Thanks to 18% GST, the lighting lifestyle industry looks to be at crossroads

The lighting industry and more so the light emitting diode (LED) industry in the country has grown leaps and bounds in recent years. However, in comparison to the strides elsewhere perhaps India has a long way to go. Although you had Incandescent bulbs and Fluorescent lamps in the initial stage, the scenario changed altogether with the advent of the Compact Fluorescent Lamps (CFL) and Light Emitting Diode (LED) Halogen lamps had their own say. In recent times, it looks like LED bulbs have a major say in the domestic market. The advantage of the light emitting diode is that it happens to be a semiconductor light source emitting light with the flow of the current, while electrons in the semiconductor recombine with electron holes, releasing energy in the form of photons.

Interestingly, despite the domestic lighting industry emerging into a billion-dollar market it continues to be in its infancy when you ponder over if it is an organized one? As of now, the industry looks to be at crossroads, thanks to the hefty taxation of the Union Government while there has been no organized voice on behalf of the industry to raise the alarming issue to the authorities concerned. The GST on lighting products has steadily kept on increasing, initially from two per cent and then to five per cent, later 12 per cent and now 18 per cent!

Yet, there are no efforts on behalf of the industry as a whole to raise concern on the matter. An interaction with Karthik Tallam a fifth-generation entrepreneur owning the sought-after Adithya Lamps and Aura Illumination in Bengaluru threw light on the developments in the industry. Karthik Tallam is a grounded, humble gentleman; he recalls the journey and sheds light on the ever-expanding industry.

Karthik Tallam

Q: Can you throw light on the lighting industry in the country?

Karthik Tallam: The Indian LED lighting market reached a value of USD 2.5 billion in 2020. The market is further expected to grow. Some of the top players in lighting are Osram, Phillips, (now Signify), Havells and Wipro, which are specialized in huge project lighting.

Apart from that, there are several European companies which have their representations in India, out of which we have taken 40 different brands from Europe. The ones we have taken are predominantly from Italy, Spain, Germany, Switzerland, Austria, Portugal, and the UK. We also get products from the USA and Japan.

Owing to various supporting factors, conventional light bulbs in India are easily being replaced by LED lights. Furthermore, as LEDs are progressively used in automotive headlamps, aviation, general lighting, advertising, lighted wallpapers, medical devices, camera flashes as well as traffic signals, the LED lighting market is expanding throughout the country. In addition, the entry of Chinese LED light producers in India has enabled Indian manufacturers to offer innovative products. The Northern Region has the highest proportion of sales in India's overall market, followed by the Southern Region. Supported by various upcoming infrastructural projects throughout residential, industrial, and commercial areas across the country, the market for LED lighting is likely to see strong growth in the forecast years.

The Indian LED lighting market has seen an increase due to population growth and subsequent urbanisation in the historical period. With a growing rate of electricity use, demand for an environmentally sustainable and cost-effective lighting solution is also gaining momentum. Thus, LED lighting has begun to dominate the general lighting market of India tremendously in recent years. Several government schemes, like Unnat Jyoti by Affordable LEDs for All (UJALA) as well as Street Lighting National Program (SLNP), has remained India's largest demand generator for LED lighting. The goal of these initiatives is to raise consumer awareness of the adoption of LED bulbs over traditional lighting sources like incandescent bulbs, CFL, and halogen lights. For example, under the SLNP, the Government plans to replace more than 1.34 crore traditional street lights in India, of which approximately 1.04 crore street lights have already been replaced as of November 2020.

The Home LED segment has more than 3500 outlets in 100+ cities across India.

Q: What about the growth of the lighting industry in the country?

Karthik Tallam: If you look at the growth of the industry, it is growing by twelve per cent every year as more and more people have started using LEDs’. There was a time when people were using incandescent bulbs and CFLs’. Now it has transformed into LED lighting. By the way, day by day LED lighting is becoming more and more affordable. Unfortunately, there has been a move from the government recently which is quite disturbing not only to all the lighting manufacturers but also to dealers…

…GST surges from 2-18 per cent! There were several states which had two per cent GST or VAT, once upon a time. However, it went on to increase to five per cent and 12 per cent. And now the government has taken a decision to enhance the same by 18 per cent. This hike literally means a person buying LED bulbs for his home at Rs 600/- will have to pay Rs 700/- for no fault of his. So, these are some of the challenges the industries are facing…

…Foreign companies are expected to adhere to BIS! Another problem we see in the lighting industry as a whole is the advent of the BIS rules. The Bureau of Indian Standards was started with a very good agenda but certain things are not taken into congruence. For instance, if you look at a certificate called UL or ENEC or CE certification, they are very high certifications used in Europe or the USA. Interestingly the BIS standards are one step lower than these but they expect every single supplier from abroad to have a BIS certification and testing done, which by itself is a very cumbersome and long-drawn process…

…200 European brands dip to 40: We had 200 international brands from Europe, which were interested to supply to us. Now their number has dipped to an abysmal 40! The reason is that 160 people have refused to come and invest crores of rupees only for testing and BIS certification to be done here. So, these are some issues confronting the lighting industry as a whole…

…100+ airports coming up: Even when we speak about the international airports or the 100+ airports which are coming up in the country, they want superior certification. But at the same time, they do not want to uphold the products due to the abnormal taxation and regulatory measures.

Q: In this situation, what future do you envisage for the lighting industry?

Karthik Tallam: All facts mentioned to you so far are nothing short of a voice of the industry. But nobody knows whom to approach, whom to talk to, how to resolve it…So, if the GST is less, what happens is people will give more business, and they will have more affordability. A Rs 200/- tube light will be available at Rs 190/- is a happy thing rather than shelling Rs 250/-. Isn’t it?...

…Small players will be wiped out! Thanks to the prevailing circumstances, we don’t see many growth prospects in the near future. There will be more and more challenges because of the BIS and the tax structure paving way for the wiping out of the small players extremely badly. Only people with a long standing in the business will be left to survive and grow, otherwise, the smaller ones are wiped out.

Q: But, what is the way out? Has there been any representation to the Union Finance Minister in this regard on behalf of the industry to address the grave problems?

Karthik Tallam: I really don’t know as to what I can comment about the ability of our Finance Minister in understanding things. In the last two years, we haven’t seen any substantial positive things happening. The piquant problem lies in having no association with LED manufacturers, hence there is no organized voice today and probably we need one.

Q: Any effort in this direction to form an association for the industry?

Karthik Tallam: If you typically see how the business works, everybody is everybody’s competitor! Only when something of this sort crops up does everyone has to unite and come together. The situation is like who’s going to bell the cat?

-Manohar Yadavatti