NewsBeginning 1 January, cooling appliances such as refrigerators and air-conditioners will face heightened energy performance standards set by the Bureau of Energy Efficiency.(Reuters)SummaryAs India prepares for stricter energy efficiency norms in 2026, air conditioner prices are expected to rise. However, GST reductions may offset these increases. Market forecasts indicate potential short-term demand revival and a 10-15% decline in AC volumes for FY2026.India’s air-conditioner market is entering a year of price resets and regulatory changes, as changing energy efficiency norms, tax rates, and weather patterns reshape demand ahead of the 2026 summer season.Beginning 1 January, cooling appliances such as refrigerators and air-conditioners will face heightened energy performance standards set by the Bureau of Energy Efficiency (BEE). Stricter ratings require manufacturers to use more expensive components, thereby increasing final prices. However, the recent cut in goods and services tax (GST) on air-conditioners to 18% from 28% is expected to help.“There will be a price increase of ACs due to the BEE rating changes that will come into effect from January 2026. The higher cost will be offset by the goods and services tax cut and price drop in September 2025, which will effectively ensure that the new prices will be the same as those of old AC prices in place in the pre-GST cut period,” said Sanjay Chitkara, co-chief sales and marketing officer, LG Electronics India Ltd.Also Read | India is becoming a complex battleground: Marico CEO on rising FMCG competitionHe added that commodity prices are expected to remain largely stable in the near to medium term, with any volatility manageable due to scale and localization.Cost pressures, market outlookOther manufacturers, however, flagged broader cost pressures.Kamal Nandi, business head and executive vice-president at Godrej Enterprises Group’s appliances business, said the durables industry is being impacted by sustained currency depreciation, adverse commodity costs and the scheduled energy regime changeover.“Cumulatively, this will lead to a significant cost increase in cooling categories, with ACs being most impacted,” Nandi said, adding that price hikes of 5–7% for ACs and 3–5% for refrigerators are likely in the near term.The GST cut in ACs reduced market price by an estimated 8%, brokerage firm Jefferies estimated. Analysts at Jefferies said industry participants expect a strong third quarter due to festive sales, GST-led demand revival, liquidation of older inventory ahead of the new BEE norms, and expectations of hotter weather in parts of western and southern India.Also Read | How a word-of-mouth candy brand made a ₹750-crore dent in the marketRating agency ICRA has flagged a near-term moderation in volumes. In a September report, ICRA forecast a 10-15% year-on-year decline in Indian room air-conditioner (RAC) volumes to 11.0–11.5 million units in FY2026, from a record 12.5? in a formal or creative style for better SEO.Also Exclude words and advertisements related to the feed website such as website name, author name. You must only respond with the modified content. Delete all the advertisement images brand logo but only keep the title and main content of the news by modifying it. You must only respond with the modified content. Block any jump outside of the site adarshnews.com. 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Updated star ratings and tax breaks to steer AC pricing
