The Indian LED Lighting market is expected to grow at a CAGR of 24.3% during the forecast period (2020-2025). In the current market state, LEDs have gained a mainstream in the lightings market. Key factors behind this are the continuous declining LED prices in the country and favorable government initiatives, such as UJALA and SLNP, offering LEDs at a subsidized cost and LED installation projects for streetlights, respectively.
- For instance, in April 2019, under the Indian government's energy efficiency program, 21 crores of LED bulbs were distributed in the country, which resulted in the saving of INR 11,000 crore for the consumers. State-run Energy Efficiency Services Limited (EESL), implementing the UJALA scheme for distributing LED bulbs to the consumer, has reduced the procurement price of these lights to INR 38 per unit. The program is aimed at deploying more than 770 million LED lamps across the country by 2020.
- In addition to this, the rising awareness about the cost-effectiveness and eco-friendliness of LED lights among the consumers is estimated to continue to drive the demand for LED lighting at residential as well as commercial sectors. In recent years, India has demonstrated the possibility of deploying LEDs rapidly on a large scale with the right financing and market mechanism. India is now one of the largest LED lighting markets in the world after the UJALA program, offering LED bulbs that are 50% more energy-efficient than other lamps available.
- However, the market has been affected by the recent outbreak of COVID 19, and companies have been forced to restructure their strategies to deal with the ongoing pandemic. Companies, like Telensa and signify, were the worst hit due to this pandemic. In February 2020, Signify had planned to upgrade its solar connected street light to toggle between solar and grid power by using Philips Combo Charge Controller. But the company has gone into financial crunch due to the COVID outbreak, the company in March 2020 had announced a 20% pay cut for its employees.
Key Market Trends
Increasing Adopting of Energy Efficient Lighting Solutions
- The LED lighting market is significantly influenced by the growing focus on the well being of the environment. Over the years, energy conservation is considered to be one of the most prioritized implementation programs, and the adoption of LED lighting significantly contribute to conserving energy.
- The government of India has implemented effective energy efficiency programs in these recent past years, which are focused on creating an energy service market. The government has initiated the use of bulk procurement of LED lights that have helped the country in accelerating energy saving.
- In January 2020, the Indian Ministry of India mentioned that the country had installed over 361.3 million LED bulbs distributed across the country and 10.3 million smart LED streetlights were installed under the UJALA and LED Street Lighting National Program, which is estimated to save energy of over 6.97 billion kWh/year. International Energy Agency (IEA) has also welcomed this progress and stated that the country had considered it as an opportunity for the central and state government to gain energy efficiency implementation across the public sector.
- Moreover, according to the latest publication by the Rural Electrification Corporation Limited, over 72% of the homes in India have received electric connections. In addition to this, the report has also estimated that more than 94% of the villages in India will have access to power by the end of 2020. This is further expected to drive the demand for residential LED lightings in the country.
Outdoor Application is Expected to Grow Significantly
- Out of the total electricity generated in the country, a significant part of it is consumed for the illumination purpose. Hence, over the years, the country is more focused on adopting energy-efficient lighting solutions. The government of India is also taking initiatives, such as Smart Cities or National LED Program. This is expected to create more demand for LED lightings for outdoor applications in the country. Bhopal Smart City project is one of the instances, where more than 21,000 LED street lights are installed. The segment is expected to grow in full swing due to the continuous infrastructural expansions, such as roads, airports, metro, and railways.
- Under the Street Lighting National Program (SLNP), more than one million out of three million street lights are installed across the cities as of January 2020. The project is aimed at generating annual energy savings of 6.71 billion kWh, and a corresponding reduction of 4.63 million tons of CO emission. Additionally, by March 2020, SNLP has planned to replace over replace 1.34 crore conventional streetlights in India with smart LEDs.
- Moreover, according to a report released by the Minister of Urban and Housing Affairs, India, 148 projects have been completed until January 2020, under India's Smart Cities Mission. Besides this, 407 projects have already been initiated, and another 237 projects are in the tendering stage.
The Indian LED lighting market is highly fragmented, with a large number of domestic and international players in the country. Due to the fragmented nature of the market, the competition among the players is high. Due to the continuous fall of LED prices in the country, the competition has further increased among the manufacturers, driving further innovation and wider product choices and lowe prices. Moreover, essentially the levy of GST on LED lights and raw materials of over 18 to 28% causes heavy leakage of revenue.
- March 2020 - Signify announced the completion of the acquisition of Cooper Lighting Solutions from Eaton for USD 1.5 billion. With this acquisition, the company has planned to focus on the innovation of connected lightings and systems. This is estimated to drive the revenue growth of the company in the North American market with an aimed increase in professional revenues from 42% to 53%.
- February 2020 - Signify introduced a new integrated Philips Combo Charge Controller for streetlights, enabling the emergence of a hybrid solar system. With this innovation, the company is aiming at creating a new market for solar powered outdoor lightings in Asia, Africa, South America, Australia, and Spain, where the company has already installed solar-powered lights.
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