Industrialisation and urbanisation drive the HVAC market in India

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Industrialisation and urbanisation drive the HVAC market in India

Industrialisation and urbanisation drive the HVAC market in India

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Aug 29,24

HVAC (Heating, Ventilation, and Air Conditioning) systems are vital for creating and maintaining optimal work environments, while playing a key role in environmental responsibility.

Industrialisation and urbanisation drive the HVAC market in India

HVAC (Heating, Ventilation, and Air Conditioning) systems are vital for creating and maintaining optimal work environments, while playing a key role in environmental responsibility. Its applications span across sectors like FMCG, ONG, chemical, pharmaceuticals and more. With a growing emphasis on sustainability and reducing ecological footprints, HVAC technology is gearing up to meet these challenges, says Sanskriti Ramachandran.

In today’s world, where comfort and efficiency are paramount, the HVAC systems play a crucial role in maintaining optimal indoor environments. These systems are not just about controlling temperatures; they are integral to enhancing air quality, ensuring energy efficiency, and providing a healthier living and working space. As the technology behind HVAC continues to evolve, understanding the complexities and advancements in this field becomes increasingly important.

In 2024, the Heating and Cooling market in India has reached a significant milestone, with revenues amounting to a staggering $3.79 billion. As the nation marches towards a more urbanised and industrialised future, this market is projected to grow at a steady annual rate of 7.01% (CAGR 2024-2028). Despite this promising growth, when compared on a global scale, the United States remains the leader in HVAC market revenue, generating a massive $126 billion in 2024. However, the Indian market is showing remarkable potential, especially when considering the per capita revenue, which stands at $2.64 in 2024.

India's heating and cooling market is experiencing a surge in demand due to rapid urbanisation and increasing consumer awareness about energy-efficient solutions. This trend is particularly evident in the industrial sector, where HVAC systems have become indispensable.

Rajarshi Datta, Director - Commercial & Healthcare, Data Centre and Manufacturing, Johnson Controls India notes, “Manufacturing facilities are energy-intensive powerhouses, contributing significantly to India's carbon footprint. As the second-largest contributor of greenhouse gas emissions in the country, the sector's impact is undeniable. In 2023, the cement, steel, and aluminium industries alone emitted a staggering 108 million tonnes of carbon dioxide equivalent (CO2e). This alarming figure underscores the urgent need for manufacturers to adopt sustainable practices and reduce their environmental impact. HVAC systems have emerged as a critical component in this transition owing to their ability to simultaneously enhance energy efficiency and productivity within manufacturing facilities.”

HVAC systems play a crucial role in manufacturing by meticulously regulating temperature, humidity, and air quality. These systems create an ideal environment for both workers and machinery, ensuring optimal operational efficiency. A comfortable workspace is directly linked to improved worker health, morale, and job satisfaction, which in turn leads to increased productivity and reduced absenteeism.

Moreover, HVAC systems are vital for maintaining the quality and integrity of products. Many manufacturing processes are sensitive to temperature and humidity fluctuations, making precise climate control essential. For instance, in the pharmaceutical industry, maintaining specific environmental conditions is critical to prevent product degradation. Similarly, the food and beverage sector relies heavily on HVAC systems to ensure product freshness and safety. Recent updates in regulatory standards, such as the revised Schedule M and World Health Organisation (WHO) guidelines on water and HVAC systems, have further emphasised the need for advanced HVAC solutions in these industries.

Beyond worker comfort and product quality, modern HVAC systems contribute to energy efficiency by incorporating energy-saving technologies like variable speed drives, heat recovery, and intelligent controls. By optimising energy consumption, manufacturing facilities can significantly reduce operational costs and minimise their environmental footprint. Datta summarises, “HVAC systems are more than just comfort providers in manufacturing facilities. They are strategic assets that drive efficiency, productivity, and sustainability.”

Market size and scope

The industrial sector in India is experiencing robust growth, with the HVAC market projected to reach $29.4 billion by 2030 (PSmarketresearch), growing at an impressive CAGR of 16.3% between 2024 and 2030. This growth is driven by several factors, including rapid industrialisation, urbanisation, and increasing disposable incomes, all of which contribute to the rising demand for industrial HVAC systems.

Industrial HVAC systems encompass a wide range of equipment and solutions tailored to meet specific industry requirements. These include precision temperature and humidity control systems essential for industries like pharmaceuticals, electronics, and food processing. Additionally, large-scale air conditioning and ventilation systems are necessary for factories, warehouses, and industrial complexes. Heat recovery systems are also becoming increasingly popular as they improve energy efficiency and reduce operating costs. Furthermore, cleanroom HVAC systems are indispensable in industries with stringent air quality standards, such as semiconductor manufacturing or solar cell and battery production.

Key factors driving the demand for industrial HVAC systems include the need for advanced solutions in end-user industries like pharmaceuticals, food and beverages, electronics, data centres, and textiles. These industries require precise temperature and humidity control to ensure product quality, safety, and optimal operational conditions. Furthermore, increasing energy costs and government initiatives promoting energy efficiency have intensified the focus on energy-saving HVAC solutions. Datta highlights, “The convergence of these factors, alongside robust economic growth and the escalating impacts of climate change, presents a compelling case for the adoption of advanced HVAC solutions in Indian industries.”

