HEATING, VENTILATION, AND AIR CONDITIONING (HVAC) SECTOR OVERVIEW
Due to increased industrialisation and urbanisation, the demand for heating, ventilation, and air conditioning (HVAC) systems is rising in India. Household demand for air conditioners has increased as a result of greater affordability and family income. Air conditioners, which were formerly considered a luxury, are now becoming more popular in homes. The continual upward economic trajectory of India has resulted in a massive increase in commercial, retail, and hospitality development. The industrial sector is also expanding, with new factories being built in a variety of industries such as cement, iron and steel, chemicals, consumer goods, and so on. With this, the industrial ventilation business is further opening up. As the country moves toward generating clean energy through the use of solar, wind, and biomass energy sources, the availability of electricity has expanded significantly in the recent years, allowing for a surge in the use of air conditioners at home and at work. Sandeep Sharma examines the Indian HVAC industry.
BRIEF OVERVIEW OF HVAC INDUSTRY IN INDIA
HVAC stands for heating, ventilation, and air conditioning, and it is used to maintain air quality in residential, commercial, and industrial buildings, as well as provide vehicle environmental comfort. The HVAC system delivers a comprehensive purified air conditioning environment and operates on three principles: heating, air conditioning, and ventilation. Its purpose is to provide enough thermal comfort and indoor air quality.
Split air conditioners, windows air conditioners, and other types of HVAC systems are available in India. Air conditioners, ventilation fans, heat pumps, humidifiers/dehumidifiers, boilers, furnaces, and air pumps are among the products and solutions available. Air handling equipments, heating equipments, cooling equipments, as well as air treatment, air filtration, and de-dusting market segments, dominate the Indian market.
The average temperature in India has been steadily rising in recent years. Individuals working in a variety of environments are increasingly relying on HVAC (heating, ventilation, and air conditioning) equipment to maintain or improve their overall productivity levels.
Customers today are extremely demanding, and HVAC companies must constantly follow and apply technological advancements, provide energy-efficient systems, meet safety parameters, and adhere to environmentally friendly standards. These elements influence purchasing decisions and differentiate one HVAC player from another.
Apart from the affordability of buying an HVAC system, the energy efficiency parameters as well the recurring maintenance cost also matters a lot for the customer. If properly installed and maintained, a typical HVAC system should last between 15 and 25 years. While buying air conditioners in India, apart from the pricing, the consumer also takes into account the energy efficiency star ratings, the manufacturer’s warranty and the expected recurring cost after the warranty period. Improper installation might lead to problems down the road, making the experience more expensive and maintenance-intensive. After sales service is an important element which can tilt the buying decision towards a particular brand.
INDUSTRY PLAYERS
Daikin Industries Limited, Samsung Electronics Co. Limited, LG Electronics Inc., Mitsubishi Electric Corporation, Blue Star Limited, Danfoss A/S, Voltas Limited, Whirlpool Corporation, Havells India Limited, Qingdao Haier Co. Limited, Carrier Corporation, Panasonic Corporation, Samsung Electronics Co. Limited, Fujitsu General Limited, Zamil Air Conditioners India Private Limited, and Johnson Controls International are just a few of the major players in the Indian There are both domestic and international companies in this industry. Domestic companies are gaining progress in terms of supplying improvised products and conquering markets where low cost is a crucial factor in purchasing HVAC equipment and solutions. To gain a presence in the industry, international enterprises and significant players rely on factors such as their brand value, reliability, energy-efficiency and after-sales services
IMPACT OF PANDEMIC ON HVAC INDUSTRY IN INDIA
The COVID-19 scenario had a detrimental impact on the growth of the Indian HVAC market, both on the demand and supply sides. The manufacturing and import of such equipment into India had been significantly hampered as a result of the lockdowns implemented in numerous countries to combat the spread of the disease. Similarly, non-essential commercial and industrial operations in India have ceased, putting a further damage in HVAC equipment manufacturing and supply. People were hesitant to acquire such non-essential items since they are experiencing unemployment and income cuts on the demand side.
MARKET SCENARIO
Consumer electronics firms are going ahead with their advertising campaign to lure more and more customers to buy their air-conditioners, refrigerators and coolers this season. Customers are also being enticed by incentives and simple EMI options to make their purchases more comfortable. With the rise in heatwaves across the country, AC manufacturers in India expect double-digit growth as majority of their sales comes during the Summer season.Brands are relying on cutting-edge technology and the promise of lower electricity bills to drive their sales of HVAC systems. The demand is expected to peak during this Summer and it might also lead to a shortage of units, putting the manufacturers under pressure to meet the increased requirement for ACs and other cooling products. According to the Consumer Electronics and Appliance Manufacturers Association (CEAMA), this peak season will account for 35 to 40% of overall annual sales. It does, however, warn imminent price rise in May 2022 owing to number of factors such as increase in the input cost of the raw materials, crude oil, freight cost etc. The impact of Russia-Ukraine conflict has affected the supply chain on a global scale which further fuels the need for price revision in the near term.
