War induced plastic shortage mounts for AC makers reeling under tepid FY26 sales

Air-conditioner makers in India are looking forward to FY27 with hope as the war in West Asia threatens to impact plastic component availability and consumer sentiment, adding to the challenges around raw material price and new energy label, a senior executive of a leading company has said.

Lots of plastic components are becoming difficult to get in the backdrop of the war impact on crude supplies. The additional price increase on this count though is early to assess for the AC makers feeling the heat of an increase in prices of raw materials such as copper, aluminium, refrigerant, steel and packaging material. A change in energy label norm, from January, also translated into more material usage.

The GST rationalisation did provide some relief, but not enough to stop the AC makers from passing on the burden of higher raw material price, especially given the competitive market and thin margins in which they operate. A price increase of 7-8% seems inevitable, something never seen before in the air conditioning industry, Blue Star Group President-Unitary Cooling Products Mohit Sud said on Tuesday.

However, it is unlikely that the product price will be increased all at once as the war is likely to adversely impact consumer sentiment. The AC makers are likely to revise the prices upwards gradually over the next few months, he said in an interaction following the launch of company’s new products.

The evolving situation comes at a time when the AC makers witnessed tepid sales in FY26 and likely to close the fiscal 5% lower in terms of volume compared to 2024-25, which was a blockbuster year on the back of intense heat conditions. Sales in FY25 had surged to record 15 million units from about 11 million units in the previous fiscal.

Blue Star is poised to do better than the competition this fiscal, he said, adding the sales de-growth will be lower that the industry. The company is also geared up with the new launches and with schemes aimed at reducing the total cost of buying ACs for the customers. It has also sharpened focus on R&D value engineering from a perspective of reducing cost without decreasing the performance.