A close look at India’s LED imports and exports

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Home-Splash_LedsLEDs are not only environment-friendly but are also a cost-effective lighting option for industrial units, commercial establishments, roads, highways, airports, railway stations and domestic lighting, and have a high growth potential. The fact that most of India’s demand for LEDs is met by imports has adversely affected the country’s import bill and also hinders the development of the domestic LED industry. In order to understand specific aspects of this sector, the PHD Chamber of Commerce and Industry (PHD-CCI) involved Infodrive India Limited to present this report on ‘LED Imports and Exports’ during the conference on ‘Make in India: Bright Prospects of LED Manufacturing’ in August 2015. The report covered the import and export figures for LEDs in the Indian lighting segment as well as in consumer durables. Read on to get a clear insight into the current state of this industry

Light emitting diodes (LEDs) are the basic components used in a variety of applications. Initially, the use of LEDs was limited to certain specific lighting needs and had not entered the mainstream general lighting market. However, their entry in applications such as general lighting has given a strong thrust to the lighting market.
In the coming years, consumers will gain awareness regarding the benefits of LED lamps, such as a longer life span, which will eventually lead to their widespread adoption.

Fig 1

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Trends in the global LED market
Let’s take a look at a few major trends:

  • The forecast for the global LED lighting market is that it will reach a turnover of US$ 42.7 billion by 2020, growing at a CAGR of 13.5 per cent from 2014-2020.
  • The fastest growing region is North America, with a CAGR of 15.3 per cent from 2014-2020, closely followed by Latin American countries, Asia Pacific and Europe.
  • It is anticipated that LED lamps will command about a 20 per cent share of the global lighting market by 2020. This will be equivalent to two-thirds of the revenue for the overall LED sector.
  • In the automotive sector, LEDs are preferred for many lighting applications including head lamps. This sector is expected to become a US$ 1 billion market in 2015, for LEDs.
  • Among the many types of LEDs, the high brightness LED segment is expected to grow swiftly and continue to account for the highest market share, contributing to over 60 per cent of the total market’s revenue, throughout the forecast period (2015-2020).
  • General lighting and mobile devices are the other two largest segments in which LED technology has been adopted. The mobile devices segment accounted for about 27 per cent of the total LED market revenue in 2014 and will remain the top segment throughout the forecast period. On the other hand, in the Asia-Pacific region alone, the general lighting segment accounts for nearly 25 per cent of the total revenue.
  • The US government is replacing conventional streetlights with LEDs, a programme that is expected to be completed soon. Such developments are instrumental in the growth of LED technology.
  • Chinese companies control nearly 35 per cent of the LED market and their share will continue to grow. This clearly indicates that China’s LED factories are running at full capacity. Chinese factories are producing large volumes of LEDs at cheaper prices. Some of the companies have a production capacity of 500,000 pieces per month.
  • Among the Chinese LED lamp suppliers, MLS Electronics shines bright and is the star performer even globally. MLS makes LED downlights, LED ceiling lights, LED panel lights, LED candle lights, LED bulbs and package LEDs. MLS has upped its production capacity from 3 million pieces a month to 30 million pieces a month. It is said to have maintained a high double-digit growth rate since it started in 1997. The company supposedly has 10,000 production line workers.
  • Veeco, a US based semiconductor manufacturing equipment provider catering to makers of compound semiconductor based LEDs, flexible OLEDs, solar cells and RF/wireless IC chips, reported a revenue of US$ 90.8 million in its first quarter of 2014 compared to US$ 73.2 million in its previous quarter, amounting to a sequential growth of 24 per cent. The LED and solar sectors account for 75 per cent of its revenues.

