HVACR Blooming in India

According to industry experts, the HVAC industry’s key objectives in 2025 will continue to be rules, regulations, and skilling. Sustainability, energy efficiency, legislative changes, and digital revolution are the main forces driving these.  Innovations like AI-driven Smart HVAC systems, low-GWP refrigerants, and district cooling are reshaping the sector. With regulations and rising demand for green buildings, businesses must embrace advanced solutions to stay competitive. Shifting towards net-zero emissions and climate resilience will shape a more efficient and sustainable future.

The HVAC industry is getting a whole lot smarter and greener. It is set for remarkable growth in 2025, fuelled by a strong focus on sustainability. Efforts are underway to evaluate refrigerants suitable for high ambient conditions while aligning with the Kigali Amendment to minimise global warming potential (GWP). IoT and AI are reshaping HVAC technology, empowering Smart systems with predictive maintenance, energy efficiency improvements, and adaptive performance based on real-time demand.

HVAC Industry Outlook

The HVAC industry is projected to see substantial growth driven by increasing demand for energy-efficient, Smart systems with IoT integration, focusing on improved indoor air quality and sustainability in retrofitting older buildings and emerging markets while facing challenges related to skilled labour availability and initial installation costs. Vaibhav Pitale, managing director of India and South West Asia, Belimo Automation India, emphasises energy efficiency, enhanced air quality, and automation. Innovations like Variable Refrigerant Flow (VRF) systems, advanced chiller designs, and high-efficiency filtration technologies have gained prominence. Further, Smart HVAC systems utilising IoT for real-time monitoring and control are transforming building management. The advancements optimise energy efficiency and improve occupant comfort   in environments such as data centres.

D. B. Jani, associate professor at Government Engineering College, Gujarat Technological University, notes that 2025 is poised to be a year of massive change for the HVAC industry. The sector is witnessing increasing demand for skilled professionals alongside rapid technological innovation. The growth drivers include climate change, expanding construction activity, evolving technologies, urbanisation, and stringent environmental regulations.

HVAC boom

India’s HVAC industry is being shaped by ever-rising urbanisation, rising temperatures, and the growing need for sustainable cooling solutions. Heat stress is already a major concern, with South Asia experiencing up to a 12 percent productivity loss and India facing a potential 24.7 percent GDP decline by 2070 under high-emission scenarios. Urban areas are particularly at risk due to the ‘Urban Heat Island’ (UHI) effect, which drives increased cooling demands across buildings, industries, and transportation.

According to Sudheer Perla, Managing Director of Tabreed Asia, India’s cooling sector is expected to expand eightfold by 2038, with air conditioning penetration surging from 8 to 40 percent. By 2050, cooling demand could account for 45 percent of peak power load, potentially driving greenhouse gas emissions 90 percent higher than 2017. Perla emphasises that incremental efficiency improvements alone will not address this challenge.

Varun Pahwa, President of Desiccant Rotors International, believes the HVAC industry is driven by infrastructure development. The surge in construction and the rising number of buildings fuel the demand for HVAC systems, further supported by the expansion of hypermarkets and the growing presence of shopping complexes and malls.  The outlook for the HVAC industry in 2025 is bright across India and Asia, according to Vikram Murthy, India Representative, Air-Conditioning, Heating, and Refrigeration Institute.  Governments and the private sector in India have rapidly expanded infrastructure development and housing, which fuels the demand for HVAC equipment.

As a result, the sector is expected to experience significant growth, with WebFx forecasting the global HVAC market to surpass $367 billion by 2030, at a projected CAGR of 3.9 percent between 2020 and 2030. According to C. Subramaniam (Subbu), Chairman of ACREX 2025, the Indian HVAC&R market is poised to grow almost 30 percent faster than the global scenario. Vikram Murthy highlights advancements in digital controls, AI-driven HVAC management, enhanced energy efficiency, heat pump applications, refrigeration innovations, and the adoption of ultra-low and zero GWP refrigerants.

