LED Industry in India

India’s quiet but impactful revolution in energy efficiency through government LED bulb subsidies – LED price reduced by 75% in just 7 months

The new Indian government has made some tremendous positive changes in the energy sector, despite deep rooted structural issues. While the renewable energy changes with strong support towards solar energy is well known and discussed, what is missing is the massive change being made towards the energy efficiency sector. The government is collecting millions of dollars through higher taxes on oil and through a clean energy cess of almost $7/ton on coal. This is being used to finance subsidies for the distribution of millions of LED bulbs to customers across the country. 30 million LED bulbs have already been distributed. The massive scale of this exercise has not only sharply reduced the costs and prices of LED, but also helped in kick starting the manufacturing. India has made large climate change commitments, with 30-35% reduction in emission intensity. LED bulbs are a fast and easy way to reduce the energy demand. The government gives LED bulbs at heavily subsidized rates to electricity customers, who replace the CFL bulbs being used. This reduces the energy demand quite substantially.

Why LED

This is not only helping the manufacturing sector, but also increasing the demand from the non-subsidized sector which is benefiting from the lower prices of the LED products. Note Light emitting diode or LED bulbs are emerging as the most energy-efficient source of lighting, with a LED bulb using only 1/10th as much energy, as a normal incandescent bulb and half as much energy as a compact fluorescent lamp (CFL) to produce the same amount of light.

		Light Type
Parameter	Units	Incandescent	CFL	LED
Life Span	hours	1,500	10,000	50,000
Wattage	watts	60	14	6
Power consumed per hour	Kilowatt-hour (kWh)	0.06	0.014	0.006
Cost of usage for one hour @Rs 6 per kWh	rupees	0.36	0.084	0.036
Cost of usage for 50000 hours	rupees	18000	4200	1800
Bulbs needed for 50000 hours of running	no of bulbs	33	5	1
Bulb Cost	rupees	10	120	400
Cost of replacement	rupees	330	600	400
Total 50000 hour lighting cost	rupees	18330	4800	2200
Ratio of cost	ratio	8.3	2.2	1.0

The LED Program

The LED push, under the Domestic Efficient Lighting Program was launched in full swing across Maharashtra, Rajasthan, Delhi, Uttar Pradesh and Himachal Pradesh in January 2015.

Also read about Solar Garden Lights.

The LED Price Crash

Energy-efficient LED (light-emitting diode) bulbs will now be available at a price lower than CFLs (compact fluorescent lamps) after the government closed the world’s single-largest tender to procure 50 million LED bulbs. With this tender, the price of an LED bulb has come down to one-fourth, or Rs 77 on an average, since January last year when the first tender was finalized.

LED Business Model

The LED project is financed by consumers themselves through two plans. The first one is an ‘onbill EMI’ model under which consumers have to pay Rs 105 for an LED bulb across 10 months, which is added to the monthly power bill. The second plan allows the consumer to buy bulbs in one go — every consumer is entitled to four LED bulbs — by paying Rs 100 a piece. (The bulbs come with a three-year replacement warranty).
In Delhi, the government has come up with a unique way to promote the use of LED bulbs. In Delhi, LED bulbs will be provided to all domestic consumers at an initial payment of Rs. 10 each and recovery of Rs. 10 each for 12 months from their electricity bill. Hence, the cost for an LED bulb to domestic consumer will be Rs 130 through this program due to bulk procurement, compared to the current open market retail price in the range of Rs. 350-600 for LED bulbs.

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