Indian RAC market to witness surges this summer

With the issue of compressor shortage well managed, the Indian RAC industry is likely to witness a good start this summer, as it did last season.

Most industry players faced a shortage of high-value intermediaries, such as compressors and copper, during 3QFY25, but they have addressed the issue with alternate supply arrangements.

Sales of the RAC have already picked momentum in the South and the West.

So far in FY 25, the AC industry has seen a good demand amid rising temperatures and increasing disposable incomes.

The demand for AC is expected to grow at a healthy CAGR of 19% (volume) over the next years, alongside compressors and copper tubes.

However, the industry was impacted due to a shortage of compressors during January 2025 as the peak production happens in Dec-June.
In the domestic AC OEMs, big players like LG and Daikins were less impacted as they have in-house compressor manufacturing units.

Others are handling the situation by importing compressors from Taiwan, Japan, and Thailand and may also import from China given the ease of BIS certifications for key players like GMCC and Highly.

Meanwhile, the industry has appealed to the government to extend BIS certifications for certain compressor and copper suppliers until domestic markets are not available to meet the entire demand, and a favorable decision on the same is expected.

India is expected to become an electronics manufacturing powerhouse over the next decade driven by increasing domestic demand and improving export competitiveness. India’s EMS industry is growing, driven by a higher share of outsourcing by OEMs, developing component ecosystems and government incentives.

The domestic RAC industry volumes are expected to report a CAGR of 14% over FY24-27, driven by improved penetration and higher per capita income.