New Delhi: According to a study by ICRA, the Indian room air-conditioner (RAC) industry is set to experience remarkable growth, with sales volumes projected to increase by 20-25 percent annually, reaching a record high of 12-12.5 million units in the 2024-25 fiscal year. It was stated that there is an anticipation of a 10-12 percent increase in sales for the fiscal year 2025-26. The credit rating agency stated that factors like higher temperatures, rising demand for multiple RAC units in households, increasing urbanization, higher disposable incomes, and favorable consumer financing options will fuel growth in the coming years.
Srikumar Krishnamurthy, senior vice president and co-group head of Corporate Ratings at ICRA, stated that the domestic RAC industry exceeded pre-COVID sales volume levels in the financial year 2023-2024 with the help of favorable consumer trends and changing weather conditions. He stated that there has been a continuous rise in the number of average heatwave days per year during the past thirty years. Most OEMs experienced strong year-on-year volume growth of 40-50 per cent during the recent summer season. ICRA, on the other hand, predicted a decrease to around 10-12 percent in the fiscal year 2025-26.
Over the next three years, there is an expected growth of more than 40 percent in the domestic household RAC capacity on the supply side. Krishnamurthy stated that major OEMs and contract manufacturers are quickly increasing RAC capacities to meet the rising demand in the local market. The impact of the government's production-linked incentive (PLI) scheme for components manufacturing in the consumer durable industry is also emphasized in the report. This initiative is credited with boosting localisation levels in the Indian RAC industry. In the first quarter of the year, ICRA's selected three main RAC brands saw a rise of around 53 pc in revenue compared to the previous year.
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