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Chhotapreneur
@chhotapreneur
90% Indians remain at risk of heat waves. A great way to get to know India, is to get to know India through the lens of individual markets. Durables, smartphones, short-form video, education, sanitation, health, aerospace, crypto, and ...what not. To understand India, today I am picking the Air-conditioners market. And to understand Air Conditioner market - let me begin by getting you to 'feel the heat'. Temperatures in India are no joke. The country has been experiencing unprecedented heatwaves, February 2023 recorded as the hottest since 1901. Northern and western India are reeling under temperatures exceeding 40 degrees Celsius, transforming “March into the new May” as per Hindustan Times. Delhi which is the capital city of India saw temperature peak to 109F in 2023. This climatic challenge underscores the critical need for cooling solutions.
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Chhotapreneur
@chhotapreneur
A key stat to always recall is per capita income. Per capita income of India is at $2,400. This stat determines many of our behaviours. Half of us haven't had a problem in adopting smartphones. Smartphones are only a recent phenomena, and yet 55% of households already have bought their first smartphone. Households have been able to prioritise connectivity over cooling, even cooling is clearly just as much a necessity.
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Chhotapreneur
@chhotapreneur
The average cost of an entry-level air conditioner in India is around $350 to $400. In stark contrast to the high adoption rates in the USA and Japan, where AC penetration is at 90%, only 13% of Indian households have an AC. In other words, ~90% of Indian households haven't purchased their first AC even till as recently as 2022. Purchasing an AC would constitute approximately 20% of the annual income, making it a substantial investment for many Indian households.
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Chhotapreneur
@chhotapreneur
Per capita income, or affordability, is a key barrier to adoption. Look at the evidence countries like Indonesia, Brazil, and Mexico provide - which also have low per capita incomes. A 30% higher per capita income in China compared to Brazil and Mexico has allowed the country a 2x jump in AC adoption.
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Chhotapreneur
@chhotapreneur
All this, despite the fact that India, Indonesia, Brazil, and Mexico experience higher average temperatures compared to the USA and Japan. Higher temperatures reduce productivity, lowering GDP and incomes, which in turn increases risk to higher temperatures? Looks like it. India has a population of 1.47 billion people. Among the lower-income class, which makes up 70% of the population, AC adoption stands at just 3% in 2023. That's approximately 950 million people living without air conditioning. A staggering 90% of Indian households, primarily from the low-income class, haven’t bought their first AC. An air conditioner costs around 20% of their annual income in a country where temperatures can soar as high as 110°F. This stark reality underscores the urgent need for affordable cooling solutions to address the risk to heat and improve the quality of life for millions of Indians.
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