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The Indian heating, ventilation, and air conditioning HVAC market was valued at $3.9 billion in 2018 and is expected to register a CAGR of 7.0% during the forecast period. The market for HVAC systems in the country is majorly propelled by the growing construction industry and surging infrastructure spending. Additionally, India’s growing middle-class population, rising disposable income, and surging ventilation and space requirements are resulting in the expansion of the HVAC market in the country. The market displays an increased focus on energy efficiency by manufacturers as well consumers. Furthermore, the ‘Make in India’ initiative is resulting in global players setting up factories in India, to cater to the local population, effectively making the country a global manufacturing hub.
Fundamentals Governing India HVAC Market
One of the key trends in the Indian HVAC market is the adoption of energy-efficient HVAC systems, which are becoming popular as they consume less energy as compared to conventional systems. This reduces the greenhouse gas emission by lowering the overall demand for, and subsequently, production of electricity. Apart from this, the government is focusing more on energy efficiency programs to conserve energy. For instance, in 2018, Government of India introduced ‘ECO Niwas Samhita 2018’, a new Energy Conservation Building Code (ECBC) for residential buildings.
The surging infrastructure spending in India is driving the growth of the Indian HVAC market. There are several infrastructure projects, such as for airport and metro railway construction and expansion, underway across the country. For instance, Government of India has granted around $57 million in Interim Budget 2019, for the construction of the Noida and Ghaziabad sections of the Delhi metro network. Further, in 2018, the Maharashtra government approved the construction of two new metro railway lines in Mumbai — Dahisar–Mira Bhayandar and Andheri–Chhatrapati Shivaji Maharaj International Airport. The total funds allotted of this project was around $925 million. The Dahisar–Mira Bhayander metro route would be nearly 10 km long and have 11 stations, while the Andheri–Chhatrapati Shivaji Maharaj International Airport route would be nearly 3.5 km long.
Structural Analysis of India HVAC Market
Based on HVAC type, cooling systems held the largest share in the Indian HVAC market in 2018. This can be attributed to the expansion of small and medium enterprises (SME), commercial hubs, and upcoming smart city projects. For instance, Government of India has announced 99 smart city projects in the country; among these, 20 smart cities were announced in 2016 and nine in 2018. Hence, with the development of a large number of smart cities in the country, the market for the cooling category is expected to grow.
On the basis of end user, the residential category is expected to witness the fastest growth during the forecast period. This is attributed to the increasing construction of residential units under government initiatives, such as smart city projects. For instance, in September 2018, 6,028,608 urban houses were sanctioned under Pradhan Mantri Awas Yojana (PMAY). Moreover, in March 2018, the construction of additional 321,567 houses were sanctioned under this scheme. Hence, with the construction of an increasing number of houses in the country, the HVAC market for the residential end-user category is expected to grow.
Based on industrial end users, the food and beverage subcategory held the largest revenue share in the market in 2018, owing to the growing food service sector in the country, buoyed by the young and working population, which eats out more often. According to the Federation of Indian Chambers of Commerce & Industry (FICCI), in 2017, the Indian food service market generated revenue of $52.9 billion, which is expected to reach $86.4 billion by 2022, advancing at a CAGR of around 10%.
Geographical Analysis of India HVAC Market
The northern region held the largest share in the Indian HVAC market in 2018, owing to the hot and humid summers in most parts of North India, where cooling equipment, such as room air conditioners, is important. Further, due to the rising disposable income in the region, the standard of living of the middle-class population is improving. On account of this, the spending on consumer goods, especially HVAC systems, is also increasing. Thus, the subtropical climatic conditions and rising disposal income in the region is expected to push the demand for HVAC systems here in the coming years.
In Delhi, a significant demand for HVAC systems has been witnessed from the transportation sector, public and private offices, hospitality niche, and supermarkets/hypermarkets. As of 2018, there are more than 200 metro stations in Delhi. Further, there are several Delhi metro railway extension projects in the pipeline. For instance, as per Delhi Metro Railway Corporation, Government of India granted around $57 million in the interim budget of 2019 for work on the Noida and Ghaziabad sections of the metro network.
Competitive Landscape of India HVAC Market
The Indian HVAC market is highly competitive in nature and characterized by the presence of globally operating companies, such as Daikin Industries Limited, Voltas Limited, and Johnson Controls International plc. Multiple construction projects, mainly in the commercial and residential sectors, are being undertaken in the country, which is set to provide plenty of growth opportunities to the market players. This is expected to further intensify the competition in the market.
Recent Strategic Developments of Major India HVAC Market Players
In the recent past, product launches have been one of the major activities in the HVAC industry in India. Blue Star Limited, for instance, has been the forerunner in focusing on enhancing its product portfolio and expanding its business in the country. For instance, in December 2018, Havells India Limited launched ‘Grande Series’ of air conditioners under the brand name, Lloyd. These air conditioners are equipped with features to control indoor pollution and comply with Indian Seasonal Energy Efficiency Ratio (ISEER) rating.
In October 2018, Voltas Limited launched an Amazon Alexa-compatible air conditioner, which can be controlled using Amazon Echo smart speakers and other Alexa-enabled devices, such as Harman Kardon Allure.
Key Questions Answered in the Report