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‘Make in India’ falls flat, Philips asked to supply China LED bulbs

‘Make in India’ falls flat, Philips asked to supply China LED bulbs
Photo courtesy: IndianExpress

By BizLED Bureau

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.

Also Read: LED bulbs’ price further reduced under UJALA program

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).

Also Read:UJALA LED procurement creating artificial demand, say LED makers

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.

Also Read: ESSL distributes LED bulbs under UJALA across 16 Indian states

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.

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  1. Indian manufacturers have ample amount of capacity to meet the govts LED Bulb requirements. And in fact before this Philips tender all manufacturers were supplying to govt on time and in huge quantities.
    Problem was that Philips India does not have this much capacity in India and no one else was given quantities from this tender.
    If the govt would have analysed the capacity Philips had and given the balance quantities to others, they wouldn’t have faced this problem and the make in india plan would continue to work.

  2. Kwality Photonics is producer of LEDs since 30 years and has currently setup a Innovation Startup – LEDchip Indus P Ltd- to expand capacity to over billion LEDs, a first for India.
    Thanks to EESL Ujala initiative for creating huge market for LEDs in shortest time ever recorded in the history, it also succeeded to bring in competition; drive down the LED prices almost on par with the traditional lighting. As a result, India will now need a score of LED packaging plants to meet the local demand; and make 100% make-in-India-lights a reality.
    It’s sad and against the interest of the country to restrict the use of selected foreign brands of LED chips ( LED packages), in above mentioned tender. We hope EESL takes the bold step to include LED packages of any LM80 certified Indian make, in every tender.
    Even the progressive ESDM policy by DEITY mandates under PMA (preferential market access) policy that all Govt purchases should have Indian component content of 65% and more. EESL can prominently incorporate this clause in the basic conditions to accelerate the manufacturing in India.

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