Durables prices may rise as firms stick to energy norms

Refrigerators or ACs could be dearer soon as the consumer durable companies start conforming to energy efficiency standards.

The Bureau of Energy Efficiency (BEE), ministry of power recently instituted energy labelling guidelines for electronic appliances that have high energy utilisation like refrigerators and ACs. The guidelines come into effect by June 1.

As the companies have invested significant amounts to redesign their product range to get better ratings, the incremental costs are expected to be passed on to the consumers.

Kamal Nath, vice-president, sales and marketing, Godrej Appliances said, "More efficient products require better raw materials, control mechanisms, superior compressors "� all of which come at a higher cost. For better products, consumers have to pay a higher price."

He added that to upgrade from 3 star to 4 star refrigerator of the same capacity, product prices could reflect an increase anywhere between 3-5 per cent. Energy labelling or star rating (one being the least efficient and five being optimally efficient) calculates power consumption with respect to performance.

Durables manufacturers claim that the star ranking will benefit consumers. "For every star that the user goes up to, he stands to save Rs 2,000 a year. So if you upgrade to a one-star, you save Rs 2,000 a year and Rs 10,000 annually for a five-star," said Zubin Irani, managing director, Carrier India, as the company today launched its new energy-efficient product line of ACs.

Irani added that even additional costs incurred by consumers on superior models would be recovered on operational savings. "We believe that by switching to an energy-saving model, the payback on the incremental price would occur within a year," said Irani. An industry expert said while it cost Rs 10 an hour to run an air-conditioner at home today, the cost could come down by almost 5 per cent a star that the user upgrades to.

Korean durables giant LG has invested in installing testing calorimeters that measure energy efficiency in ACs. The company has incurred additional investments to develop 4 and 5 star rated ACs, but refused to divulge financial details.

An industry expert said the leading brands were unlikely to come out with a low star rated product, in keeping with their image of good quality and reputation. Ajay Mathur, director-general, BEE, said, "The companies are reluctant to change as they claim that there is no demand in the market for the product. The reason why there is no demand is because the customers are not aware of the energy consumption."