of AC components.
Market Segmentation of India AC Market
Market Segmentation of India AC Market by Product
The Split ACs dominated the India air conditioner industry in 2022, with a substantial 73% market share, closely followed by Window ACs and Packaged Air Conditioners. Window ACs constituted 23% of the market share, while Packaged Air Conditioners contributed 2%.
Market Segmentation of India AC Market by Distribution
The India AC market’s distribution segmentation is predominated by retail stores with 60% of the market share in 2022. One of the major reasons behind their domination is customers' trust and goodwill in retail stores. Online retail or e-commerce is making significant growth in the sector and has captured 25% of the market share in the last five years. Distributors and wholesalers are losing their market share due to the growing influence of Online retail in the market.
Future Outlook of India AC Market
The Indian AC market is projected to grow at a CAGR of 15% between 2023-2028. The market is anticipated to reach a market size of INR 660 Bn driven by climate change, urbanization, increasing disposable income, and increasing demand for energy-efficient ACs.
The trend of AI-assisted ACs is rising in the market. Recently, LG introduced an AI+ dual invertor with the help of its cutting-edge technology and durable sensing mechanism, it can detect changes in the user's surroundings, lifestyle, and usage habits and adapt the cooling system appropriately.
India AC Market Macro-Economic Indicators
India's population was valued at 1437 million in 2023, increasing by 30 million from 1407 million in 2022. By the end of 2025, India's population is predicted to reach 1500 million.
In the year 2020, The population between the 25-49 age group is the largest age group (36.40%) in India followed by 0-14 (26.40%), 50+ (19.40%), and 15-24 (18%).
In 2023, India's GDP was valued at USD 3732 billion compared to USD 2710 billion in 2018. The country’s GDP is expected to reach 5000 billion by the end of 2025.
In 2023, India’s Inflation rate stands at 5.66 % an increase of approximately 2.5% from the 2018 inflation rate of 3.94%. During the COVID-19 pandemic in 2020, the inflation rate in India surged unexpectedly to 6.62% from 3.72% in 2019.
As of 2023, India comprises of majority of the middle-class population which is 57% of the total population of India. After the middle class comes the lower-class category which comprises 33% of the total population of India. The remaining 10% of the population belongs to a high-income class.
Frequently Asked Questions
Find quick answers to common questions about the India AC Market
The India Air conditioner market is anticipated to reach INR 372 billion in 2023.
The future market size of the India Air conditioner Market is expected to reach INR 660 billion in the forecasted period of 2023-2028 with a CAGR of 15%
Voltas, Blue Star, Godrej, Whirlpool, and LG are some of the prominent companies operating in the India Air conditioner market.
Energy Efficiency and Inverter Technology, Smart and Connected ACs, Air Purification, and Green Initiatives are some of the key trends in the India Air conditioner market.
Rising Disposable Income, Changes in climate, urbanization, and growing demand for energy-efficient ACs are the major growth drivers of the India Air conditioner market.