GROWTH DRIVERS & MARKET SIZE
There is a huge demand for energy-saving inverter ACs across the country. The work-from-home concept has gained prominence during the Pandemic and is still continuing in many a companies, due to this, the demand for Air-conditioners is on the rise. The pent-up demand might also lead to a shortage of air conditioners this season. Godrej Appliances Business Head and Executive Vice President Kamal Nandi has said in one of his media interaction that the Indian Heating, Ventilation and Air Conditioning (HVAC) industry market size is close to INR 18,000–20,000 crore. The Indian home air conditioning market is estimated to be about 7 to 7.5 million units, according to CEAMA, with more than 15 companies operating in this segment.
PROJECT OPPORTUNITIES
Some of the prominent projects and announcements pertaining to the HVAC sector are listed below:
- ABB India Ltd. reported in January 2022 that by installing ABB’s Cooling Tower Direct Drive system in its hotel JW Marriott Pune, an iconic landmark in the city of Pune, it has reached new records in energy efficiency, saving about 35 percent energy yearly.
- Hitachi India Private Limited’s Infrastructure Systems Division teamed up with AIIMS hospital and used its expertise in information and communication technologies (ICT) to implement a slew of energy-saving measures, resulting in a 30 percent reduction in energy consumption and the establishment of an ICT-based Green & Digital Hospital at AIIMS. The hospital’s Heating, Ventilation, and Air Conditioning (HVAC) system was upgraded with state-of-the-art, energy-efficient technology, in addition to a variety of other measures.
- Daikin India has recently laid down the foundation stone of its upcoming third manufacturing facility at Sri City, Andhra Pradesh. Air-conditioners will be manufactured along with crucial components such as compressors at this plant for which Daikin has got approval under the Government of India’s Production-Linked Incentive (PLI) Scheme. The company intends to invest Rs 1,000 crore in the first phase. The commercial production is expected by 2023.
- Blue Star Limited, a maker of air conditioners, air purifiers, and water coolers, plans to open its largest factory later this year in Sri City, Andhra Pradesh. The corporation also aimed for a 14 percent market share and forecasted a 20% increase in revenue for the current fiscal year.
- Thomson has been selling washing machines and air coolers in India and has now expanded to include split air conditioners. By 2025, the company hopes to have a 10% market share. Thomson is to open two more plants in the next two years as part of its effort to increase its product offering. One of these units will be built in Hapur, and the location for the second unit has yet to be determined. By the end of the first quarter of this year, the Hapur facility will be operational.
- The government has provided financial incentives worth ₹6,238 crore to appliance and electronics manufacturers. From FY22 through FY29, companies can get subsidies worth 4-6 percent on net incremental sales on products manufactured in India over the base year of FY20 or FY21, whichever is higher. Investments made by companies after April 1, 2021, are eligible.
- Daikin, Panasonic Corp., Syska LED Lights Private Limited, and Havells India Limited are among the 42 consumer durables companies that have pledged to invest a total of ₹4,614 crore in the scheme. This is also likely to create an excess capacity in 2-3 years according to industry sources.
FUTURE OF HVAC INDUSTRY IN INDIA
The HVAC industry is still heavily reliant on imports, with only 25% local value added on average. Under the production linked incentive plan, the government approved 26 applications for manufacturing air conditioner components with a committed investment of Rs 3,898 crore last year. Over the next five years, India’s HVAC industry is likely to benefit from growing infrastructure-based expansions, technological advancements, and more tourism. Extreme climatic conditions, rising disposable income, increasing construction activities in both the commercial and residential sectors, as well as various government initiatives aimed at improving energy efficiency, are some of the other major factors expected to boost the India HVAC market in the coming years. Heating, Ventilation, and Air Conditioning (HVAC) consume about 50 percent of the energy in buildings on an average, so there’s always a need to make energy efficient systems which can reduce electricity bills to a great extent. The consumer awareness is on the rise and the new age consumer demands energy efficient air-conditioners in the modern times.
According to research firm Technavio Insights, the HVAC systems market in India would increase by USD 2.26 billion from 2020 to 2024, with a CAGR of over 10% during that time. The industry is being driven by rising demand for inverter HVAC systems. In addition, the market’s growth will be fueled by the rising popularity of rental HVAC systems. The research also warns industry players about increase in environmental pollution and stricter government regulations governing HVAC systems in India. The transition to green building construction necessitates the installation of energy-efficient HVAC systems in the residential sector. As the country moves closer to strengthening its manufacturing base, the industrial ventilation industry is anticipated to open up further for the HVAC players. Overall, the future is bright for the HVAC industry in India.
*Image used in this article is for illustration only
Note: The above-mentioned article covers India’s Heating, Ventilation, and Air conditioning (HVAC) sector overview. This was first published by us in our ProjectX India | 15th April 2022 edition. Each issue of ProjectX contains information on new projects, ongoing projects, contract award, commissioned projects, and e-procurement opportunities. Buy our latest or archival issues by clicking here…
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