Production Linked Incentives Schemes in India

India’s LED Sector: Enhancing the Local Ecosystem

LED lights

Light bulbs are one of the most ubiquitous electric appliances around the world, consuming about 15% of the global electricity. Light Emitting Diode (LED) lighting technology has gained a stronghold in the market for lightbulbs as the technology is up to 75% more energy efficient than traditional incandescent and compact fluorescent (CFL) bulbs. LEDs will play a key role in enabling electricity access with a lower carbon footprint. LED lighting is the first choice in industrial, commercial, and domestic applications owing to its low energy consumption, low costs, modular designs, and ease of use.

India’s LED lighting market grew 130-fold within five years, skyrocketing from annual sales of 5 million bulbs per year in 2014 to about 670 million in 2018. This resulted in 30 terawatt hours (TWh) of annual energy savings. The price of an LED bulb in India also dropped dramatically, from Rs. 400 ($ 6.4) in 2014 to about Rs. 70 ($ 1) just five years later.

Over the same period, the number of LEDs in India has increased rapidly. The market share for LEDs grew from 0.3% to 46%, with sales surpassing those of incandescent, CFL and tube light lamps. This rapid increase in demand for LED lights is driven by government initiatives, adoption in metro cities because of better awareness and higher socio-economic growth. Rural areas and Tier- II cities have also contributed to an increased demand based on requirements from the street lighting and industrial lighting domains.

The main driver of India’s rapid market creation was a policy initiative, known as “Unnat Jyoti by Affordable LEDs for All (UJALA)” which procured LED bulbs for the national market. This brought LED prices down through competitive bidding, allowing the bulbs to be sold at profitable, but lower-than-retail prices through kiosks and registered vendors. Over 2.1 million conventional streetlights have already been replaced with LED streetlights across the country, under the Street Lighting National Programme (SLNP).

There is immense potential for India to continue its LED market growth while also increasing bulb quality and accelerating industrial capabilities. This would mean a focused improvement in the entire value chain, including research and development, manufacturing, demand-side management, and job creation.

To make LED manufacturing in India globally competitive, removing sectoral disabilities, creating economies of scale, and enhancing exports, the Government of India has approved a Production Linked Incentive Scheme for White Goods with a budgetary outlay of INR 6,238 crore (~$ 855 million) which includes LED Lights. The scheme will encourage manufacturing of components or sub-assemblies which are not manufactured in India presently with sufficient capacity at incentive rate of 4-6%.

Core components like LED Chip Packaging, Resisters, ICs, Fuses, and other components of LED lights like LED Chips, LED Drivers, LED Engines will be incentivized to help create a robust ecosystem that would help in increasing value addition to 40-45% in LED lights. This PLI scheme will also have a positive impact on other sectors like the automotive sector which is expected to be the fastest growing LED application area at 21 per cent CAGR. General lighting, backlighting, signal, and signage are other common applications of LED lights in India. Over the five years, the PLI scheme is estimated to lead to incremental production worth over $ 23 billion, exports worth over $ 8.8 billion and create additional four lakh direct and indirect employment opportunities.

The PLI is now open for applications for a period of 3 months till 15th September, 2021 and the application portal can be accessed through: https://pliwhitegoods.ifciltd.com/

We would be happy to walk you through the guidelines of the scheme as well as with the application process. Please reach out to at consumer.goods@investindia.org.in.