A light-bulb moment for the Indian fan market

Source– The post is based on the article “A light-bulb moment for the Indian fan market” published in “The Hindu” on 22nd September 2023.

Syllabus: GS3- Indian Economy – Industries and industrial policies

News– The article explain the issue of energy efficiency of ceiling fans for sustainable energy transition

Why ceiling fans are crucial for energy transition in India?

India has an objective of achieving a 45% reduction in harmful emissions per unit of GDP by 2030 compared to 2005. It necessitates a significant decrease in the energy used for economic activities.

Approximately one-third of all electricity consumed in India is attributed to households. The ceiling fans constitute around 25% of household electricity usage, according to a 2020 survey by the Council on Energy, Environment, and Water (CEEW).

The India Cooling Action Plan predicts that the number of fans in operation in India could double to one billion by 2038.

What are efforts by the government to improve the energy efficiency of ceiling fans?

The Bureau of Energy Efficiency mandated the Standards and Labelling (S&L) program for ceiling fans in May 2022. This marked a significant shift from the voluntary program introduced in 2009.

However, ‘5-star’ rated fans are priced at twice the cost of regular, unrated fans. It is posing a substantial barrier to adoption in India’s price-sensitive market.

To address this challenge, the Energy Efficiency Services Limited (EESL) is planning an initiative aimed at selling 10 million ‘5-star’ ceiling fans.

This program aspires to revolutionize the fan market in a manner similar to LED lamps under the UJALA program.

What should be the way forward for sustainable and advantageous transformation of the ceiling fan market?

Maintain a technology-neutral policy- Ceiling fans offer a broader range of technologies, each with its own advantages and trade-offs.

A policy that accommodates multiple specifications would be more cost-effective in the long term.

A technology-neutral demand aggregation policy should allow manufacturers to offer various technologies to consumers, fostering competition and ensuring cost-effective market transformation.

Strike a balance between price reduction and quality management- The significant price pressure on LED bulbs during the UJALA program led to the entry of lower-quality products into the market.

While replacing a light bulb is relatively easy and inexpensive, replacing a ceiling fan is inconvenient and costly.

Low-quality products could erode consumer trust in the new technology, prompting them to revert to traditional fans.

Development of high-quality domestic manufacturing capabilities- India has overlooked the importance of maintaining the quality of local manufacturing and reducing reliance on imported components.

India can capitalize on its extensive domestic market to achieve economies of scale for both finished products and components.

It is crucial to update Indian quality and performance standards to align with international benchmarks, ensuring that domestic manufacturers remain competitive.

More resources to enhance the standard and labeling program- It is estimated that at least 30% of India’s ceiling fan market operates informally. This segment is expected to be slow in adopting new technologies and will likely continue selling less efficient fans.

Therefore, the Bureau of Energy Efficiency and its State-designated agencies should leverage their market monitoring authority to ensure that products carrying genuine energy performance labels reach consumers.