It's 1902. Willis Carrier, an engineer trained in mechanical systems, is working on an odd problem in a printing plant in Brooklyn. Some days, paper swells slightly, ink shifts, and colours don't line up.
He realises the issue isn't the machines. It's the air. Changes in temperature and humidity are affecting everything. By stabilising the air, he fixes the problem. That solution becomes the first air conditioner (AC) the world sees. Over time, this machine makes its way into homes.
Today, that same idea sits inside a much larger system. What looks like a simple appliance runs on a complex chain of inputs and tight timing. The demand window is so narrow that even small shifts in weather or timing can swing quarterly performance.
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From Unseasonal Rains
That is exactly what played out this year. Parts of India witnessed rains, hail, thunder and snow throughout March. For AC manufacturers and dealers, this directly affects sales.
Traditionally, manufacturers increase shipments to dealers in March ahead of summer demand. Axis Capital's retail channel checks showed the room AC industry was already down by around 20% in January and 10% in February. Because of March rains, the usual seasonal uptick got delayed by about two weeks.
...To Warmer Nights
The India Meteorological Department (IMD) states that heatwave days are expected to rise. But maximum daytime temperatures are likely to remain normal to below normal in many parts of the country. However, this does not mean a milder summer. The more important signal is on nighttime temperatures, which may stay above normal across most regions.
This is part of a broader trend. Over the past decade, we have seen rising nighttime temperatures. About 70% of Indian districts had over five extra "very warm nights" each summer in the past decade, according to the Council on Energy, Environment and Water.
AC Demand To Rise
The traditional AC market assumes peak usage in the afternoon, followed by a tapering off at night. That is beginning to change. When nights remain warm, ACs run longer, electricity demand rises, and households that earlier managed with fans begin shifting to ACs.
ALSO READ: AC Sales Slows Down In South India As Late Summer Hits Demand: Axis Capital
This shift is playing out in a market that is still at a nascent stage. India is among the fastest-growing AC markets globally, with only about 10% of households owning one today. Demand, in that sense, is not the constraint. However, supply is increasingly becoming one.
Raw Materials, Policy Challenges
Liquefied petroleum gas (LPG) is a critical input in production, used for brazing copper tubes and curing components. India relies heavily on West Asia for LPG imports, and recent geopolitical disruptions have tightened supply. The government prioritised supplying LPG to households first, while industrial supply remained restricted.
Manufacturers have indicated production cuts of 20-30% if the shortage persists longer. Some have switched to oxy-acetylene. But since it is imported from the same region, it is neither an easy nor a cost-effective alternative.
At the same time, copper, used in heat exchangers and compressors, has seen its prices rise by around 30% in the last year. Plastic, a crude derivative used in panels, vanes, and outdoor casing, is also becoming more expensive.
On top of the higher input costs, regulatory changes are adding to the pressure. New standards introduced by the Bureau of Energy Efficiency from January 2026 have changed how the ratings are defined. Products that were earlier rated five stars are now closer to three, forcing manufacturers to upgrade components and redesign systems.
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As older inventory clears, new stock this summer will be priced higher, reflecting fuel constraints, commodity inflation, currency pressures, and regulatory upgrades. Companies have remained careful with staggered hikes in AC prices, but their margins are indeed under pressure.
Final Take
Structural forces such as rising night-time temperatures, increasing first-time adoption, and more persistent heat patterns are driving up demand. However, geopolitical disruptions, rising raw material costs, and regulatory changes are pressuring supply.
This is going to be a fragile summer for the AC industry. Companies with pricing power and stronger balance sheets may be able to navigate it - but not every business will. As the nature of heat changes, the economics of cooling is changing with it.
Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the opinion of NDTV Profit or its affiliates. Readers are advised to conduct their own research or consult a qualified professional before making any investment or business decisions. NDTV Profit does not guarantee the accuracy, completeness, or reliability of the information presented in this article.
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