India HVAC Market 2026-2034 | USD 49.02 Billion Industry Growth, Trends & Strategic Outlook | IMARC Group

India HVAC Market Outlook

This study by IMARC Group on the India HVAC Market provides a forecast of market size, share, and emerging trends for 2026–2034. The report covers segmentation by product type, end user, and region, with regional coverage across North India, South India, West India, and East India.

Market Snapshot

• Base Year Market Size (2025): USD 13.56 Billion
• Forecast Market Size (2034): USD 49.02 Billion
• CAGR (2026–2034): 14.89%
• Base Year: 2025
• Historical Period: 2020–2025
• Forecast Period: 2026–2034
• Leading Product Type: Direct Expansion Systems (62.4%, 2025)
• Leading End User: Residential (55.8%, 2025)
• Leading Region: North India (32.6%, 2025)

Current Size of the India HVAC Market

The India HVAC Market size reached USD 13.56 Billion in 2025 and is projected to reach USD 49.02 Billion by 2034, growing at a CAGR of 14.89% during 2026–2034. India HVAC Market growth rests on the 2026 BEE star rating revision, Samsung’s Pune plant for AI data centre cooling, Daikin’s planned R&D hub in Haryana, and compressor import curbs under the 2026 Quality Control Order.

Emerging Trends in the India HVAC Market

Samsung Opens Pune Plant for AI Data Centre Cooling

Samsung completed a new HVAC manufacturing facility in Pune operated by FläktGroup in August 2026, its first new plant since acquiring the HVAC specialist in November 2025. The 13,826-square-metre facility will produce Air Handling Units, Fan Wall Units, and Computer Air Handlers for AI data centres and critical infrastructure, scaling to 6,500 units annually alongside FläktGroup’s existing Noida plant. This matters because data centre cooling is a distinct, high-value segment separate from residential room air conditioners, and local production shortens supply timelines for hyperscale projects across Asia-Pacific.

Daikin Establishes India R&D Hub for Global HVAC Development

Daikin’s board approved the formation of Daikin Research and Development India Private Limited in June 2026, with a new R&D centre in Haryana expected to be completed by June 2028 at an initial capital of ₹8 billion. The facility will develop HVAC systems for data centres and large commercial infrastructure across Asia, Oceania, and Africa. This matters because India is shifting from a sales market to an engineering base for global HVAC products, and localized development helps meet country-specific regulations and customer requirements.

2026 BEE Star Rating Revision Raises Efficiency Thresholds

The Bureau of Energy Efficiency’s revised star rating norms took effect at the start of 2026, raising efficiency thresholds so that a model previously rated 5-star may now classify as 4-star. LG Electronics India launched its 2026 BEE-compliant lineup in January 2026, ahead of the summer season, with features including Precool and Energy Manager+. This matters because the rating change forces portfolio upgrades across the industry, and manufacturers that comply early gain shelf advantage during the peak buying season.

Quality Control Order Curbs Compressor Imports

The Air Conditioner and Related Parts, Hermetic Compressors and Temperature Sensing Controls (Quality Control) Amendment Order, 2026 took effect on May 8, 2026, capping imports of small hermetic compressors at 30–40% of FY2024-25 levels through March 2027, while VRF compressors for commercial systems remain at 100%. Manufacturers must also submit monthly import records and a domestic value addition plan. This matters because compressor localization is becoming a regulatory requirement rather than a strategic choice, and the differentiated caps favor commercial HVAC players over mass-market room AC manufacturers.

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Factors Driving the Growth of the India HVAC Market

Record Summer Demand Despite Price Hikes

AC and refrigerator makers reported double-digit volume and value growth through April-May 2026 as prolonged heat and a delayed monsoon boosted demand, even after price hikes of 8–15% since March due to rupee depreciation, raw material costs, and the BEE rating change. Voltas crossed one million AC sales in FY27, Blue Star recorded 25% volume and 30% value growth, and LG India saw strong April-June performance. This matters because demand proved resilient to price increases, and the season extended beyond the typical peak period into June.

