In its research publication, ICRA has estimated Room Air Conditioner (RAC) industry volumes to post a further 15-20% expansion in FY2024 following the robust growth of 26-28% in FY2023.

Moreover, the government’s Production Linked Incentive (PLI) scheme has received a strong response with a committed capital outlay of Rs. 4,806 crore from both global as well as domestic RAC companies, which will help reduce imports and support industry margins through backward integration.

Giving more insights, Ms. Sheetal Sharad, Vice President and Sector Head – Corporate Ratings, ICRA Limited says, “ICRA foresees a healthy 15-20% jump in RAC volumes in FY2024 supported by an underpenetrated market and expected harsh summers this year. The industry has significant growth potential considering its low penetration of 7-9% of total urban Indian households, compared to 90% in developed countries. Increasing urbanisation, growing disposable income, improving consumer finance availability and increasing RACs per household are further expected to support the volume, as well as revenue growth.”

ICRA estimates the domestic RAC market at 6.4-6.8 million units in terms of volume and Rs. 17,000-18,000 crore by value in FY2022, having recovered from the pandemic-induced low of FY2021.