LED Market in India

In 2009, India began a plan of replacing 4 million inefficient incandescent bulbs with CFL by 2012. By 2013 Indian states including Tamil Nadu announced plans of replacing some 200,000 fluorescent tube lights with LEDs. Philips and Panasonic active involvement in the Indian market in late 2013 and Jan 2014 are also indicators of LED market potential. LEDinside editorial team had a chance to recently interview Deepak Loomba, Managing Director and CEO of De Core Nanosemiconductors Ltd., who shares some interesting insights on the LED market developments in India. 

Deepak Loomba, Managing Director and CEO of De Core Nanosemiconductors.
Deepak Loomba, Managing Director and CEO of De Core Nanosemiconductors. (Photo Courtesy of  De Core Nanosemiconductor)

Overall India LED Market

In 2012, the LED light source market generated about US$ 100 million, said Loomba.LEDs remain a minority in the Indian market with only three to five percent market share. In the residential market, LEDs are mostly seen in new constructions, with existing CFL users are less willing to convert to LED lighting. 

The Indian market continues to be mainly driven by government which makes up 51 percent of all LED orders. The streetlight market, for instance is benefiting from lighting overhaul in cities of old lights to LED. While in the commercial lighting segment there is a heightened interest in industrial lighting and in downlighters, which in India are vigorously shifting to LED as a source. In addition, the Indian government has proposed major measures to encourage LED industry – (a) Setting up LED Fabs included under MSIPS (Modified Special Incentive Package Scheme) to provide cash grant of up to 20% of the cost of project to companies that set up semiconductor fab in India subject to a minimum initial investment of approximately US$ 50 million. There is no discrimination whatsoever on account of the origin of the investment – whether Indian or foreign, both are subject to same conditions and get the same incentives. (b) Notification of LEDs under the Preferred Market Access Policy of Government of India, under which the Government of India shall provide 50 percent of tendered quantity of LED based product purchases by Government of India to companies who do at least 50 percent value addition through manufacturing in India, while doing so there is no preference on the tender price or specifications for the tender. This enables companies manufacturing LEDs within India to gain access to local markets. 

To reduce reliance on LED imports, a total of US$ 2.5 billion has been injected into two major semiconductor subsidy programs, including the ST Microelectronics Fab in Gujarat, very close to the fab installed by De Core Science & Technologies Ltd. in Gandhinagar, Gujarat

Most of the LED chips in the country are still imported with Philips and Nichia dominating the LED industry. “Philips has a 65 percent share in the lighting market in India,” said Loomba. Even the GaN LED market is dominated by large foreign players including Cree, Nichia, Samsung and Osram. Everlight and Epistar have also started appearing in the market though the market share is not substantially large in lighting market.

Challenges local manufacturers face

In general, the prices for LEDs are pretty low in the Indian market because it is still a developing country and while it has low entry costs, local manufacturers also receive low margins in return. “India does not have a respectable LED industry size, so this is a major challenge for manufacturers,” said Loomba. Moreover, the industry faces intense competition from Asian manufacturers.  

Location and stable power source also present particular challenges for companies that want to establish foundries and factories in India. Loomba pointed out it is difficult to find suitable locations to build LED factories, and there are still issues of power shortages. Headhunting is also a headache for manufacturers, as there are few people working in the semiconductors sector. 

De Core Nanosemiconductor vertically integrated LED strategy overview. (Photo Courtesy of De Core Nanosemiconductor)

De Core Nanosemiconductor Positioning

In face of all these challenges, how does De Core Nanosemiconductor cope? One of the two interesting strategies it adopted is its global outlook. The company requires numbers, which it can build only in case it can create markets besides India. It is more focused on the pay worthy Russian and European markets at this moment of time while commencing operations for export to US markets. Russia currently is the focus State for exports where it has gone ahead and set up a local office, alliances with local distributors and even a local Company to facilitate sales of its in-house designed and packaged LED luminaires to the country. “We are focused on the Russian market because it is a relatively wealthy country, also because the company has partnerships in R&D and research labs in the country,” said Loomba. Another explanation can be noted with Loomba personal experience of spending 16 years in the country, which makes him confident of his understanding of the market there. 

The other major strategy was to be fully vertically integrated. De Core Group along with its flagship Companies – De Core Science & Technologies Ltd. and De Core Nanosemiconductors Ltd. are doing everything from end-to-end internally. The picture below represents the various stages of LED manufacturing and strategic placement of De Core in it.

To differentiate itself from Taiwanese and Japanese manufacturers, Loomba noted he was “not particularly impressed” with the former two countries LED luminaire models, and is very highly focused on final product while realizing that a good LED luminaire is foremost a good and reliable power supply. The company’s strength of any manufacturer today lies in the speed with which innovative and reliable products can be brought to the market. Speed happens only with quick and internal decision-making, without having to convince the outsourcing partners in a product or technology, which is why Samsung has been able to dent the forte of traditional electronics giants. “The chip manufacturing and design is changing so fast that many companies are outsourcing,” said Loomba. “However, due the division of work in the LED market, there can be incompetencies.” 

Having said that the company welcomes partners from all over the world to collaborate in solid state lighting challenges. There is a special interest in collaboration with Taiwanese Companies. The company can be approached through www.dstlworld.com. All the more that the Fab in India that the Co. has built is still geared only for blue and white LEDs (Nitride Compounds), while the Company is importing other colors (green, amber, red etc) in the near future for its lumianire manufacture and die packaging sections. Import of electronic components from Taiwan for SMPS manufacture is another interesting area for De Core. After a few visits to Taiwan, Loomba says he is convinced in the natural complementary advantages that Taiwan and India have and which his Company intends to exploit positively.

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