Data Centre Capacity Expansion Creates Concentrated Cooling Demand

India’s data centre capacity reached 1,500 MW in 2025, quadrupling from about 375 MW in 2020, creating a concentrated profit pool for precision cooling, chillers, liquid-cooling integration, and high-redundancy controls. Government-linked reporting expects data-centre electricity demand to reach 13.56 GW by 2031-32. This matters because data centre cooling specifications differ fundamentally from comfort cooling, and suppliers qualified for mission-critical infrastructure capture higher-value contracts.

Residential AC Penetration Remains Low at Around 11%

LG Electronics India noted that AC penetration is still at around 11% in a country of India’s scale, leaving substantial headroom for growth. The tropical climate, extended summer season, and delayed monsoon onset sustained demand well beyond the typical peak period. This matters because the residential segment, which holds 55.8% share, has not saturated, and first-time buyers in Tier-2 and Tier-3 cities represent the largest incremental volume pool.

Regulatory Push Toward Domestic Value Addition

The 2026 Quality Control Order requires manufacturers to submit a domestic value addition plan alongside import records, and the PLI baseline is around 20–25% domestic value addition against a target of 75–80% by 2028-29. Localization of compressors, motors, copper tubes, heat exchangers, and controls can compress import exposure and improve lead times. This matters because supply chain localization is becoming a condition of market participation, and manufacturers that build domestic component ecosystems reduce exposure to currency and shipping disruptions.

Opportunities in the India HVAC Market

Precision Cooling for AI Data Centres

Samsung’s Pune plant will produce AHUs, Fan Wall Units, and CRAHs specifically for AI data centres, with proximity to Mumbai port improving logistics for Asia-Pacific customers. The opportunity lies in supplying mission-critical cooling equipment for hyperscale and colocation facilities, where precision temperature and humidity control command premium pricing and long-term service contracts.

Compressor Localization Under Import Caps

The Quality Control Order caps small hermetic compressor imports at 30–40% of FY2024-25 levels through March 2027, while VRF compressors remain at 100%. The opportunity lies in domestic compressor manufacturing for room ACs, where the import cap creates a defined supply gap that local production must fill, and manufacturers that establish capacity early secure OEM contracts.

Commercial HVAC for IT Parks and Infrastructure

Commercial end users hold 44.2% share, supported by expanding office spaces, retail malls, hospitality investment, and healthcare infrastructure, with VRF units, chillers, and packaged platforms serving IT parks, institutional buildings, metro rail projects, and airports. The opportunity lies in integrated HVAC solutions for large commercial projects, where Daikin’s planned R&D hub for data centres and large facilities signals growing demand for high-capacity systems.

Challenges in the India HVAC Market

Raw Material Cost Inflation Squeezes Margins

Cooling appliance makers implemented price hikes of 8–15% since March 2026 due to rupee depreciation and rising raw material costs, but Blue Star’s managing director noted that the full impact was not passed on to consumers, impacting margins across the industry. This matters because input cost inflation cannot be fully recovered through pricing without dampening demand, particularly in the price-sensitive residential segment.

Monsoon Onset Cools Demand After Peak Season

Demand momentum that built through April and May moderated in June as the monsoon set in, with Blue Star noting that market momentum was lost before it could fully build, and Godrej Appliances reporting that AC sales moderated across regions as monsoon gained momentum. This matters because HVAC demand is highly seasonal, and a delayed or weak monsoon extends the selling window while an early monsoon cuts it short, creating inventory risk for manufacturers and retailers.

Compressor Import Restrictions Constrain Supply Flexibility

The Quality Control Order’s import caps require manufacturers to reduce small compressor imports to 30–40% of prior-year levels while submitting domestic value addition plans, even as demand is running at record levels. This matters because the restriction limits manufacturers’ ability to scale production using imported components during peak demand, and domestic compressor capacity may not be sufficient to close the gap immediately.

Key Market Segments in the India HVAC Market

The India HVAC Market is segmented by product type, end user, and region.

Direct Expansion Systems Lead the India HVAC Market by Product Type

• Direct Expansion Systems
• Central Air Conditioning Systems

Direct expansion systems lead with 62.4% share in 2025 due to widespread adoption of split, window, and packaged air conditioners across residential and small commercial premises, offering lower upfront costs, easier installation, and broad dealer availability. Central air conditioning follows at 37.6%, serving commercial real estate, hospitals, hotels, malls, and industrial facilities requiring uniform cooling across large spaces, with VRF units, water-cooled chillers, and packaged rooftop systems supporting the segment.

