India’s room air-conditioner (RAC) market continues to witness robust growth, driven by rising temperatures, rapid urbanisation, increasing disposable incomes and greater adoption across tier 2 and tier 3 cities. Industry estimates suggest India’s air-cooling and air-conditioning market is expected to grow at a CAGR of around 15–18 per cent over the next few years, while AC penetration in the country still remains relatively low at nearly 8 per cent. Against this backdrop, market leader Voltas Limited closed March with a 16 per cent market share in the RAC segment.
In an exclusive interaction with BW Businessworld, Jayant Balan, Head – RAC Business at Voltas, speaks about changing consumer preferences, AI-driven cooling solutions, premiumisation, sustainability and the future of India’s cooling industry.
The RAC market today has nearly 62 brands competing for consumer attention, so differentiation is extremely important
India’s air-conditioner market is witnessing strong growth driven by rising temperatures and premiumisation. How is Voltas positioning its RAC business to capture the next phase of growth?
India remains a significantly underpenetrated market with only around 8 per cent AC penetration, and nearly 70 per cent of consumers are still first-time buyers. While premiumisation is clearly gaining momentum, the entry-level segment continues to remain highly relevant for us.
At Voltas, we have consciously created a three-tier product portfolio. We continue to cater to first-time buyers through our entry-level offerings, while also driving consumers towards the mid-premium segment through our Vertis AI range. Beyond that, we also have a luxury premium portfolio focused on features such as superior air throw and full-capacity cooling.
This year, we accelerated the integration of AI-enabled features into our products, but we wanted those features to be genuinely relevant to Indian consumers rather than using AI merely as a marketing term. We focused on customer insights and introduced three major capabilities. The first is geo-fencing, which allows consumers to activate cooling before they arrive home. Given India’s hot and humid climate, consumers can set their location within a 15-kilometre radius so that the AC starts cooling automatically before they enter the room.
The second is energy management. Indian consumers are highly conscious about electricity bills, regardless of income group. Our systems provide real-time energy consumption insights, enabling users to manage and optimise power usage. The third innovation is adaptive cooling. We studied weather patterns across India and developed algorithms that allow the AC to learn from user behaviour. For instance, if a user typically reduces the fan speed or changes settings during the night, the AC learns those preferences over time and automates them. We have seen particularly strong growth in our AI-enabled portfolio this year, especially within the Vertis AI range.
Consumers today increasingly prioritise energy efficiency, smart features and sustainability while purchasing cooling appliances. What key shifts are you seeing in consumer preferences?
Indian consumers today are extremely informed and research-oriented. Around 80 per cent of buyers research products online before making a purchase decision. As a result, customer education and digital content have become critical aspects of our strategy.
Over the last 18 to 24 months, we have significantly enhanced our brand communication and consumer education efforts. Since we are part of the Tata Group, sustainability is deeply embedded in our operating philosophy. Voltas was among the earliest companies to voluntarily introduce energy-efficiency labelling even before it became mandatory in 2010. We started doing so as early as 2008. Today, we are among the largest sellers of high star-rated ACs in the country.
We were also among the first to transition to eco-friendly refrigerant gases. Our manufacturing facilities operate with zero-discharge systems and increasingly use renewable energy sources. At the same time, value remains central to Indian consumers. Every feature we introduce must deliver a tangible consumer benefit. That balance between innovation, sustainability and affordability is what drives our product strategy.
The RAC segment has become intensely competitive, with both Indian and global brands expanding aggressively. What differentiates Voltas, especially in tier 2 and tier 3 markets?
The RAC market today has nearly 62 brands competing for consumer attention, so differentiation is extremely important. One of our biggest strengths is our service ecosystem. We have more than 1,850 service centres and around 18,000 technicians supporting customers across the country. We have also invested heavily in CRM systems that help us track customer complaints and resolve issues quickly and effectively. That service backbone builds long-term customer trust.
The second major differentiator is our long-standing relationship with dealers and distributors. In many cities, including Lucknow, we continue to work with third-generation channel partners. In some cases, we have the grandfather, father and grandson all associated with Voltas together. That reflects the strength of relationships built over decades.
Additionally, being part of the Tata Group provides a strong trust advantage among consumers. Most importantly, we design products specifically for Indian conditions. Many companies manufacture in India, but at Voltas we focus on making products for India — products tailored to Indian weather, usage patterns and consumer expectations.
Climate concerns and energy consumption linked to air-conditioners continue to attract global attention. How do you see innovation shaping the future of cooling in India over the next five years?
India already has some of the most stringent energy-efficiency standards globally, and the Bureau of Energy Efficiency deserves significant credit for consistently raising industry benchmarks.
What qualified as a five-star product a few years ago would now be categorised much lower because efficiency standards have evolved rapidly. The products available today are among the most energy-efficient cooling systems globally. At Voltas, we use only zero ozone-depleting refrigerant gases. Several of our facilities are already carbon neutral because of renewable energy adoption.
However, the larger climate impact of air-conditioners comes from electricity consumption during usage rather than manufacturing itself. This is where the transition towards renewable energy becomes critical.
As renewable power adoption increases — particularly through companies like Tata Power — the overall carbon footprint associated with cooling will reduce significantly.
So while manufacturers are continuously improving product efficiency and sustainability, the broader shift towards renewable energy will ultimately play the biggest role in building a more sustainable cooling ecosystem in India. |
