Single-door refrigerators may turn costlier on stricter BEE norms

As stricter energy labelling norms kick-in from January, prices of direct cool refrigerators are expected to shoot up by ₹2,000-4,000. Industry players believe this would impact the demand for 5-star and 4-star-rated direct cool refrigerators, also known as single-door refrigerators.

The Bureau of Energy Efficiency (BEE) has tightened norms for single-door refrigerators by two levels. This will mean that the existing 5-star and 4-star-rated direct cool refrigerators will be downgraded to 3-star and 2-star, respectively, in January. The industry will also need to introduce more efficient and costlier 5-star and 4-star-labelled single-door refrigerators to meet these new norms.

Companies will have to use inverter compressors and vacuum insulation panels to manufacture the new range of direct cool refrigerators, which will increase their costs.

Kamal Nandi, Business Head & EVP, Godrej Appliances, said, “Nearly 75 per cent of the sales in the direct cool refrigerator segment currently comes from the 4-star and 5-star models. But the new norms will push the costs up for manufacturing the 4-star and 5-star direct cool refrigerators. Therefore, we anticipate the overall consumption will shift to 3-star and 2-star-rated models.”

Nandi said since stricter energy-labelling norms were introduced in the frost-free refrigerator category, the industry has seen very little demand for the 5-star-rated frost-free refrigerators. “Direct cool refrigerators are preferred by the masses, who are even more price-conscious so we anticipate seeing similar trends in this category,” he added.

While the industry is already dealing with the dip in demand due to demonetisation, the new energy labelling norms may become a double whammy of sorts.

“The new energy labelling norms as well as the increase in commodity prices may lead to increase in costs for direct cool refrigerators by as much as 10 per cent. This may lead consumers to increasingly opt for 2-star and 3-star rated single door refrigerators,” said CM Singh, COO, Videocon.

Industry players also believe that unlike the air-conditioner segment, consumers may not see enough incentive to pay a premium to shift to more energy-efficient refrigerators.

ACs are known to be power guzzlers and consumers see benefits in shifting to more energy-efficient ACs. However, since refrigerators do not consume a lot of electricity, industry players believe consumers may not want to pay a premium to shift to more energy-efficient ones.

The consumer durable industry has also been urging the government to give incentives to consumers in terms of tax breaks or subsidies to encourage them to shift to higher star-rated appliances.