After the new BEE guidelines, the manufacturers of ceiling fans around the country will see an increase of around 10 to 12 percent in their production costs.
With the onset of summer, the ceiling fans industry always expects an increase in their sales. But, this time, companies like Animesh Graphics Engineers, which print Bureau of Energy Efficiency (BEE) star rating labels are observing an increase in their orders and revenues, instead of ceiling fan manufacturers. This is after the new BEE mandated rule that says that all ceiling fans which are sold after January 2023 need to have a ‘star rating’.
Gaurav, managing director, Anand Shakti Innovation, ceiling fans manufacturers said “Our cost of production will increase by 10 to 12 percent because of the star ratings.” He added that this is because of the new raw materials which have to be used for the ceiling fans. As the rules are mandated for all the ceiling fans produced throughout the country, it has to be followed by every manufacturer.
As of 2019, only nine percent of ceiling fan manufacturers in the country are producing ‘star-rated’ fans, said a report by the Council on Energy, Environment and Water (CEEW) and the US Department of Energy Resources. As the cost of production will increase, the Maximum Retail Price (MRP) of the ceiling fans will also increase.
“Market is price sensitive. It is highly competitive,” said Gaurav. He added that even the big competitors will try to manipulate the market by raising the price of fans. The two components of the manufacturing— copper and the motor will have to undergo changes. The copper has to be enhanced by seven percent before using.
Another manufacturer, Akash Gupta, partner of Dipti Electricals said “Value of raw materials will increase. Components will be costly.”
Animesh Deep, managing director, Animesh Graphic Engineers said that this mandated rule by the BEE department has increased their revenue by 10 to 12 percent. “We are producing around 25 lakh BEE labels every month,” added Animesh.
An official from the BEE department said that “The ceiling fans will be taken by BEE or its agency for testing at the National Accreditation Board for Testing and Calibration Laboratories (NABL).” The decision by the BEE department came into effect on Jan 1, 2023, which said that no ceiling fan can be manufactured or sold without the BEE star rating.
Manufacturers also believe that this rule will benefit the customers as they will save money by using energy-efficient ceiling fans.
Dr Jayesh, Assistant Professor in Economics at Christ University, Bengaluru said “This transition has to be looked like the transition that happened with bulbs.” He added that if the cost of selling is increased right now, the customers will be saving in the future. “The long-term benefits for the consumers will outweigh the additional cost that they are paying right now,” said Dr. Jayesh. The report by CEEW said that after switching from a conventional to a Super-Efficient (SE) fan, an average residential consumer would save Rs. 500 annually in India.
However, the number of households using energy-efficient fans in the country is low. Of the 90 per cent of Indian households using ceiling fans, only three percent use energy-efficient variants, said the report by CEEW. Vikram Kumar, proprietor of Athrva Galleria said, “Customers come for cheaper products as well as for star-rated ones.”
Apart from the issue of the production cost, inventory of the existing ceiling fans have to be taken into consideration, said Dr. Jayesh. The BEE guidelines have said that no ceiling fans are to be sold without the star label which will create an issue for the shopkeepers and the manufacturers having an inventory of non-labelled fans.
Vikram added that the retailers will have to liquidate the non-labelled fans because the companies have dumped their stock on the retailers. It will take a few months to finish the already existing stock.
The people in the fan manufacturing industry said that a reduction in the Goods and Services Tax (GST) rates will bring them some relief. At present, the industry is taxed 18 percent.