India HVAC System Market Outlook to 2028

India HVAC System Market Overview

• The India HVAC System Market has experienced notable growth, this is reflected by Global HVAC System Market reaching a valuation of USD 255 billion in 2023. This growth is fueled by rapid urbanization, increasing disposable incomes, and the rising demand for energy-efficient air conditioning systems.
• The top HVAC brands in India are Daikin, Voltas, Blue Star, Johnson Controls-Hitachi, and LG. These companies dominate the market due to their extensive distribution networks, strong brand recognition, and continuous product innovation.
• Voltas Limited is expanding its manufacturing capabilities with a new plant near Chennai, involving significant investments and strategic partnerships to enhance its production capacity and product offerings. The total investment for the new plant is over ₹1,000 crore, which includes a ₹500-crore plant with Highly and another ₹500-crore AC manufacturing facility.

India HVAC System Current Market Analysis

• The government initiatives for smart cities in India are propelling the demand for HVAC systems, as these are now an essential requirement in residential buildings. The growing residential construction activities, including the rise in newly constructed apartments, are driving the demand for HVAC systems.
• The HVAC system market has a significant impact on energy consumption in India, with HVAC systems accounting for a significant share of total energy usage in commercial buildings. The adoption of energy-efficient HVAC systems has the potential to reduce energy consumption, contributing to the country's sustainability goals.
• Delhi has the largest HVAC installed capacity in India. Rising incomes and living standards in the northern region are driving increased HVAC demand. The booming construction sector, with extensive road and infrastructure projects, is also fueling growth in residential and hospitality construction that requires HVAC systems.

India HVAC System Market Segmentation

By Product Type: India's HVAC system market is segmented by product type into heating, ventilation, and air conditioning. In 2023, Air conditioning systems lead the market share primarily due to the hot and humid climate in most parts of India. The widespread use of air conditioning systems in residential and commercial buildings contributes to their dominance.

By End-User: India's HVAC system market is segmented by End User into residential, commercial, and industrial. In 2023, The commercial segment holds a significant market share driven by the increasing number of shopping malls, office complexes, and healthcare facilities that require extensive HVAC systems for maintaining comfortable indoor environments.

By Region: India's HVAC market is segmented by region into North, South, East, and West. In 2023, the North India, comprising states like Delhi, Haryana, Punjab, Rajasthan, and Uttar Pradesh lead the market, driven by high industrial and commercial activity. This dominance is due to the region's rapid urbanization, high population density, and extreme weather conditions requiring both cooling and heating solutions.

India HVAC System Market Competitive Landscape

• Daikin India: Daikin is expanding its presence in India with a new manufacturing facility at Sri City, Andhra Pradesh. The plant will produce air conditioners and compressors, starting commercial production by the end of 2023. This will increase India's total air conditioner production capacity to 2.6 million units and compressor production to 6.01 million units.
• Blue Star Limited: Blue Star, India's second largest homegrown AC brand, has a presence across the Middle East, Africa, SAARC and ASEAN. In May 2023, it launched 75 new inverter and fixed-speed AC models across price points. Blue Star also announced a partnership with Germany's Gebhardt Intralogistics for warehouse automation solutions.
• LG Electronics India Pvt. Ltd.: LG has established itself as a major player in the Indian HVAC market, with a focus on energy-efficient and technologically advanced solutions. In 2024, LG launched a new range of smart HVAC systems featuring AI-based controls and IoT integration. LG’s focus on innovation and customer-centric solutions has helped it maintain a strong market presence.

India HVAC System Market Industry Analysis

India HVAC System Market Growth Drivers

• Increasing Office Absorption Space: The expansion of office spaces in the growing commercial and industrial sectors is a major HVAC market driver. Trends like ecological, intelligent, and automated technologies will shape the future of the commercial HVAC segment.
• Shift Towards Energy-Efficient and Smart HVAC Systems: There is a growing inclination towards energy-efficient HVAC systems, such as inverter-based ACs, VRF systems, and systems with advanced features like IoT integration and remote controls, which is being supported by consumers prioritizing energy efficiency and smart features in HVAC systems.
• Untapped Potential in Tier-II and Tier-III Cities: Major metropolitan cities dominate HVAC demand, but Tier-II and Tier-III cities offer immense untapped potential due to rapid urbanization and economic growth. Rising disposable incomes and aspirations in these cities will drive future HVAC demand.

India HVAC System Market Challenges

• High Initial Cost of Advanced HVAC Systems: The installation cost for a commercial energy-efficient HVAC system can range from INR 5 million to INR 10 million or more, depending on the size of the building, the complexity of the system, and the specific features and technologies included which make it difficult for small and medium-sized enterprises to invest such a large amount of capital upfront.
• Emerging Trends and Changing Demands: The HVAC industry in India faces challenges in adapting to evolving trends, particularly the rising demand for smart HVAC systems and stringent energy efficiency regulations. This dynamic landscape necessitates strategic planning and technological advancement to stay competitive in the market for efficient and sustainable HVAC solutions.
• Regulatory Compliance: HVAC manufacturers in India face challenges in meeting stringent energy efficiency standards and regulations set by government bodies like the Bureau of Energy Efficiency (BEE). Compliance with these guidelines is crucial for market players to ensure their products meet environmental sustainability goals and cater to the growing demand for energy-efficient solutions in the HVAC sector.

India HVAC System Market Government Initiatives

• Smart Cities Mission: The Smart Cities Mission, launched in 2015, aims to develop 100 model cities across India with core infrastructure, clean environment, and high quality of life through smart solutions. In January 2024, the mission showcased achievements at the Smart Cities India Expo in New Delhi, highlighting notable projects in Indore, Surat, Udaipur, and Prayagraj.
• Bureau of Energy Efficiency (BEE): Introduced in 2002, this initiative focusses on developing policies and strategies to reduce the energy intensity of the Indian economy with the primary objective of enhancing energy security and climate change mitigation. BEE, in association with the Alliance for an Energy-Efficient Economy (AEEE), released the 5th edition of the SEEI in 2023 to evaluate the performance of 36 states and UTs across 7 demand sectors using 65 indicators.

India HVAC System Market Future Outlook

By 2028, the HVAC system market in India looks promising, and is anticipated to be driven by technological advancements, the increasing adoption of smart HVAC systems, and stringent government regulations promoting energy efficiency.

India HVAC System Market Future Trends

• • Rising Demand for Smart and Energy-Efficient HVAC Systems: India's HVAC industry is shifting towards smart systems that leverage IoT technologies for better controls, building automation, and real-time performance monitoring. This aligns with the country's net-zero emissions goals, focusing on developing low-carbon, eco-friendly HVAC solutions.
  • Retrofitting and Upgrades: Retrofitting existing buildings with energy-efficient HVAC systems presents significant potential to reduce energy consumption and improve indoor air quality in India. The luxury and specialized sectors, such as hospitality and healthcare, are at the forefront of HVAC retrofitting practices.
  • Expanding Commercial and Residential Sectors: Rapid urbanization, infrastructure development, and growth in sectors like hospitality, healthcare, and data centers are driving demand for HVAC systems across commercial and industrial applications. The residential sector is also a key growth area because of rise in income and awareness of indoor quality of air.