Fig 2

Fig 3

The Indian scenario

The Indian LED market is one of the fastest growing, driven by factors such as falling prices, increasing initiatives taken by the government and growing concerns about energy conservation. Today, the turnover of the Indian LED market is around US$ 143 million (₹ 9120 miilion). Business is expected to grow at a CAGR of 47.3 per cent between now and 2018 to touch US$ 1.3 billion (₹ 82.98 billion).
Moreover, the ‘Make in India’ initiative launched by Prime Minister Narendra Modi will provide a boost to the LED industry.
The shipments of LED tubelights are forecast to reach 1 billion units per year by 2018. The important markets for LED tubelights are offices, where the tubelights are switched on for around 15 hours a day. LED tubes cut power consumption by 50 per cent compared to fluorescent tubelights.
Among the various verticals, the LED industrial lighting segment is gradually opening up with a wide range of opportunities for players in India, who are witnessing immense growth. However, for the consumer market, LED is still an expensive technology. Though they are penetrating the consumer market, LEDs lag behind CFL technology, especially in the lamps, tubelights and bulbs sections.
There are a lot of LED lamp assembling companies in India that design and make LED lamps, but they import the basic LED chip elements.
De Core Nanosemicondutors Limited is the only LED semiconductor device maker that has an LED wafer fab in India. De Core is India’s first commercial compound semiconductor foundry, with its 20,000sqm facility located in the Special Economic Zone (SEZ) of Gujarat’s capital city, Gandhinagar.
De Core has the infrastructure to produce GaN/InGaN based high brightness LED chips in volumes, and can hence save India from importing these in the coming years.
The quality of LEDs made by De Core matches that of any leading Chinese vendor. De Core makes LED chips (bare-die), LED modules and luminaires, which include downlighters, false ceiling lights, grid lights and tubes.

Major players, worldwide

The vendors that focus on high brightness LEDs for lighting applications are Cree, Osram, Nichia and Philips Lumileds.
Nichia recorded a phenomenal growth of 20 per cent over the previous year and became the leader in LEDs. Lumileds Lighting (Philips) is estimated to generate a revenue of more than US$ 3 billion and is growing at a rate of over 30 per cent. Another top vendor, Cree, supposedly increased its share of the overall global market by 1-2 per cent in 2014 to get a total share of 11 per cent. The total sales revenue of Cree from LEDs for 2014 is estimated to have been in the range of US$ 1.8 – 2 billion. Germany based Osram is also categorised as a Tier 1 manufacturing company.
All these high-end Tier 1 manufacturers offer 40W replacement LED bulbs in the price range of US$ 9-10, compared to Chinese vendors who offer them for US$ 3-4. However, LED bulbs from Tier 1 manufacturers are better in terms of light efficacy and durability. These bulbs can work for 50,000 hours without failure.
There are a large number of Tier 2 players that focus on backlighting. These include Samsung, Everlight and many other South Korean and Taiwanese vendors.
In Taiwan, the two leading vendors are Everlight and Epistar. There is not much difference between the revenue earnings of these two companies, with Everlight being the leader.
Both these companies enjoyed double-digit growth in 2014 and expect the same in 2015. Taiwan makes the maximum number of notebook computers, which comprises a big market for these two manufacturers.
South Korea’s leading LED manufacturer, Samsung, uses much of its production capacity for its own products such as televisions, notebook computers, tablets and smartphones. Samsung is also aggressively marketing its high efficacy package LEDs for lighting applications. Though no exact revenue figures are available, we estimate it to be among the top four of Tier 2 companies, probably in the third or fourth position, with a revenue growth of around 10 to 20 per cent.
The Tier 3 vendors are primarily from China and are known to make low-power LEDs for backlighting as well as low cost lighting.

