Facing cost pressure, AC cos signal price hikes

NEW DELHI: India's room air-conditioner market is heading into the summer season under clear price pressure, even as companies remain bullish on long-term growth. Manufacturers including Blue Star have indicated further price hikes, driven by rising commodity costs, tighter energy-efficiency labelling norms that came into effect in Jan 2026 and current global headwinds. "The increase in commodity prices has been unprecedented," said B Thiagarajan, managing director of the company.

Industry executives estimate that higher input costs have added roughly 8-9% to material expenses, while the shift to more energy-efficient models is pushing prices up by another 5-8%. Together, this has translated into a 13% increase in AC prices, said Thiagarajan. However, a GST reduction has softened the blow, with consumers likely to see an effective rise of about 5% compared to last year.

Companies have already passed on part of the increase, with more expected in phases. "A large part of the increase is already behind us. The balance will be taken as the season progresses," Thiagarajan said, indicating a staggered pricing strategy. Other players, including Godrej Enterprises Group, have also raised prices. "Despite a challenging year for the AC industry, which witnessed a decline in overall sales, Godrej ACs achieved significant growth," said Kamal Nandi, business head, appliances business at the company. Godrej has increased AC prices by nearly 10%.

At Hisense India, CEO Pankaj Rana said the recent price hikes are a function of sustained input cost pressures. "The recent increase in AC prices is primarily driven by a sharp rise in input costs, including raw materials, logistics, and broader supply chain disruptions," he said.Rana noted that companies have ensured adequate inventory and strong on-ground presence to meet summer demand. "While demand remains robust, any further price revisions will depend on how input costs evolve, as well as the competitive landscape, with potential increases in the range of 7-10%, depending on demand trends and competitive responses," he said.

Manufacturers are walking a tightrope between protecting margins and sustaining demand during peak summer months. Apart from commodity inflation, elevated copper prices, a weaker rupee, and higher freight and component costs continue to weigh on profitability. Demand, meanwhile, has been volatile due to erratic weather and unseasonal rains, which impacted peak-season sales last year. Thiagarajan said 2025 turned out to be a weak summer, with industry volumes likely declining 5-7.5% compared to FY25.

The outlook, however, remains strong. The domestic AC market, estimated at 14 million units, is expected to nearly double to about 30 million units by FY30, driven by rising incomes, heat, and deeper penetration in smaller towns.


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