Nabil Shahin, managing director of the Air Conditioning, heating, and Refrigeration Institute, notes that the HVAC industry is driven by increased regulatory stringency regarding energy efficiency and environmental impact. Regions like the Middle East are aligning with ASHRAE 90.1-2022, emphasising sustainable solutions such as SEER-compliant technologies, inverters, and high ambient equipment. The priorities include decarbonisation, renewable energy adoption, and net-zero building designs. Collaboration between manufacturers and regulators is growing through associations like AHRI, fostering standard harmonisation and reducing trade barriers. Additionally, demand for third-party equipment performance verification, certification, and market surveillance is expected to rise, ensuring compliance with regulatory standards.

Sustainable opportunities

There are good opportunities to advance to a net zero world in 2025. This is especially true with the global building stock. Dr. (Ar.) Anshul P. Gujarathi, Founder Director of ECO-SOLUTIONS (PhD Green Buildings), highlights the ongoing transformation in the HVAC&R industry driven by global sustainability efforts, energy efficiency, and carbon reduction. Over the next 5-10 years, key trends will include a strong focus on decarbonisation and a transition from fossil-fuel-based heating to electric heat pumps for space and water heating.

Many buildings certified under green programs are now closing the gap to reach net zero certification. Green certifications will become more mainstream, especially in emerging markets like India, and retrofitting existing buildings for sustainability and future-proofing of assets will be a focus.

There will also be greater emphasis on sustainable construction practices like material reuse and adaptive designs, with governments continuing to support the sector through tax rebates and green bonds. The residential market will see growing demand for energy-efficient homes. As more organisations adopt net zero strategies, they will mitigate risks, tap into new opportunities, and position themselves as leaders. Green building rating systems will evolve toward net zero goals, with technology supporting this shift, including tracking embodied carbon. 2025 will be a crucial year in accelerating emissions reduction and driving impactful progress.

Future of HVAC

The HVAC industry presents a wealth of opportunities in high-efficiency equipment, district cooling, alternative cooling solutions like radiant and evaporative cooling, and natural and passive cooling systems. Retrofitting inefficient systems will also play a crucial role in improving energy efficiency. District Cooling (DC) continues to gain traction, with the India Cooling Action Plan (ICAP) and the Bureau of Energy Efficiency 2023 guidelines recognising its potential in optimising energy use and reducing emissions.

The HVAC and data centre industries experience abundant opportunities driven by sustainability and energy efficiency initiatives. As regulatory frameworks tighten and consumer demand shifts towards green technologies, businesses that embrace energy-efficient innovations will secure a competitive advantage. Expanding green data centres and Smart buildings will accelerate investment in sustainable solutions, paving the way for a more eco-friendly future.

Conclusively, the industry’s success will depend on technological advancements, energy-efficient strategies, and the integration of renewable energy. Collaboration among governments, industry leaders, and the private sector will drive the widespread adoption of these transformative solutions, ensuring a greener and more efficient future.

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Vaibhav Pitale, Managing Director India and South West Asia, Belimo Automation India Pvt. Ltd.

As regulatory frameworks become stricter and consumers prioritise green technologies, businesses that adopt innovative, energy-efficient practices will gain a competitive edge.

Dr. D. B. JANI, Associate Professor, Government Engineering College, Gujarat Technological University, Gujarat.

The sector is witnessing increasing demand for skilled professionals alongside rapid technological innovation.

Sudheer Perla, Managing Director, Tabreed Asia.

With air conditioning penetration surging, incremental efficiency improvements alone will not address this challenge.

Nabil Shahin, Managing Director, Air-Conditioning, Heating, and Refrigeration Institute. 

The HVAC industry is driven by increased regulatory stringency on energy efficiency and environmental impact.

Vikram Murthy, India Representative, Air-Conditioning, Heating, and Refrigeration Institute. 

The outlook for the HVAC industry in 2025 is bright across India and Asia. Governments and the private sector in India have rapidly expanded infrastructure development and housing, which fuels the demand for HVAC equipment.

Dr (Ar).  Mrs. Anshul P. Gujarathi, Founder Director (Ph.D. Green Buildings), ECO-SOLUTIONS.

Trends in 2025 include decarbonisation and a shift away from fossil-fuel-based heating toward electric heat pumps for space heating and water heating.

C. Subramaniam (Subbu), Chairman for ACREX 2025.

With India’s HVAC&R market set to expand nearly 30 percent faster than the global average, the industry is thriving. It offers an ideal landscape for manufacturers and service providers to innovate and grow.