Moreover, growing concerns about indoor air quality and its impact on worker health and productivity are driving demand for advanced ventilation and air purification systems. The expansion of industrial parks and manufacturing facilities across the country is also creating new opportunities for HVAC providers.

Impact of regulatory standards

Governments set energy efficiency standards to encourage the use of equipment that conserves energy and reduces greenhouse gas emissions, motivating industries to opt for more efficient systems. Kishor Patil, HVAC & Transport, India & SAARC Country Leader, Trane Technologies, explains, “Regulations on indoor air quality also influence decisions, pushing for HVAC systems that include advanced filtration and ventilation to ensure a healthy work environment. Additionally, meeting safety standards is essential, as HVAC systems need to adhere to specific safety requirements to protect employees and prevent accidents.”

Companies' environmental policies, aligned with global sustainability goals, further encourage the adoption of more sustainable HVAC solutions. By upgrading to energy-efficient systems, industries can earn carbon credits, which can be traded or used to offset emissions. This creates a favourable environment for industries to choose HVAC systems that are not only efficient and reliable but also compliant with environmental regulations.

Balancing upfront costs with long-term energy savings

Upgrading to eco-friendly HVAC systems often requires a significant initial investment. However, the long-term energy savings can make it a wise financial decision. There are several strategies that industries can employ to balance upfront costs with future benefits. Patil suggests, “Opting for HVAC systems with high energy efficiency ratings is one approach. Additionally, financing options like leasing or loans can help spread out the costs, making them more manageable. Conducting a life cycle cost analysis is also crucial to compare the total cost of ownership across different systems, taking into account factors like energy consumption, maintenance, and repairs.

Investing in energy management systems can further enhance efficiency by optimising performance and pinpointing areas where energy savings can be achieved. Regular maintenance is also key to extending the lifespan of HVAC systems and ensuring they run efficiently. Industries should also explore available rebates from utility companies or government agencies, which can help reduce the initial investment. By considering these strategies, industries can make informed decisions that balance upfront costs with long-term energy savings and environmental benefits.

Emerging trends

The HVAC sector is rapidly evolving, with new technologies and innovations making systems more efficient, sustainable, and high-performing. Key trends driving this evolution include the integration of IoT, which allows for remote monitoring, control, and optimisation, thereby enhancing predictive maintenance and energy management. Artificial intelligence and machine learning are also being leveraged to analyse data from HVAC systems, optimising performance and predicting maintenance needs, leading to cost savings and increased reliability.

Building Automation Systems (BAS) are linking HVAC with other building components, such as lighting and security, to improve overall energy efficiency and building performance. Additionally, there is a growing emphasis on renewable energy integration, with HVAC systems increasingly being paired with solar and geothermal sources to reduce reliance on traditional energy and cut operational costs.

The sector is also seeing a shift towards the use of natural refrigerants or synthetic refrigerants like Hydrofluoroolefins (HFO) with low Global Warming Potential (GWP), which are more environmentally friendly.

Modular HVAC systems are gaining popularity for their flexibility, allowing them to be easily scaled to meet changing industrial needs.

Even advanced filtration systems are enhancing indoor air quality by removing more contaminants, reducing health risks drastically.

As Patil notes, “These trends are driving big changes in industrial HVAC, making systems more adaptable, efficient, and sustainable to meet the demands of modern industrial settings.”

Future outlook

Despite the promising growth prospects, the HVAC sector in India faces several challenges, including high initial investment costs, lack of skilled workforce, and the slow pace of adopting new technologies. However, these problems also present opportunities for innovation and growth. The focus on energy efficiency and sustainability is driving the development of new technologies and solutions that can help overcome all issues.

The HVAC space in India is set for significant growth in the coming years, driven by urbanisation, infrastructure development, changing climatic conditions, and government initiatives. The Heating, Ventilation, Air Conditioning (HVAC) market, along with intelligent building solutions, is projected to reach Rs 1,780 billion by 2028 (ISHRAE). The market is expected to see the introduction of feature-rich, IoT/AI-enabled machines that can be remotely controlled or managed online through smart devices.

Abhishek Verma, Business Head, Air Conditioners Group, PMIN, Panasonic Life Solutions India, observes, “Today an HVAC customer seeks smart and new-age sustainable tech-enabled cooling solutions for his day-to-day needs. Along with energy efficiency, the two aspects that consumers desire are sustainability and ease of operation. As a result, the market is currently moving toward smart controls, giving consumers the ability to manage their HVAC system remotely.”

The expansion of the HVAC market in India is also supported by various government initiatives, such as 'Make in India' – Atmanirbhar Bharat, Production Linked Incentive (PLI) schemes, and the commitment to become carbon neutral by 2070.

The HVAC market in India is on a growth trajectory, driven by increasing demand from various sectors, regulatory push for energy efficiency, and the adoption of new technologies. As the market continues to evolve, it will be essential for companies to stay ahead of the curve.