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AC`s & fans to get cheaper as govt plans to launch new scheme

Subsidized ACs & fans

Government of India is planning to launch a new project which will subsidize energy efficient air conditioners and fans. The scheme is based on the Narendra Modi`s UJALA Yojana which subsidized LED bulbs. The LED bulbs reduced the electricity bills drastically and as a result UJALA Yojana was a massive hit and most of the country now understands the use of LED bulbs and energy conservation. Union government now want people to avoid use of non-energy efficient electrical equipments and hence they are planning to subsidize AC`s and fans now. Under the scheme a 1.5 tonne, 5-Star split AC will cost less than Rs 30,000 only which today costs close to Rs. 40,000. The Ministry of Power will be starting the initiative soon via one of its arm Energy Efficient Services Ltd. (EESL). EESL is a joint venture firm by various state run power companies. The initiative aims to bring down the costs of the energy efficient electrical equipment by 30% and the electricity bills by 20-45%.

The EESL will bulk buy AC`s from the popular AC manufacturers such as Whirlpool,  Voltas, Blue Star, Daikin etc. They will be available to consumers on subsidy. Consumers can buy these energy efficient products on zero down payment and then can pay the cost of the equipment by monthly installments. The government is expecting that the scheme will encourage consumers to use energy efficient products and reduce the overall electricity bills between 30% – 60%. There will be subsidy schemes for the big institutional buyers as well such as bank, corporates who needs thousands of AC`s, fans and other electrical equipments. Government bulk procurement also reduce the costs of the equipemnts due to increased demands. The costs of the LED bulbs came down by 23% due to government bulk procurement during UAJALA Yojana. Prominent electrical equipments manufacturers have also requested government to reduce the goods and service tax (GST) on the energy efficient products which to encourage consumers to buy them and save energy.

Highlights of the subsidized AC`s & fans program:

  • Subsidy on the energy efficient products
  • Subsidy on the 5-star ACs
  • ACs will be available on the zero down payment and monthly installment schemes
  • Reduced costs of the ACs: they will cost 30% lesser with the program
  • Reduced electricity bills by 20 – 45%
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