LPG Shortage Challenges India's Air Conditioner Industry Amid Critical Demand

In a pressing development for India's consumer durables sector, air conditioner manufacturers are contending with a severe production hurdle caused by a tightening supply of Liquefied Petroleum Gas (LPG). Ongoing geopolitical tensions and emerging supply-chain bottlenecks have driven the Indian government to prioritize household LPG consumption. This decision leaves commercial users and Electronic Manufacturing Services (EMS) struggling with limited fuel availability as the industry braces for peak summer demand, according to a Nuvama report.

Manufacturers heavily depend on LPG for heat exchanger brazing, an efficient method for building air conditioning units. The supply disruption is particularly critical for companies unable to switch to alternative energy sources. While some major players have adopted oxy-acetylene for brazing to maintain production lines, this transition introduces its own set of vulnerabilities. The production of oxy-acetylene is reliant on crude-linked feedstock or limestone, both significantly reliant on imports.

According to the report, 94 per cent of India's limestone imports originate from the Middle East, exposing the alternative fuel to global trade fluctuations and further supply risks. This challenge coincides with other industry headwinds. A sluggish summer in 2025 and unseasonal Northern Indian rains recently dampened consumer enthusiasm. Brands have responded to rising input costs by imposing price hikes between 5 and 10 per cent. Companies like LG Electronics India have already increased prices, citing oxy-acetylene's higher costs for maintaining production. The financial pressures are exacerbated by the Indian Rupee's depreciation and new star rating compliance costs, suggesting additional price increases could reach up to 14 per cent. While brands expect modest revenue growth in Q4FY26, EMS players may encounter significant revenue and margin challenges.