The appliance makers predict a good churn in the Christmas season, led by the government's proposal to decrease the GST slab on air-conditioners from the current 28 per cent to 18 per cent, which will reduce the price from Rs 1,500 to Rs 2,500 depending on the models.
Government initiatives:
Recently, the government lowered the repo rate—the rate at which the RBI lends money to banks—and lowered income taxes.
The cost of appliances like air conditioners is anticipated to decrease as a result.
Effect on customers:
More consumers can now afford air conditioners thanks to lower costs (greater penetration).
Because the price difference will be less severe, customers may also decide to choose premium or energy-efficient versions (premiumization).
Effect on additional appliances:
The industry anticipates that comparable advantages will encourage the government to lower the GST on TVs larger than 32 inches (from 28% to 18%).
ACs won't be purchased in August
Additionally, dealers (shops) won't stock up out of concern for losses.
Sales are temporarily slowed until the new pricing is implemented as a result.
Effect on additional appliances:
The industry anticipates that comparable advantages will encourage the government to lower the GST on TVs larger than 32 inches (from 28% to 18%).
Viewpoint of the industry (Blue Star MD Thiagarajan):
He applauds this action but highlights a drawback: People will put off buying now since they know prices will decline soon (probably starting in September or October).
He responded, "This will be around 10 per cent," when asked about the price benefit to the customer, since GST is applied to the final pricing.
According to Manish Sharma, chairman of Panasonic Life Solutions India, the industry anticipates energy-efficient items to pay about 12% GST, with the remaining products falling between 18% and 18%.
However, "there will be a straight 6 to 7 percent price reduction in the event that the GST on air conditioners and other appliances is lowered from 28 to 18 percent."
Current Situation
Right now, Air Conditioners (ACs) are taxed at 28% GST (higher slab).
Most other appliances like fridges, washing machines, microwaves are already at 18% GST.
This makes ACs costlier compared to other appliances.
2. Proposed Change
If GST on ACs is reduced from 28% → 18%, prices will drop.
How much will customers save?
Manish Sharma (Panasonic): Price reduction of 6–7% (since GST is on base price).
Thiagarajan (Blue Star): Around 10% savings to customers.
In actual money: ₹1,500–₹2,500 cheaper per AC, depending on the model.
Why is this important?
Affordability: ACs will be more affordable for middle-class buyers.
Penetration: Currently, only 9–10% of Indian households have ACs (very low compared to developed countries).
With cheaper prices, more families can buy ACs.
Quality of life improves → especially in India’s hot climate.
Industry View
Panasonic & Godrej: They see this as a phenomenal move because:
It reduces costs for consumers.
Boosts demand and sales for appliance makers.
Brings ACs in line with other appliances (same 18% GST).