Air-Conditioning Industry Faces Tough Summer in 2026

New Delhi, Apr 7 (PTI) This summer season is not going to be easy for the room air-conditioners industry, as it faces several challenges, including rising input costs due to the West Asia crisis and delayed hot weather condition amid incessant rains, said Blue Star Managing Director B Thiagarajan.

Thiagarajan also hinted towards more price hikes in the coming months due to a rise in the cost of plastics triggered by the Iran-US war and increasing steel prices. However, its effect may come during the festive season sales.

Despite challenges, Thiagarajan expects a double-digit growth over last year and said, "One should be happy if 20 per cent growth comes, given these situations."

The RAC (room air-conditioner) industry has already been facing inflationary pressure from commodities such as copper, as well as from ocean freight, devaluation of the Indian rupee and now the cost of plastics, which is a byproduct of petrochemicals.

"The price increase is going to happen one more time post the war because the rupee has depreciated," said Thiagarajan.

He was speaking on the sidelines of the launch of Blue Star's new range of RAC, comprising 125 models, including a flagship premium range, catering to a wide spectrum of customer requirements and usage environments. All models comply with the new Bureau of Energy Efficiency (BEE) standards that came into effect on January 1, 2026.

Some players of the RAC industry already took a hike in January when the new energy efficiency standard came into effect on January 1. Later, a second round of hikes was taken from March to April due to commodity inflation.

"And to top it all, there is a war-related sentiment and the burden that is arising out of war. Therefore, it is not going to be an easy summer. Summer will happen, but it is going to be a tough summer," said Thiagarajan.

When asked if there are chances of downtrading, where consumers start moving from premium, high-end, energy-efficient RACs to more budget-friendly alternatives due to rising costs, he said, "It can happen".

"But that (downtrading) happens at the very last stage. It depends on the price and the affordability," Thiagarajan added.

About the active western disturbances in March and early April, which have delayed the onset of summer in North India, bringing unusually cool, rainy, and windy conditions, Thiagarajan said the demand usually picks up in the second half of April.


"The good news is that most of the states in the south, like Tamil Nadu, Andhra Pradesh, Telangana or even Maharashtra, Gujarat, summer has set in," he said.

However, Thiagarajan also said there are some challenges in Kerala, where remittance from the Gulf plays a big role in the local economy.

"Kerala is doing badly due to war-related sentiments. Nothing is happening there at the moment because their dependence on the Middle East is high, plus it is election season there," he said.

Still, the projections are that there will be above normal temperatures at quite a few locations.

"I won't be so much worried, given that there is April, May, June, perhaps summer is going to be late this year. Still, the projections are that there will be above-normal temperatures at quite a few locations," he said.

When asked about Blue Star, Thiagarajan said the plan is to sell around 1.75 million units this year.

The company, which has recently invested in amplifying manufacturing capacity at Sri City, can produce around 1.4 million units.

Besides RAC, Blue Star has a role in the large commercial air-conditioning projects and commercial refrigeration.

According to Thiagarajan, the commercial side is also picking up from the last three years.

"It continues to grow at around 10 per cent. Data centre and factories, these two are the big drivers now," he said.

The domestic RAC market is expected to be around 14 million units and expand up to 30 million units by FY30, driven by strong first-time adoption in low-penetration markets as well as replacement demand in more mature urban centres. Tier 3, 4 and 5 markets are emerging as key growth engines, outpacing Tier 1 and 2 cities, albeit on a smaller base, he said.