“I pray that summer is good and monsoon is also good,” B Thiagarajan, managing director of Blue Star, told ET Now, highlighting the dual challenge facing India’s AC industry as it emerges from a weak FY26 base while grappling with geopolitical headwinds.
With tier III, IV and V markets comprising more than two-thirds of sales, the rural economy’s health, directly tied to monsoon performance, has become critical for sustained growth. “If at all there is a shortfall, it should be a minor shortfall,” Thiagarajan said.
Summer has finally arrived after April rains threatened the crucial selling season. Temperatures crossed 40 degrees Celsius in some regions for the first time in recent days, providing relief to an industry that had been battling uncertainty. “At least one problem is that summer is here,” Thiagarajan said.
Yet early optimism comes with caveats. The managing director compared the current environment to a “T20 cricket” match where “just one or two hours can derail” outcomes. The industry faces the delicate task of passing on price increases to consumers while managing war-related concerns. In Kerala, sales are running below last year’s levels due to the impact of the Middle East conflict.
Price increases averaging 13%, with 5% from energy label changes and 8% from commodity costs, have only been partially absorbed by the market so far. Consumers may see just 3-4% higher prices in May, partially offset by a 10% GST reduction from last year. “Enough inventory was there in the market in March itself,” Thiagarajan explained, cushioning the immediate impact.
The company stressed there is currently no demand-supply mismatch, with adequate inventory in place despite the early summer onset. However, Thiagarajan flagged ongoing concerns about raw material inflation, citing the rupee, steel, copper, aluminium and zinc prices as variables tied to global volatility. “My sense is that it will be an inflationary trend for at least six to seven months,” he said.Consumer sentiment appears resilient so far, protected from war-related impacts. “The government has done a great job in ensuring they are not burdened,” Thiagarajan noted, adding that early signs “seem more positive as the weeks are rolling by.”
The festival season outlook remains entirely dependent on how the war situation evolves and overall economic sentiment in India, leaving the second half of the year uncertain even as summer sales show promise.