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Indian Budget 2017: Mixed response from LED industry

Indian Budget 2017: Mixed response from LED industry

By BizLED Bureau

Feb 3, 2017: To promote LED lighting, in Budget 2017, the Indian government has cut excise and import duties on input materials used to manufacture LED lamps, which has been appreciated by the LED industry. Under the Domestic Efficient Lighting Scheme UJALA, the Power Ministry has already replaced over 200 million traditional bulbs with LED lights.

According to the Shyam Sujan, secretary general, Electric Lamp and Component Manufacturers Association of India (Elcoma), this move will help the Indian government’s ‘Make-in-India’ program. “This initiative is in favour of the domestic LED lighting industry,” said Elcoma Vice President Raju Bista.

The Budget has also retained the 10% customs duty on import of finished LED products, which will also support the domestic LED lighting industry. “Now, value addition in LED products by importing the components would be cheaper and domestic LED light makers would grow,” said Bista, who is also Managing Director of Surya Roshni.

Also Read: India’s distribution of LED bulbs under UJALA crosses 200 mn mark

In Budget 2017, the government has proposed to reduce excise duty to 6% and basic customs duty to 5% and countervailing duty to 6% from the existing duty on “all parts for manufacture of LED lights or fixtures, including LED lamps”.

The budget also proposes to cut customs duty on “all inputs for use in the manufacture of LED driver and MCPCB for LED lights or fixtures, including LED lamps” to 5%.

Also Read: Philips is sparking price war, say Indian LED makers

Dixon Technologies Chairman & Managing Director Sunil Vachani said: “As far as the LED industry is concerned, they have reduced the excise duty, which is a welcome step but there is certain anomalies also which has come because of this.”

According to Vachani, the impact would be “neutral” on the price. “Most of these items are in ITA 1 agreements of WTO, and they are not taxed. The government would have to rectify this anamoly,” Vachani said. Since India is a signatory to WTO, this bars imposition of customs duty on PCBs, a major component of LED lighting products.

LED lighting companies in India will meet Union Power Minister Piyush Goyal to vent their opposition against imposition of import duty on input components. Earlier, there was no customs duty on imported MPCBs, however, there was a 10% duty on finished LED products. The LED industry representatives will ask the power minister to make suitable amendments in the proposal.

The industry is hopeful that despite these changes, prices of LED lighting products will not rise as the government has reduced excise duty on components used in manufacturing LED lights to 6%.

According to Shyam Sujan, LED lighting companies had actually asked the government for a 20% customs duty on finished LED lights.

According to Anchor Electricals, “A course correction in countervailing duty and basic customs duty structure on renewable energy and LED products and components will give the necessary impetus to local manufacturers, aligned to government’s ‘Make in India’ vision.”

Saurabh Kumar, managing director, Energy Efficiency Services Limited that is implementing the government’s LED bulb distribution scheme across India, said, that cut in duty in LED manufacturing will motivate innovation among the LED lighting manufacturers and support the ongoing efforts to reduce the cost of LED technology. “This is a stepping stone towards India becoming a global leader in energy efficiency programs,” he said.

EON Electric chairman and managing director VP Mahendru said, “The Union Budget 2017 has come up with some interesting steps for the LED lighting industry. With rural development being one of the major focuses for 2017-18, there has been an increased allocation for the rural electrification which will in turn benefit the manufacturing and sale of LED lighting products. However, the budget should have offered incentives and concessional interest rates for LED Lighting manufactures keeping in mind that LED lighting can play a big role in the implementation of the government’s vision of 100% rural electrification, and energy conservation. Establishment of special economic zones for the LED lighting industry has also not been touched in this Budget.”

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