Fig 4

Major Indian players

Energy conservation drives, the need for more power efficient products and the electrification of rural areas are some of the factors that are driving the Indian LED lighting market. Unlike in developed countries, LED lighting constitutes only a negligible part of India’s overall lighting market.
A survey found that consumers prefer the bigger brands over Indian SMEs. The SME brands are yet to make their mark in the lighting segment.
Bajaj Electricals is the most preferred and trusted brand in India. It is one of the oldest business conglomerates in India focusing on lighting solutions and domestic appliances. It manufactures LED lights for home decoration under the brand name Bajaj LEDZ and iLED. It is a strong player even in solar lighting.
The second most preferred brand in India was Fiem Industries, according to the survey. Fiem Industries Ltd is a reputed name in the automotive lighting industry with eight state-of-art manufacturing units located across India. The company has recently added more facilities for the production of automotive lighting and signalling equipment.
Also amongst the top three LED brands is the global electrical giant, GE, which offers a variety of LED lamps ranging from decorative lamps and downlights to LED strip lights. Its Maple series of lights is for commercial applications and the Palm series is for streetlight applications. The company now has an employee strength of 15,000 in India. GE has set up many research centres across India with over 6000 engineers in Bengaluru, Mumbai, Hyderabad and Chennai.
Along with these brands, others like Havells, HPL, Osram, SYSKA LED and Surya Roshni have been very active in the market and are setting up manufacturing units in various states across India.
These brands are marketing themselves aggressively and in the coming years will gain a strong foothold in the Indian market.

Fig 5

LED manufacturing in India

Factors leading to an increase in demand
The factors which have led to an increase in demand for LED products are:

  • Mandatory energy efficiency regulations for new buildings and facilities
  • More investments in green buildings
  • Large size of the real estate market in India
  • Growing interest among healthcare, hospitality, retail and IT industries
  • Demand from institutions, industries and corporate houses

Factors deterring the technology in India

  • India, a latecomer: Compared to China, USA and European countries which have embraced this technology and are using it extensively, India has been slow to adopt it. Some European countries have even banned incandescent bulbs, which goes to show their seriousness and conviction in this technology.
  • Lack of awareness: Another problem is the lack of awareness among the Indian public. For people living in rural areas, incandescent bulbs are still most favoured and accessibility to LED technology is limited due to problems in distribution networks.

Problems in manufacturing LEDs in India
The problems cited by Indian manufacturers are:

  • Absence of national technical standards
  • Lack of testing facilities like laboratories and workshops
  • Lack of proper institutions which can impart training focusing on the lighting sector

Government initiatives

The government of India has acknowledged the benefits of using LED products and since 2009, it has taken several steps to promote awareness about this technology, amongst the public.
Earlier this year, the government of India launched an LED bulb distribution scheme under which, for a paltry rate of ₹ 10 per bulb, consumers in Delhi can register through a Web portal to request for LED bulbs. This scheme is expected to be rolled out in other states too.
Such initiatives have made the government’s intentions clear, which is to provide maximum support to this technology and phase out incandescent bulbs as they are a burden not only on the consumers but also on the government, due to the high power consumption involved.

Government incentives/schemes to promote manufacturing of LEDs

  • LED is a key vertical among the ESDM (electronic system design and manufacturing) products under the Modified Special Incentive Package Scheme (MSIPS) of the Department of Electronics and Information Technology (DeitY) which aims at increasing investments in both urban as well as rural areas. The scheme provides a subsidy for investments in capital expenditure – 20 per cent for investments in an SEZ and 25 per cent in non-SEZ projects. It also provides for reimbursement of CVD/excise on capital equipment for non-SEZ units. For high technology and high capital investment units, like fabs, reimbursement of central taxes and duties is also provided.
  • The Make in India programme launched by the prime minister has earmarked electronics systems as a core sector and focuses on LEDs, with custom duty exemptions to promote manufacturing of LEDs in India.

Private sector initiatives

The Indian private sector has embraced this technology with many private companies entering this lucrative and ever growing market.
Indian brands like SYSKA LED, Eveready, Havells and Surya Roshni have marketed themselves extremely well, which has led to the increase in supply of LED products.
The primary objective of their marketing campaigns was to make consumers aware about the technology and motivate them to buy LEDs.
Global giants like GE, Philips and Crompton Greaves have also made their presence felt in the Indian market and manufacture LEDs in large numbers.

