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Indian HVAC Market Overview

The Indian HVAC market, in volume terms, is expected to reach approximately five million TR in 2015. Chillers, Variable Refrigerant Flow (VRF), and Air Handling Units (AHU) are by far the most popular types of HVAC products in the country due to product durability and shift in the industry towards greener and more sustainable solutions. The sectoral analysis by Frost & Sullivan – South Asia, Middle East and North Africa – include the technology impact which will replace products such as packaged (in the commercial segment) and split units (in the residential segment) based on the customer preferences, type of end users and economic factors.

Energy-efficient chillers, such as centrifugal and scroll types, are expected to outpace reciprocating and screw chillers, which are less energy-efficient. Enforcing stringent building codes and improving energy-efficiency standards and practices will provide more investment opportunities for HVAC companies in the country. There are massive growth opportunities for foreign companies to enter the market either through direct investments or through partnerships with local companies.

Additionally, the Government has made provisions for import duty exemptions for sectors like commercial, industrial, and hotels located in Special Economic Zones (SEZs), Export Oriented Units (EOU), and Export Promotion Capital Goods (EPCG) that will drive the market for imported HVAC products in India.

As per the report, Indian customers are highly price-sensitive and look for more affordable energy-efficient systems due to the rising energy costs and environmental awareness. Thus, the industry aim to provide cost-effective solutions to cater to the needs of the commercial and industrial customers with the introduction of eco-friendly systems by phasing out hydrochlorofluoro carbon (HCFC) gas.

The HVAC market in India is highly-competitive with presence of domestic, international and unorganized market participants. The markets for Air Handling Units (AHU), Ducted/Packaged Units, and Chillers are fragmented due to the presence of unorganized/local players and small-time assemblers. The markets for VRF and Vapour Absorption Machines (VAM) are fairly organized. However, lack of availability of skilled labour serves as a significant entry barrier for new players. Also, the sharp rise in raw material prices (especially steel and copper) is likely to negatively impact the operating margins and profitability of market participants going forward.

According to the Bureau of Energy Efficiency, the overall constructed area of the building sector in India will be 9,670 million sqm by 2030; which includes offices, retail, hospitality, and residential segments. This potential demand from the construction sector (both conventional and green buildings), coupled with the potential to save energy from air-conditioning (especially through efficient technologies), will usher a boom period for the HVAC market by 2035, with complete support from the Government to promote energy-efficient standards, practices, and technologies.

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