AC Prices Rise Amid Weak Rupee and Supply Chain Disruptions
As temperatures rise, so do air conditioner prices. Ahead of the peak summer season, AC manufacturers in India are grappling with multiple challenges—rising import costs due to a depreciating rupee and supply chain disruptions delaying the arrival of key components, especially compressors. This could mean higher prices and limited choices for consumers this summer.
Rising Costs and Supply Chain Struggles
Global geopolitical tensions have exacerbated supply chain issues, increasing logistics costs and delaying shipments of crucial AC components. Pradeep Bakshi, MD & CEO of Voltas, highlighted that these disruptions are affecting production timelines and the availability of essential parts.
The Indian rupee has depreciated by over 5% against the US dollar in the past year, directly impacting import costs. Kamal Nandi, Business Head at Godrej Enterprises Group, noted that price adjustments are expected by the end of the month due to rising raw material expenses.
Domestic Production Not Enough to Meet Demand
Despite improvements in India’s local AC manufacturing ecosystem, thanks to the government’s Production-Linked Incentive (PLI) scheme, domestic production of key components like compressors is still insufficient. While the demand for ACs in India stands at around 14 million units, local compressor production can only support approximately 8 million units, making imports—mainly from China—essential.
At least 35% of AC components are still sourced from China, according to industry estimates. A surge in domestic demand within China, along with Chinese manufacturers prioritizing shipments to the US ahead of expected tariff hikes, has further strained supplies to India. Additionally, certification delays from the Bureau of Indian Standards (BIS) for some Chinese suppliers are compounding the issue.
Consumer Impact: Higher Prices, Limited Choices
Industry leaders anticipate that AC production could be affected in April due to delayed shipments of compressors and components. While price increases are unlikely to drastically impact sales—thanks to EMI options—stock availability could be a concern.
“There are chances that consumers may not be able to get a brand or model of their choice,” said Nilesh Gupta, Director at Vijay Sales.
Despite these hurdles, the demand for ACs remains strong, with the onset of summer expected earlier this year. Companies are bracing for a surge in sales, with Blue Star predicting a 25% growth in the industry, driven by the increasing necessity of air conditioning amid rising temperatures.
