BEE’s new star ratings to offset price benefits of GST reforms on ACs, rates to go up by 10%

The revised star rating from the Bureau of Energy Efficiency (BEE) will offset the benefits of the GST (Goods and Services Tax) reforms in September, which brought down the prices of room air-conditioners (RAC) by slashing duty by 10 per cent. With the new start rating, prices of cooling appliances such as room air conditioners and refrigerators have increased by 5-10 per cent, effective January 1, 2026. The revised BEE norms will downgrade the 5-star rating of 2025 to a 4-star rating. Similarly, a current 4-star will be a 3-star, and a current 3-star will be a 2-star, with a 5 per cent price difference. The new 5-star AC under the new revised BEE norms is 10 per cent more energy efficient. According to Blue Star Managing Director B Thiagarajan, the revised norms will also increase the prices by around 10 per cent.

“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.

GST benefits resulted in an increase in sales

The AC industry got GST benefits and had also seen an increase in sales. However, the industry is also committed towards sustainability, as when the demand goes up, it is also required to balance the energy efficiency.

Other factors impacting the prices

Besides the revised star rating, the fall of the Indian rupee against the US dollar and the global increase in copper prices are also putting pressure on manufacturers’ margins.

“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,” Daikin Airconditioning India Chairman and Managing Director Kanwaljeet Jawa was quoted as saying by PTI.

Asked whether the RAC prices will return to pre-GST reforms time, Jawa said, “It will be around that”.