Fig 6

Electronics imports in India

During 2014-15, India imported electronic products under the HS Codes 8517, 8518, 8519, 8521, 8522, 8523, 8525, 8526, 8527, 8528, 8529, 8533, 8534, 8538, 8541 and 8542, worth US$ 22.14 billion.
China was the largest supplier with a share of 57.15 per cent, followed by the Republic of Korea with 8.3 per cent and Vietnam with 5.06 per cent. Delhi’s Indira Gandhi International Airport (IGIA) accounted for 32.97 per cent of the imports, followed by Mumbai’s Chhatrapati International Airport (CIA) and JNPT (Jawaharlal Nehru Port Trust), which accounted for 13.59 per cent and 12.85 per cent of imports, respectively.

Electronics exports from India

During 2014-15, India exported electronic products under the HS codes 8517, 8518, 8519, 8521, 8522, 8523, 8525, 8526, 8527, 8528, 8529, 8533, 8534, 8538, 8541 and 8542, worth US$ 2.088 billion.
The USA was the largest buyer with a share of 20.03 per cent, followed by United Arab Emirates with 9.44 per cent and Israel with 6.26 per cent. JNPT accounted for 21.65 per cent of the exports, followed by Bengaluru’s Kempegowda International Airport (KIA) and Delhi’s IGIA, which accounted for 17.41 per cent and 13.94 per cent of exports, respectively.

LED imports for lighting

During 2014-15, India imported LED lighting products under HS code 9405, worth US$ 222.3 million. China was the largest supplier with a share of 84.76 per cent, followed by Republic of Korea with 5.43 per cent and Hong Kong with 2.4 per cent. JNPT accounted for 28 per cent of the imports followed by Chennai Port and Mumbai’s CIA, which accounted for 18 per cent and 13 per cent of imports, respectively.

LED exports for lighting

During 2014-15, India exported LED lighting products under the HS code 9405, worth US$ 13.25 million.
United Arab Emirates was the largest buyer with a share of 9.81 per cent, followed by Kenya with 9.22 per cent and France with 6.37 per cent. JNPT accounted for 19.29 per cent of the exports, followed by Delhi’s TKD ICD (Tughlakabad Inland Container Depot) and Bengaluru’s ICD (Inland Container Depot), which accounted for 19.16 per cent and 9.6 per cent of exports, respectively.

LED imports for the consumer electronics (CE) business

During 2014-15, India imported products under the LED category for the CE business under the HS codes 8528, 8529 and 8531, worth US$ 783.30 million.
China was the largest supplier with a share of 69.89 per cent, followed by Malaysia with 15.06 per cent and Republic of Korea with 4.10 per cent. JNPT accounted for 48.59 per cent of the imports, followed by Chennai Port and Delhi TKD ICD, which accounted for 15.15 per cent and 14.89 per cent of imports, respectively.

LED exports for the CE business

During 2014-15, India exported LED products for CE business under the HS codes 8528, 8529 and 8531, worth US$ 32.54 million. Sri Lanka was the largest buyer with a share of 73.63 per cent, followed by United Arab Emirates with 6.65 per cent and Nepal with 6.44 per cent. JNPT accounted for 40.76 per cent of the exports, followed by Chennai Port and Dadri – STTPL CFS, which accounted for 21.48 per cent and 17.47 per cent of exports, respectively.


While the imports of LED lights into India grew by 69 per cent in 2014-15, exports of these lights from India also increased by 22 per cent in the same year, indicating that the manufacturing industry in India has recognised the immense opportunities this sector offers. However, a number of challenges remain and will need to be addressed to minimise the imports of these lights in the coming years.


Opportunities to ‘Make in India’

There is a huge surge in imports, with the annual growth rate exceeding 26 per cent in electronics, 69 per cent in LED lighting and 104 per cent in LEDs for the CE business.The volumes also are fairly large, with electronics imports being US$ 22 billion in 2014-15. There is also negative growth in the export of electronics.
This means there are huge opportunities for import substitution and for exports by enhancing domestic manufacturing capabilities, infrastructure, the marketing and sales ecosystem, and by introducing industry-friendly taxation and legal compliances.

 

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