India faces an AC shortage as demand surges amid supply chain disruptions and regulatory delays. ‘Brands are striving to keep ACs affordable, but some price hikes may be unavoidable,’ says Ajay DD Singhania, CEO of EPACK Durable.

With summer fast approaching, India is bracing for an unprecedented surge in air conditioner (AC) demand. However, reports indicate that the country may face a severe shortage of ACs, leading to potential stockouts, price hikes, and frustrated consumers. This looming crisis stems from multiple factors, including supply chain disruptions, component shortages, and regulatory hurdles, all of which could significantly impact retailers and manufacturers.
As temperatures soar across the country—already hitting 40°C in states like Maharashtra, Kerala, and Telangana—the demand for cooling solutions is skyrocketing. While this spells good news for AC manufacturers and retailers, it also presents a major challenge: the supply of air conditioners may not be able to keep up with demand.

Why Is India Facing an AC Shortage?

Supply Chain Disruptions
Industry experts warn that air conditioner manufacturers are struggling with supply chain bottlenecks, especially concerning a shortage of compressors—one of the most critical components in AC production. According to NDTV, compressor supply disruptions are expected to hit the industry in April 2025, limiting production and availability just as peak summer temperatures drive up demand.
Additionally, other key components like copper tubing and aluminum parts are facing supply constraints, further straining the production process. These shortages are not only delaying manufacturing but also increasing production costs, which may eventually be passed on to consumers in the form of higher AC prices.

Regulatory Delays and BIS Certification Issues
Another significant factor contributing to the AC shortage is the delay in certification by India’s Bureau of Indian Standards (BIS). Many AC components, including those imported from China, require BIS certification before they can be used in India. Due to bureaucratic hurdles, these approvals have been delayed, restricting the supply of critical parts and slowing down production.
In late December 2024, a key Chinese supplier finally received BIS certification, but the delay had already caused a ripple effect, leading to production slowdowns and inventory shortfalls. This situation is expected to persist until at least June 2025, impacting peak summer sales and causing major revenue losses for retailers.

Rising Demand Outpacing Supply
The demand for air conditioners in India has been rising steadily due to increasing temperatures, rapid urbanization, and higher disposable incomes. According to the India Meteorological Department (IMD), the summer of 2025 is expected to be one of the hottest on record, further accelerating the demand for ACs.
A study by rating agency ICRA estimates that AC sales will surge by 20-25%, reaching a record 12-12.5 million units in the financial year 2024-25. Growth is expected to continue at 10-12% in 2025-26, fueled by accessible consumer financing options and expanding markets in Tier 3, 4, and 5 cities.
Notably, smaller cities are outpacing metro areas in AC adoption, with growth rates of 20% compared to 10% in urban centers. Premium 5-star energy-rated models are also gaining popularity in rural areas, where EMI-based financing options with down payments as low as ₹100 have made ACs more affordable.

Impact on Prices and Inventory

If supply shortages persist, air conditioner prices in India are expected to rise significantly. Due to increasing raw material costs, manufacturers may shift from annual to quarterly price adjustments as they operate on thin profit margins. According to Ajay DD Singhania, CEO of EPACK Durable, while brands are striving to keep ACs affordable, some price hikes may be unavoidable. Consumers delaying their purchases until later in the summer could end up paying a premium due to dwindling supply and heightened demand.
Additionally, with demand projected to surge by 25-30%, retailers may struggle to maintain adequate inventory. If manufacturers fail to scale up production in time, consumers could face a shortage of popular models, leading to limited choices and inflated prices. Industry experts caution that buyers waiting until May or June might find themselves with fewer options or forced to pay higher rates. In anticipation of this, retailers are already adjusting their inventory strategies to meet the expected summer rush. However, ongoing component shortages and regulatory delays continue to pose challenges, raising concerns about potential losses and customer dissatisfaction.

AC Stocks Rally Ahead of Peak Season

Following the growing demand for ACs, a strong rally is being observed in AC stocks. The anticipation of high sales and potential supply shortages has driven up share prices of leading companies in the sector.
Blue Star, one of India’s top AC manufacturers, recently saw its stock surge nearly 9% before experiencing a slight correction. Currently, it trades at ₹2,086 per share, reflecting an overall gain of 11% over the past few sessions.
Similarly, Voltas, another key player in the industry, witnessed a sharp increase before a minor pullback, with its shares now trading at ₹1,401, slightly down by 0.57%. However, both stocks remain in focus as analysts predict continued gains ahead of the peak summer season.
With the AC market expected to grow at an unprecedented rate, investors are optimistic about the industry’s long-term profitability. As manufacturers scale up production and navigate supply chain challenges, the sector is poised for sustained growth despite short-term hurdles.

Government Interventions and Industry Adjustments

To reduce reliance on imports and strengthen domestic manufacturing, the Indian government has introduced a Production-Linked Incentive (PLI) scheme. This initiative has significantly increased local component production from 25% to 75%, reducing dependence on foreign suppliers.
However, Ajay DD Singhania notes that domestic production is still struggling to meet rising demand due to high capital investment requirements and slow approvals for new manufacturing facilities. While local manufacturing is expected to scale up by the end of 2025, the industry remains vulnerable to supply chain disruptions in the near term.
A side effect of these supply constraints has been the rise of black marketing, particularly for copper components. With shortages driving up prices, unscrupulous traders are hoarding materials, further exacerbating production delays. Industry leaders are urging the government to take strict action against such practices to ensure fair pricing and availability, preventing artificial inflation and supply bottlenecks.

Conclusion: What Should Consumers and Retailers Do?

Given the current market conditions, both consumers and retailers need to act strategically to avoid potential pitfalls.
For consumers, purchasing an air conditioner early is advisable to avoid price hikes and stock shortages. Waiting until peak summer may result in fewer options or significantly higher prices due to supply constraints.
On the other hand, retailers must focus on efficient inventory management to meet the surging demand. Establishing strong coordination with manufacturers will be crucial in securing stock and anticipating potential supply disruptions.
While India’s AC market is poised for record growth, challenges such as supply chain disruptions, price fluctuations, and regulatory delays remain significant hurdles. Addressing these issues promptly is essential to sustain the industry’s momentum and ensure that consumers can stay cool during the sweltering summer months.