Residential Leads the India HVAC Market by End User

• Residential
• Commercial

Residential leads with 55.8% share due to rising household incomes, denser urban housing, longer summers, and increasing demand for indoor comfort, with Tier-1 metros leading in absolute volumes while Tier-2 and Tier-3 cities accelerate in incremental adoption. Commercial follows at 44.2%, supported by office spaces, retail malls, hospitality investment, and healthcare infrastructure, with VRF units, chillers, and packaged platforms serving IT parks, metro rail projects, and airports.

North India Leads the India HVAC Market by Region

• North India
• South India
• West India
• East India

North India leads with 32.6% share due to extreme summer temperatures across Delhi-NCR, Punjab, and Uttar Pradesh, dense urban populations, and substantial residential and commercial cooling demand. South India follows at 28.4% and is the fastest-growing region, driven by IT and commercial real estate expansion in Bengaluru, Hyderabad, and Chennai, alongside rising household cooling demand in Tier-2 cities such as Coimbatore, Kochi, and Visakhapatnam.

Who Are the Key Players in the India HVAC Market?

• Voltas crossed one million AC sales in FY27, with strong double-digit growth in April-May despite multiple price hikes, and leads the room AC segment through its distribution network and brand reach.
• Daikin Industries, Ltd. approved the formation of Daikin Research and Development India in June 2026 with an initial capital of ₹8 billion, establishing an R&D centre in Haryana for HVAC systems serving data centres and large commercial facilities across Asia, Oceania, and Africa.
• Blue Star Limited recorded 25% volume growth and 30% value growth in the 2026 summer season, though it noted that the full impact of raw material cost increases was not passed on to consumers, impacting margins.
• LG Electronics launched its 2026 BEE-compliant AC lineup in January 2026, among the first brands to market with the revised star ratings, and reported strong April-June performance with the AC segment as an outperformer.
• Robert Bosch GmbH received Competition Commission of India approval for its $8 billion acquisition of Johnson Controls’ residential and light commercial HVAC business, expanding its presence in the India HVAC market.

Latest Recent Developments in the India HVAC Market

In August 2026, Samsung completed a new HVAC manufacturing facility in Pune operated by FläktGroup, its first new plant since acquiring the HVAC specialist in November 2025. The 13,826-square-metre facility will produce Air Handling Units, Fan Wall Units, and Computer Air Handlers for AI data centres, scaling to 6,500 units annually.

In June 2026, Daikin’s board approved the formation of Daikin Research and Development India Private Limited with an initial capital of ₹8 billion, and a new R&D centre in Haryana expected to be completed by June 2028, focused on HVAC systems for data centres and large-scale infrastructure across Asia, Oceania, and Africa.

In May 2026, the Air Conditioner and Related Parts, Hermetic Compressors and Temperature Sensing Controls (Quality Control) Amendment Order, 2026 took effect, capping small hermetic compressor imports at 30–40% of FY2024-25 levels through March 2027, while VRF compressors remain at 100%, and requiring manufacturers to submit domestic value addition plans.

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Frequently Asked Questions

Q1. How large is the India HVAC market and how fast is it growing?
The market reached USD 13.56 Billion in 2025 and is projected to reach USD 49.02 Billion by 2034, expanding at 14.89% CAGR during 2026–2034.

Q2. What is driving market growth in 2026?
The 2026 BEE star rating revision, Samsung’s Pune plant for AI data centre cooling, Daikin’s planned R&D hub in Haryana, and compressor import curbs under the 2026 Quality Control Order are the primary drivers.

Q3. Which segments dominate the India HVAC market?
Direct expansion systems lead by product type at 62.4%, residential leads by end user at 55.8%, and North India leads by region at 32.6%.

Q4. Why is data centre cooling becoming a major segment?
India’s data centre capacity reached 1,500 MW in 2025, quadrupling from 375 MW in 2020, and Samsung’s Pune plant is specifically producing AHUs, Fan Wall Units, and CRAHs for AI data centres, while Daikin’s R&D hub will focus on large-scale infrastructure including data centres.

Q5. What are the biggest challenges facing the sector?
Raw material cost inflation squeezing margins, monsoon onset cooling demand after peak season, and compressor import restrictions constraining supply flexibility are the key constraints.