New BEE rating may boost inverter AC segment

Meenakshi Verma Ambwani New Delhi | Updated on January 17, 2018


Prices expected to shoot up, say players

With the Bureau of Energy Efficiency (BEE) proposing to make the new star rating methodology mandatory from January 2018 , AC makers believe the inverter AC segment is expected to get a boost, in line with the global trend.

However, this is also expected to push the prices for BEE star-labelled ACs as manufacturing costs are expected to shoot up.

The new rating system called Indian Seasonal Energy Efficiency Ratio (ISEER) was introduced on a voluntary basis for Variable Speed Inverter Air Conditioners in June 2015. Already, leading AC makers have adopted it for their inverter ACs.

Now, BEE proposes to make it mandatory for both star-labelled also known as fixed speed ACs and inverter ACs. BEE believes this new methodology for rating system will bring in higher energy efficiency of appliances and reduce consumer’s electricity bills.

Shifting trend

Mohammed Hussain, Business Head, Air Conditioning Group, Panasonic India, said with the introduction of the new rating system, the consumers will shift towards inverter ACs. “The current contribution of inverter AC's is 10-15 per cent which will further increase to 30 per cent by 2018,” he said.

AC makers are betting on the reduction of the price gap between an inverter AC and the 5-star AC to drive this shift.

Sanjeev Bakshi, COO-Air Conditioners Division, Videocon, said: “This also presents a challenge for companies as the products will need to undergo changes in configuration, design and specifications, which will increase production costs. The cost of manufacturing a 5-star AC, for instance, will go up by an estimated 15 per cent.”

Consumers’ preference

Some industry players also believe that with the prices shooting up in non-inverter star labelled AC segment, consumers could feel the pinch and may start opting for less energy efficient ACs to save money rather than upgrading to more energy efficient products.

The 3-star ACs currently contribute the biggest chunk to the overall AC sales, and some industry players believe the new energy norms may expand the contribution of this segment further.

The AC industry has been witnessing challenging times and has seen an uptick in demand this summer season, after nearly three years of slowdown and subdued consumer sentiment.

Meanwhile, Krishan Sachdev, Managing Director, Carrier Midea India Private Ltd, pointed out that the inverter AC is one of the fastest growing categories in India as consumers want to opt for more energy-efficient products. He said this initiative will reduce the operational expenses for the customers.

Published on August 25, 2016

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