Did GST Reforms Drive a Surge in AC Sales This Festive Season?
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Synopsis
The festive season of 2025 has sparked a notable rise in room air conditioner sales, propelled by GST rate cuts. However, the broader demand outlook remains steady, raising questions about sustained growth in consumer durables. Discover the insights from recent reports on market trends and pricing strategies.
Key Takeaways
- Room air conditioners saw a significant demand spike due to GST reforms.
- Overall demand for consumer durables is expected to stabilize.
- Price hikes in cables and wires could benefit revenue growth.
- Inventory for air coolers remains high, leading to price adjustments.
- The lighting segment continues to thrive, especially in premium offerings.
New Delhi, Nov 28 (NationPress) The demand for room air conditioners witnessed a significant increase during the festive season, primarily driven by postponed purchases following GST rate reductions, according to a recent report released on Friday.
However, data compiled by BNP Paribas India indicates that overall demand is likely to remain relatively stable in the short term.
The lighting sector has shown a strong improvement in demand in recent months, with a continued focus on the premium segment, as per the report.
Demand for cables has remained robust, while the demand for wires has increased due to the resumption of construction activities following an extended monsoon season, the report observed.
Brands in the cable and wire sectors have raised prices, which may contribute to improved revenue growth in Q3 FY26, the report added.
The inventory normalization in the white goods category is skewed towards large format retailers at 15-20% above normal levels, contrasting with general trade at 35-40% above normal.
The distribution channel remains cautious about restocking in the near future and does not anticipate a significant demand increase by the end of December 2025 due to the BEE rating changes, even though brands are likely to promote older-rated inventory.
"We do not foresee a material change in the Q2 FY26 trend in the short term and favor RAC EMS players over brands to capitalize on the anticipated summer recovery in CY26," the report stated.
Nirransh Jain, India Analyst in Consumer Durables at BNP Paribas India, mentioned that dealers in the electrical consumer durables and lighting sectors stocked winter products and increased prices by 3-4% in November 2025 to counter commodity inflation.
The demand for fans saw a modest rise in the northern and western regions during the festive season but remained low in the south due to the prolonged monsoon, according to the report.
Inventory levels for air coolers are elevated by 30-35% above normal, prompting a 2-3% price reduction following the summer season. Prices for lighting products have stabilized over the past two months, although dealers remain somewhat hesitant to increase their stock.
Point of View
I recognize the significance of the recent surge in AC sales linked to GST reforms. While this is a positive indication for the industry, the overall demand stabilization suggests a cautious approach moving forward. It’s essential for stakeholders to adapt strategies that align with changing consumer preferences, ensuring they remain resilient in a fluctuating market.
NationPress
28/11/2025
Frequently Asked Questions
What factors contributed to the rise in AC sales this festive season?
The increase in AC sales was primarily driven by deferred purchases due to GST rate cuts, which encouraged consumers to make purchases during the festive season.
What does the report say about the overall demand for consumer durables?
The report indicates that overall demand for consumer durables is expected to remain flat in the near term, despite the surge in AC sales.
How have prices in the cable and wire sector changed?
Cable and wire brands have increased prices, which may lead to better revenue growth in Q3 FY26.
What is the current state of inventory levels for air coolers?
Inventory levels for air coolers are currently 30-35% above normal, prompting some price reductions.
What trends are observed in the lighting sector?
The lighting sector has shown healthy growth in demand, particularly for premium products, with prices stabilizing over the last two months.
