India Considers AC Scrappage Scheme, Incentives For Replacing Old Models

The government is in talks with air-conditioner manufacturers to finalise a scrappage scheme, aiming to phase out models older than six years. It plans to incentivise scrapping of old ACs to promote newer and energy-efficient five-star models in a bid to lower power bills and carbon footprint."There are 50 million units in the market today, already installed, which consume a lot of power," Blue Star Managing Director B Thiagarajan told NDTV Profit. "So, there is a programme that is being contemplated by the Ministry of Power... the objective is to replace these with energy-efficient ACs."Brands such as Blue Star, Godrej, Samsung, Havells (Lloyds) and Voltas have been invited by the ministry to contribute to the plan's execution.Many homes still rely on models that are 10 years old or older. Instead of replacing these units, people often just move them to another room when they purchase a new one, Thiagarajan said.While it is essential to mandate the scrapping of these outdated models, there is also an opportunity to replace units that are six–nine years old to help reduce carbon emissions. Likewise, the government and public sector units have a huge number of old machines that need replacement, according to Thiagarajan. "There is an ongoing discussion about the potential use of the GeM portal for this purpose.".India May Face AC Shortages Again This Summer As Supply Woes Worsen.Multiple ways are being considered to structure the incentives. One option is to provide funds directly to consumers upon proof of replacement. Another possibility is to allocate the funds to the manufacturer, which would then manage the programme, Thiagarajan explained. "And a third option that we have proposed is to implement a green credit scheme that consumers could use for exchanges under the Life program."It is also crucial to ensure the programme is administered effectively to avoid misuse of funds, and adequate incentives are provided. It is also being discussed whether ACs that are nine years old should receive more incentives for replacement than those that are six years old, he said. "These details are still being worked out, and I think it will take about six months to finalise the best mechanism for all stakeholders."Although less than 20% of Indian households own an air conditioner, cooling accounted for an estimated 60 GW of the total peak load in 2024, as AC sales hit a record 14 million units — 27% higher than the 11 million units sold in 2023, according to the International Energy Agency.Rising AC ownership and an expected intense and prolonged heat waves will further drive higher power consumption. By 2030, ACs are expected to contribute to a third of peak electricity load, reaching 140 GW.For manufacturers, the programme indicates a definite demand for replacements within a specified timeframe. The rollout of the scheme can further boost sales. The Bureau of Energy Efficiency's Indian Energy Scenario report projects that the percentage of households with ACs will grow from 8% in 2017–18 to 21% by 2027–28 and 40% by 2037–38..India Eases Import Rules For Key AC, Fridge Parts To Avert Summer Shortage

India Considers AC Scrappage Scheme, Incentives For Replacing Old Models

Brands such as Blue Star, Godrej, Samsung, Havells (Lloyds) and Voltas have been invited by the Ministry of Power to contribute to the plan's execution.

NDTV Profit

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