India's AC Market To Grow 2X By 2030, Says Voltas MD

In air conditioners, we are the leader with roughly 18% market share. In refrigerators, we are around 6%, and in washing machines around 8%. That gives us strong room to grow since we are still in single digits.

We are among the fastest-growing appliance brands, partly because of a low base and partly because the Tata brand resonates strongly.

We aim to reach around 20% market share in ACs, targeting about 1% growth annually till 2030.

We believe penetration levels in India are still low across categories. Air conditioners are at less than 10% penetration. Other home appliance categories range between 25% and 40%. So there is significant headroom for growth.

India’s per capita GDP is approaching $3,000. Historically, once countries cross this level, the next decade sees strong growth in consumption. People begin buying more appliances and consumer goods. Growth becomes sharper. India appears to be at that stage now, and we want to be present across that consumption growth in the home appliances space.

India's market share is less than 1% in this sector globally. All industry people are working with the government and seeing whether how do we become a country which can also not only cater to the Indian market but also become a global exporter like China did 20 years ago...So, we are working with the government and we are seeing how it can be worked out.

China accounts for about 60%, and Thailand around 14–16%. India’s focus remains domestic for now. India faces a cost disadvantage of roughly 15% compared to China, and bridging this gap is necessary for export competitiveness.

If a global buyer asks for quotations from an Indian brand and a Chinese brand for air conditioners, the Chinese product would typically be about 15% cheaper. Bridging this gap is essential, and that is what the industry is working on in collaboration with the government.

The market has changed significantly. Window air conditioners used to be popular but now account for less than 8% of sales. Consumers prefer split ACs because they are quieter and more efficient. Inverter technology has replaced fixed-speed compressors. Inverter compressors adjust speed based on cooling load, resulting in smoother operation and better energy efficiency.

Energy consumption has reduced significantly. Compared to 10 years ago, a similar star-rated AC today consumes almost half the electricity. Consumers are also demanding more features such as better air filtration, swing options, mobile app control and AI-based automation. We recently launched an AI-powered AC that optimises settings automatically.

The GST reduction from 28% to 18% was announced in September, close to winter, which is not peak AC season. The real impact will be visible during summer. While the GST cut reduced prices by about 7.8%, rising copper prices, dollar fluctuations and the upgraded Bureau of Energy Efficiency standard changes offset much of that benefit.

Copper prices increased from around $8,500 per tonne to $12,000–13,000 per tonne, significantly impacting production costs. Overall, AC prices would rise between 5% and 15% and the effects would be seen in the new products in the market.

Revenue should improve because the base was low last year. Margins should also improve if the demand-supply imbalance narrows and the summer is normal. Whether margins will return to FY25 EBIT levels is uncertain, but the direction should be positive. Industry-wide recovery is harder to predict because some brands are still operating at losses. However, it is unlikely to be worse than last year.

Traditional distribution contributes around 30–35%. Modern trade contributes about 15–16%. Regional retailers account for around 17%. E-commerce contributes roughly 10%, and exclusive brand outlets about 15%.

During COVID, e-commerce share rose to 17% because offline stores were closed. Currently, it is steady between 8–12%. Air conditioners require installation and service support, so consumers often prefer some offline interaction.

We have adequate capacity for the next 2–3 years. Smaller expansions of ₹50–100 crore will continue annually. Current capacity is about 1.5 million units. An investment of around ₹75 crore can scale it up to 2 million units.

India currently sells around 15 million AC units annually, with less than 10% penetration. We expect roughly 15% CAGR over the next five years, which could take the market to around 30 million units by 2030.