Amid the growing demand for air conditioners in India, there is an increasing focus on manufacturing key components domestically. In this direction, Voltas from Tata Group has taken steps to create a joint venture with the Indian startup Atomberg Innovation. The goal of this partnership is to manufacture, supply, and develop compressors and other necessary components for room air conditioners, with both companies holding a 50:50 stake. Both companies have signed a binding term sheet.
This initiative comes at a time when air conditioner manufacturing capacity in India is rapidly expanding, yet the country remains heavily reliant on imports for some critical components. The government, on one hand, permits limited imports, while on the other, expects companies to work on phased localization of production and increase local output.
The compressor is one of the most significant elements in an air conditioning system. It is responsible for refrigerant circulation and plays a crucial role in the cooling process. Consequently, its availability and cost directly affect the production and supply of air conditioners. According to data from the Indian Exim Bank, China accounted for 73.7% of the import of compressors in a specific commodity category, with the import volume estimated at approximately $217.5 million. However, it should be noted that this statistic applies to a specific commodity category and is not applicable to all compressors used in air conditioners sold in India.
Demand for air conditioners in India shows rapid growth. Industry forecasts suggest that around 15 million room air conditioners were sold in the country in the fiscal year 2025. According to estimates by the German analytical firm Statista, sales are expected to reach 15.4 million units in 2025 and could rise to 28 million units annually by 2030. Despite this, air conditioner penetration in India remains relatively low; according to a report by the news agency Reuters, air conditioners are installed in about 10% of households. The same report indicates that Voltas holds about an 18% share in the Indian market. Furthermore, according to Voltas, about 85% of buyers purchase their first air conditioner, indicating significant potential for attracting new customers in the coming years.
Voltas' current attempt to establish a local ecosystem for compressor production is not the first. In 2022, the company entered into a joint venture agreement with Highly International from Hong Kong to produce inverter compressors, motors, and other related components for room air conditioners. However, this proposal did not receive the necessary regulatory approvals, including Press Release 3. Subsequently, in April 2023, both companies terminated the agreement. About a year later, Voltas management stated that the company continued to seek a technology partner, aiming to develop production not only of compressors but also of other important air conditioning components in India.
Atomberg Innovation is known for its smart and energy-efficient ceiling fans. The company was founded by IIT Bombay graduates, and its initial focus was on brushless DC motor technology (BLDC). Now, Atomberg Innovation is expanding its activities to technologies related to motors, controllers, and compressors for home appliances such as air conditioners, refrigerators, and washing machines. Thus, the proposed partnership with Voltas could represent a significant expansion for it in the field of air conditioning system components. The government is also emphasizing the PLI scheme to stimulate local production of components in the home appliance sector. Atomberg Innovation is included in the list of products, such as control assemblies and motors, under the category of air conditioner components. The company's declared investment amounts to about 50.20 crore rupees.
Against the backdrop of growing demand for air conditioners in India, the government is trying to strike a balance between compressor imports and domestic production. According to a directive from May 2026, imports of rotary hermetic compressors with a capacity of less than 2 tons will be permitted up to 30% of the volume imported in the fiscal year 2025 in the fiscal year 2027. Separate limits are set for larger compressors and certain VRF-related compressors. The goal of this system is to encourage companies toward component localization and domestic production without sudden shocks to the supply chain.
If you plan to purchase an air conditioner, no immediate impact of this joint venture on the price or supply of air conditioners in the market has been announced as of yet. The proposal from Voltas and Atomberg is currently at the term sheet stage. Neither company has publicly disclosed information regarding a potential plant, production capacity, or clear timelines for the start of commercial production. Nevertheless, as air conditioner sales grow, the need to increase local production of compressors, motors, controllers, and other vital components in India is also increasing.