India’s air conditioner market is entering a new era one defined not just by rapid growth, but by a conscious shift toward sustainability. Valued at USD 5.02 billion in 2024 and projected to reach USD 13.01 billion by 2030, the market is advancing at a brisk pace, driven by rising disposable incomes, accelerated urbanization, and greater awareness of eco-friendly and energy-efficient technologies.
A notable transformation is the rise of smart and IoT-enabled systems. These air conditioners are not only improving user convenience through automation and connectivity but also contributing to energy optimization, a critical factor in a country grappling with increasing climate extremes. Consumers are also gravitating towards inverter technology and models with higher energy ratings, reflecting a clear demand for sustainable cooling without compromising performance.
Environmental concerns are reshaping preferences across both residential and commercial segments. The use of environmentally friendly refrigerants is becoming standard, and advanced air purification features are being integrated into many new models. These innovations resonate strongly with a growing segment of consumers who value clean air and reduced environmental impact.
Government policies such as the Production-Linked Incentive (PLI) scheme are playing a pivotal role in reshaping the industry. By encouraging domestic manufacturing and reducing import dependency for key components like compressors, the scheme supports both economic and environmental goals. Manufacturers are responding. For instance, global players like Daikin are significantly expanding operations in India, investing in new production facilities aimed at catering to both local and export markets while aligning with national sustainability objectives.
Different formats of air conditioning systems are witnessing tailored growth patterns. Split ACs, increasingly preferred for their efficiency and inverter capabilities, are becoming more accessible through online retail platforms. Window ACs, on the other hand, continue to find relevance in smaller and rented homes due to their affordability and ease of installation. Meanwhile, Variable Refrigerant Flow (VRF) systems and chillers are making inroads in commercial and industrial sectors, offering scalable, energy-efficient solutions that support green building initiatives and corporate sustainability commitments.
The demand for VRF systems, in particular, highlights how the market is adapting to urban infrastructure trends. These systems offer superior energy efficiency and individual zone control, making them ideal for high-rise buildings, malls, and office complexes. With their use of low global warming potential refrigerants, VRFs align well with the broader environmental objectives of the real estate and construction industries.
Chillers are also gaining momentum, especially in sectors like pharmaceuticals, food processing, and data centers. As industrial and commercial cooling needs grow so too does the focus on reducing energy consumption and carbon footprint. The India Cooling Action Plan (ICAP) underscores this trend, projecting a significant rise in installed chiller capacity and encouraging the adoption of sustainable cooling practices.
While North India remains the dominant region in terms of demand, fueled by its hotter climate and dense urbanization, the entire country is witnessing a surge in both demand and innovation. The air conditioner market in India is no longer just about cooling spaces it’s about doing so responsibly, with a long-term view toward sustainability, efficiency, and technological advancement.
In the years ahead, India's cooling industry is poised not only to expand but to lead by example in building a greener, smarter future.
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