India's HVAC market is experiencing strong growth, with projections indicating an annual increase of approximately 15%. The sector may double in size within five years, fueled by rapid urbanization, the integration of smart building technologies, and rising demand for energy-efficient solutions, according to industry leaders at ACREX India 2026 The HVAC sector in India is projected to grow at nearly 15% annually, potentially doubling within five years (as cited by Voltas, LG, and Danfoss)[1]. This expansion is driving manufacturers to localize production of key components such as compressors. Companies including LG, Mitsubishi Electric, and Daikin are expanding their manufacturing bases in India to decrease reliance on imports[2]. In parallel, India's growing need for cooling and evolving regulations are also shaping global refrigerant strategies and efficiency benchmarks.
Background
India's cooling demand continues to climb, propelled by increased adoption of air conditioning-still low by international measures-and a surge in residential, commercial, and data center construction[1]. The government's India Cooling Action Plan (ICAP) and its commitment to the Kigali Amendment promote policies focused on energy efficiency, including phased upgrades to minimum energy performance standards (MEPS) targeted for 2027, 2030, and 2035[3]. Rising electricity consumption and potential power shortages amplify the urgency for these reforms[4].
Details
At ACREX India 2026, Voltas reported annual sales of approximately 15 million residential AC units, with expectations to reach 30 million units by 2030 Voltas expects annual residential AC sales in India to rise from 15 million to around 30 million units by 2030[1]. A reduction in the goods and services tax (GST) on air conditioners from 28% to 18% is anticipated to further bolster demand starting summer 2026[1].
Manufacturers showcased new compressor platforms, such as Tecumseh's, offering energy savings of more than 30%. Industry trends include a shift to variable refrigerant flow (VRF) technology, AI-driven predictive maintenance, natural refrigerants, and district cooling systems[1]. The Indian refrigerant market, with an estimated compound annual growth rate (CAGR) of 6-7%, is moving away from high-global-warming-potential (GWP) gases like R-134a toward ultra-low GWP refrigerants and hydrofluoroolefins (HFOs), in line with the HFC phase-down under the Kigali Amendment and the country's National Cooling Action Plan[5].
India represented approximately USD 240 million of the global hydrochlorofluorocarbon (HCFC) market in 2025, accounting for 12% of global HCFC volumes, with projected growth at 3.1% CAGR through 2035[6]. R-134a usage persists due to entrenched infrastructure, while domestic annual production exceeds 45,000 metric tons. Leading companies are investing in next-generation refrigerants and recovery systems to comply with regulatory phase-downs, including a ₹500 crore investment by Navin Fluorine[7].
Outlook
Global original equipment manufacturers (OEMs) are revising strategies to prioritize localized sourcing and production in India, navigating new efficiency regulations and supply chain requirements. Upcoming MEPS updates and refrigerant transition targets set through 2035 are expected to affect research and development priorities, procurement, and international harmonization of efficiency standards.
