From 28% to 18%! Blue Star bets on tax cuts to power AC sales surge
Blue Star raised its AC sales growth forecast to 20% as India plans a major tax cut, though short-term demand may dip with buyers delaying purchases until festive season.
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AC-maker Blue Star Ltd expects its room air conditioner sales to outperform earlier forecasts this financial year, buoyed by the government’s planned reduction in consumption taxes, Reuters reported.
In the country’s largest tax overhaul since 2017, Prime Minister Narendra Modi announced in October that taxes on everyday goods and appliances would be cut, aiming to stimulate consumer spending as trade tensions with the U.S. continue.
Blue Star had earlier projected 10–15% growth in room AC sales volumes for the year ending March. Now, Managing Director B. Thiagarajan said the company expects growth of up to 20%, particularly in India’s price-sensitive market.
“From 28% for air conditioners to potentially 18% is something nobody would have dreamt of,” Thiagarajan told Reuters. “This is an extraordinary step that will boost demand, especially after a cooler summer.”
Blue Star’s unitary products division, which includes room ACs and commercial refrigeration systems, contributed nearly half of the company’s revenue of Rs 119.77 billion last year. The company holds around 14% market share in room ACs.
However, analysts warn of short-term disruption as consumers postpone purchases until the tax cuts take effect. Electronics retailers could see slower sales leading up to Deepavali in October, traditionally a peak season for appliance sales.
The tax-cut policy is expected to benefit the wider $4-billion Indian room AC sector, which also includes Tata Group’s Voltas and Japan’s Daikin.
