June 15, 2016: Under the Ujala scheme, so far, Government of India has distributed 11,68,97,199 LED bulbs, saving 4,15,92,023 energy per day, and saving 16,63,68,094 costs per day. However, the target to replace 77 crore conventional incandescent bulbs with LED lights doesn’t seem far at all as the government has launched aggressive policies and schemes to meet the goal.
In 2009, Bureau of Energy Efficiency (BEE), a Union Power Ministry arm, came up with a roadmap to guarantee quality and consistency of LED bulbs, besides strategizing on how to decrease its expensive price. In 2012, BEE spearheaded the establishment of national standards, following which 12 standards were issued by the Bureau of India Standards (BIS) in March 2012. This was a proud moment as India became the first nation to issue National Standards for LED lights.
In 2009, Energy Efficiency Services Limited (ESSL) came into existence as a cooperative venture of four power-sector Central PSUs that included Power Grid Corporation, Rural Electrification Corporation, NTPC and Power Finance Corporation, chiefly to pave way for implementation of the energy efficiency schemes headed by the government.
2016: Explosion of LED innovations and achievements
In January 2016, EESL procured about 6 lakh LED bulbs from four different manufacturers. The procurement cost was Rs 310 per bulb, which was distributed through a subsidized model. However, with the introduction of the Ujala scheme by the government, the price of LED bulbs have reduced drastically.
In April 2016, EESL procured 5 crore LED bulbs from 17 manufacturers. The procurement cost for 9W LED bulb each was reduced to 54.9 which permitted the government to sell the bulbs Rs 75 and Rs 100, as per the tax structures across varied states.
The LED industry of India is positive that LED bulbs program will end before its three-year timeframe. With this, many have raised questions regarding the quality of LED bulbs. However, only 0.31% bulbs were found to be defective up until now.
According to projections, more than 25 crore LED bulbs will hit the market in 2016-17, out of which 15 crore will be under the government-procured scheme.
Nonetheless, confusion prevails among consumers since the locally branded LED bulbs retail for Rs 200-300; whereas the price spectrum of the imported LED bulbs is as low as Rs 60. Also, some have BIS marks, others don’t and the guarantee period differs from two years to three years. For instance if you go for the cheapest Chinese LED, you don’t get any warranty. Also, the intensity of brightness varies, resulting in confusion among consumers.
There are two types of imported LED varieties at present. One is that being retailed by Indian firms such as Syska LED, and the other are the cheaper unbranded ones of Chinese manufacturers. Many reputed Indian LED manufacturers have not participated in the bidding rounds for government procurement, depending solely on imported bulbs and selling at a cost much higher as compared to government-determined rates. That raises the question whether the price will go higher once the government exits the LED space and the industry fully takes over the LED space, tentatively by April 2019.
Reduction in duty and tax component
Majority of the manufacturers, including Bajaj Electricals, want reduction in the duty and tax component for their energy efficient LED products from the government. Also, a better technique of differentiating fake LEDs from the genuine ones will be key for endurance of major LED players planning a growth.
There has to be a thrust on developing BIS standards for all LED products so as to end spurious products from entering the Indian market. Bajaj Electricals contemplating an expansion of its LED manufacturing facility beyond its present unit in Nashik, does not predict prices rising back to excessive levels.