NEW DELHI: Prices of cooling appliances, such as room air conditioners (RAC) and refrigerators, are expected to rise by 5–10 per cent starting January 1, 2026, as the Bureau of Energy Efficiency (BEE) implements its revised star rating system. This hike will effectively offset the price advantages consumers gained from the GST reforms in September 2025, when the duty on room air conditioners was slashed by 10 per cent.
In addition to the new regulations, the depreciation of the Indian rupee against the US dollar and a global surge in copper prices are further squeezing manufacturers’ margins. Despite these challenges, industry leaders like Voltas, Daikin, Blue Star, and Godrej Appliances remain unfazed, noting that the stricter norms will significantly reduce carbon footprints.
Blue Star Managing Director B Thiagarajan explained that while a 5-star AC under the revised BEE norms is 10 per cent more energy-efficient, it will also be roughly 10 per cent more expensive.
“New 5-star is a new product itself, which in today’s context, will be equivalent to 6 or 7-star. That new product, which will be introduced, has a price difference of around 10 per cent,” he said.
Existing ratings to be downgraded
Under the new system, a 5-star rating from 2025 will be downgraded to a 4-star. Similarly, a current 4-star model will become a 3-star, and a 3-star will become a 2-star, with an average price difference of 5 per cent between the tiers.
Daikin Airconditioning India Chairman and Managing Director Kanwaljeet Jawa noted that this marks the fifth time energy labeling standards have increased between 2012 and 2024.
“This industry has been supportive to the government for energy efficiency, which is a big challenge for the country. So, ever since they have taken this into sunrise, we all have been very supportive of these movements,” he said.
While the AC industry benefited from lower GST and saw a boost in sales, manufacturers remain committed to sustainability. They believe that as demand grows, it is essential to balance it with energy efficiency.
“Prices will definitely go up, not only because the BEE labelling standards are going up, but copper also has gone up, the raw material cost has been going up, the dollar against the rupee has depreciated,” Jawa added.
When asked if RAC prices would return to pre-GST reform levels, Jawa remarked, “It will be around that”.
Star labeling mandatory for several other appliances
Furthermore, the BEE has made star labeling mandatory for several other appliances including televisions, LPG gas stoves, cooling towers, and chillers effective January 1. This initiative aims to help consumers make informed choices and ensure industry standardisation.
To meet the stricter 5-star requirements, manufacturers are integrating more expensive, high-efficiency components, which is the primary driver behind the price increase. This shift means that any 5-star rated RAC purchased in 2025 will be classified as a 4-star model under the 2026 system. -(IndiaTV)
