Dec 9, 2016: The ‘Make in India’ initiative, launched by Prime Minister Narendra Modi, failed to keep up with the promises to promote local manufacturing of LED bulbs—and the credit of this failure to a large extent goes to the central government itself.
While local manufacturers could not keep up with the rising demands, most of the government orders through a tender went to Philips Lighting.
The Power Ministry issued a letter of award to Philips Lighting to import LED bulbs from China, to make up for a shortage of supply by the Indian LED manufacturers. Such purchase orders were also issued to other Indian LED manufacturers and multinationals operating in India. Bajaj, Syska, Havells, Wipro, Eveready, Moser Baer are some of the leading LED bulb makers in India.
Under the UJALA program, Philips, the main supplier, could supply only 11% of 20 million LED bulbs. As per the contract, Philips was supposed to deliver 40% of the order within 60 days that ended on November 7. The complete supply is supposed to be delivered within 150 days from September 8, 2016, when the first letter of award was given by Energy Efficiency Services Ltd (EESL).
Industry insiders are also surprised that despite Philips’ failure to deliver on time, EESL did not take any action against the company.
EESL Manager Saurabh Kumar told Quint that the tender did not prohibit from importing. It should be mentioned here that Philips had agreed to supply LED bulbs at Rs 38 only. No domestic bidders including Syska could match Philips’ price.
The first letter of award to Philips India said, “you shall only use ‘Guangzhou Hongli Opto Electronic Co Ltd-make LED Chip or Everlite-make (Taiwanese) LED Chip’ for the supplies of 9 Watt LED bulbs”.
However, Philips did not transfer the deficit quantity of bulbs to other bidders, despite failing to meet the delivery deadline.
As the domestic LED makers including Philips failed to meet the rising demand for LED bulbs, the government had to rely on Chinese LED bulbs, according to the government sources. This is to safeguard indigenous business and the economy from China where pricing “is not rational”.
National Security Adviser Ajit Doval raised a concern over too much reliance on Chinese good, particularly power equipment of uncertain quality and life cycle. Moreover, Chinese companies do not have manufacturing facilities in India. As a result, problems could arise to provide emergency repairs, spares and replacements. Chinese imports of electrical equipment in India is 35%, which can be “threatening”.
The power sector has also expressed concern over the “threatening” amount of Chinese-made electrical goods, , including LED bulbs, floating in the Indian markets.
Indian Electrical and Electronics Manufacturers’ Association (IEEMA) urged the government to ask foreign companies that are operating in India to set up manufacturing facilities in India.