India’s air conditioner (AC) manufacturing sector is facing a severe production squeeze as a nationwide LPG shortage disrupts critical assembly line processes. The crisis, triggered by the ongoing U.S.-Iran conflict and the subsequent blockade of the Strait of Hormuz, has forced the government to prioritize household cooking gas, leaving industrial and commercial users with restricted allocations.
The timing is particularly critical as manufacturers were ramping up for peak summer demand, following a lackluster sales season in 2025.
1. The “Brazing” Bottleneck
The shortage hits a specific but vital part of the AC manufacturing process: heat exchanger brazing.
- The Process: Manufacturers use LPG-fired torches to join copper tubes in heat exchangers. It is considered the most efficient and cost-effective method for mass production.
- Production Risk: Companies like Blue Star, Godrej Enterprises, and PG Electroplast have warned that without steady LPG or PNG (Piped Natural Gas) supplies, assembly lines for both room ACs and commercial cooling units could grind to a halt.
- Alternative Fuels: Some manufacturers are pivoting to oxy-acetylene for brazing. However, this is significantly more expensive and relies on limestone and crude-linked feedstocks—94% of which are also imported from the volatile Middle East.
2. Compounding Supply Chain Headwinds
The fuel crisis is not the only challenge hitting the “cooling” industry this month. A “triple blow” of rising costs is forcing rapid price adjustments.
| Constraint | Impact on Production / Cost |
| Petrochemical Scarcity | Shortage of polypropylene and polystyrene for plastic mechanical parts. |
| Metal Inflation | Copper prices have surged 25%; Aluminum is at record highs. |
| Currency & Compliance | Rupee depreciation (~₹94/$) and new Star Rating energy norms. |
3. Impact on Consumers: The “Summer Surcharge”
With production costs ballooning, major brands have already begun passing the burden to customers. Total price hikes for the 2026 summer season are expected to range between 8% and 14%.
- LG Electronics India (LGEIL): Announced a 10% hike across all AC models this week.
- Blue Star & Voltas: Anticipating further hikes if the West Asia conflict persists beyond April.
- Availability: While some brands entered the season with healthy inventory, a prolonged LPG crunch could lead to stockouts of popular 5-star and inverter models by May.
4. Government & Industry Response
To mitigate the fallout, the Ministry of Petroleum & Natural Gas is pushing for a rapid transition to PNG for industrial hubs.
- 50% Commercial Allocation: The government has managed to restore about 50% of the normal commercial LPG allocation as of March 21, but priority remains with hospitals and households.
- PNG Incentives: States are being offered an additional 10% LPG quota if they successfully transition local industries to piped natural gas infrastructure.
- Inventory Management: Manufacturers are working with vendors to “de-risk” procurement by sourcing components from Southeast Asia and increasing domestic “Bharat Cell” battery production for solar-hybrid AC models.
“We are facing aQualitatively different challenge this year,” noted Kamal Nandi, Business Head at Godrej Appliances. “It’s not just about raw materials; it’s about the very energy required to put them together.”
