In the new year, electronic appliances like refrigerators (fridges) and air conditioners (ACs) may become more expensive, because new star rating rules from the Bureau of Energy Efficiency (BEE) have come into effect today (January 1). As a result, the prices of room air conditioners could increase by up to 10% and fridges by up to 5%. Companies say that this increase has become necessary due to changes in machinery according to the new ratings and the use of expensive components. Additionally, the weakening of the rupee against the dollar and the rising prices of copper in the global market are also putting pressure on manufacturers. 5-star AC will now be called 4-star Under BEE’s new rules, energy efficiency standards have become stricter. B. Thiagarajan, Managing Director of Blue Star, said that after the new rules come into effect, today’s 5-star AC will become tomorrow’s 4-star. Similarly, the existing 4-star will be given a 3-star rating and the 3-star will be given a 2-star rating. According to Thiagarajan, the new 5-star AC will save 10% more electricity than today’s, but its price will also be about 10% higher. This will be a completely new product that will provide efficiency equivalent to today’s 6 or 7-star rating. Star rating mandatory for TVs and Gas Stoves too BEE has made star labeling mandatory not only for ACs and refrigerators but also for many other household appliances. From January 1, star ratings will also be required for televisions (TVs), LPG gas stoves, cooling towers, and chillers. This will make it easier for customers to understand how much electricity or gas an appliance will save when purchasing goods. Prices may reach pre-GST-2.0 cut levels This September, the government had cut GST on room air conditioners by 10%, providing relief to customers. However, now with changes in star ratings and the increase in raw material prices, the price hike will almost negate the benefit of GST. Kanwaljeet Jawa, Chairman of Daikin Airconditioning India, says that after the new prices, the rates could reach the same level as they were before the GST cut. Rising pressure from input costs and dollar Kamal Nandi, Business Head of Godrej Appliances, said that the consumer durables industry is currently facing a double whammy. On one hand, there is the falling value of the rupee and rising prices of commodities like copper, and on the other hand, changes in energy ratings. All these combined could lead to an immediate price increase of 5-7% in ACs and 3-5% in refrigerators. Voltas hopes that increasing demand will provide relief to companies Jayant Balan, Senior Business Leader at Voltas, believes that changes in ratings are altering consumer behavior. People are looking to make purchases before new prices are implemented, so that they can take advantage of current prices and stock. According to Balan, prices could increase by an average of 7-8% depending on different models and categories, which has already intensified activity in the market.
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