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Forecast of the LED lamp market in the current economic situation in India

Release date 23.06.2022

Number of pages 47

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The relevance of research

LED lighting technologies are currently taking a strong position in the global market. The spheres of penetration of LED technologies are expanding in such segments as architectural, street, residential lighting, etc.

Purpose of the study

Analysis of the state of the LED lamps market in the current economic situation in India, assessment of the market volume, as well as identification of factors affecting the LED lamps market in the current economic situation in India)

Content

Chapter 1 Key Components of the LED Lamp Market

1.1. Market size

1.2. Growth rate of the market of LED lamps

1.3. The ratio of imported and domestic products in the market

1.4. The volume and dynamics of the production of LED lamps

1.5. Import of LED lamps. Volume and dynamics

1.6. Export of LED lamps. Volume and dynamics

1.7. Share of exports in production

Chapter 2. Economic characteristics of the market

2.1. LED Lamp Market Trends

2.2. The main problems of the industry

2.3. Estimation of the number of buyers and their financial capabilities

2.4. Estimated consumption per capita

2.5. Analysis of sectoral indicators of financial and economic activity

2.6. Compact location of industry companies in certain regions

2.7. Life cycle stage of the LED lamp market

Chapter 3

3.1. Economic components

3.2. Social Components

3.3. Technological components

3.4. Political Components

3.5. STEP-analysis of the market of LED lamps

Chapter 4. Assessment of the degree of competition

4.1. Scale of competition (local, regional, national, global)

4.2. Number of competitors and relative market shares of the largest competitors

4.3. Competition from substitute products

Chapter 5 Industry Forecasts

5.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)

5.2. Analysis of the impact on the state aid industry at the current date

5.3. Assessment of the degree of impact of the crisis due to covid-19 on the analyzed market. Barriers existing in the LED lamp market

5.4. Prospects and growth drivers for the LED lamp market

5.5. Forecast for the development of the LED lamp market in the context of the current economic crisis due to covid-19

Chapter 6 Forecasting Methodology

6.1. Methods for forecasting key industry indicators

6.2. Sources of information for forecasting

6.3. Timing of forecasting

Research excerpt

Chapter 1 Key Components of the LED Lamp Market

1.1. Market size

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In India, the consumption of LED lighting technology is still at a low level. Meanwhile, experts clearly recognize the high potential for the development of this market. A significant incentive for its expansion was the consolidation of the official state position on focusing on energy-saving lighting technologies.

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Among the main trends in the pricing environment of the market development is the annual reduction in the cost of LED lighting systems. The cheapest solutions are presented in the individual lighting segments, which is due to the lack of need for high-power and high-brightness solutions here.

According to the preliminary results of 2021, the volume of the LED lamp market in India amounted to … million pieces or … billion Rs. at the prices of importers and producers.

According to GidMarket analysts, the potential capacity of the LED lamp market in India is at least 2 times higher than the current volume of consumption in real terms. But in the near future, the achievement of this level is limited by weakened demand from consumers due to the impact of the economic crisis and still remaining competition from substitute goods.

1.2. Growth rate of the market of LED lamps

The growth rate of the market in the period 2014-2021 allows us to state the presence of an almost constantly growing consumer interest in LED lamps.

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According to GidMarket, in physical terms, the market in 2021 amounted to about … million units, which exceeded not only the level of the crisis year of 2020, but also the level of 2019, when the previous record was reached. The growth in 2021 is estimated at …% by 2020.

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1.3. The ratio of imported and domestic products in the market

Diagram 2. The ratio of imported and domestic products in the LED lamp market, 2014–2021 (est.), %

The market of LED lamps in India is more than …% dependent on imports. This is due to the fact that the cost of producing the most popular types of LED lamps in India is much higher than in Southeast Asia. Nevertheless, in India, in recent years, the production of LED lamps has begun to develop, which has led to an increase in the share of domestic products in the market to …-…% in 2019-2021.

1.4. The volume and dynamics of the production of LED lamps

Chart 3. Dynamics of LED lamp production volumes in India, 2014–2021 (est.), million units

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This is confirmed by comparing the prices of imports and exports: if the first of the indicated indicators amounted to … dollars/piece in 2021, then the second was … dollars/piece, the difference is almost 3 times even taking into account the difference in the supplied assortment.

Until 2016, inclusive, the volume of production of LED lamps in India did not exceed … mln. Further, according to the results of 2017, there is an active growth to … million units, and starting from 2019, production exceeds … million lamps per year.

1.5. Import of LED lamps. Volume and dynamics

Due to the fact that the share of domestic products in the market of LED lamps is insignificant, the volume of the market correlates with the volume and dynamics of imports of such products.

In 2021, … % of imported LED lamps were supplied to India from China.

1.6. Export of LED lamps. Volume and dynamics

The dynamics of the volume of exports of LED lamps have a wave-like character in the period under review: in 2015 and 2016, the volume of exports was minimal and did not exceed … million units, the maximum level was reached in 2020 and amounted to … million units.

According to the preliminary results of 2021, about … million LED lamps were exported from India, which is … % less than in 2020, but 2016 times more than in 3.

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During 2014-2021, India's LED lamps trade balance is characterized by a sharp negative balance, indicating a significant excess of imports over exports.

1.7. Share of exports in production

According to GidMarket, based on the FCS data on the export of Indian products to countries outside the CU, the share of exports in production in 2020 amounted to about …%, and in 2021 - about …%. More than …% of LED lamps produced in India are consumed domestically.

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Chapter 2. Economic characteristics of the market

2.1. LED Lamp Market TrendsAccording to the study, the LED lamp market has the following trends:

The market is growing almost every year in physical terms, which is due to the growing demand for LED lamps both from the population and from enterprises and government agencies due to the global trend towards energy saving. Potential market capacity has not yet been reached;
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2.2. The main problems of the industry

According to experts, the main problems of the industry include:

Extremely high import dependence of the market on Chinese-made goods.
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“Currently, the issue of the quality of lighting products is very acute. Experts say that about ... % of lighting devices presented on the domestic lighting market do not meet the standards. The problem is that out of 40 technical criteria that characterize product quality, only two indicators are regulated by technical regulations: electromagnetic compatibility and electrical safety.”

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2.3. Estimation of the number of buyers and their financial capabilities

The end consumers in the market of LED lamps can be both the population and various enterprises, and government agencies.

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During 2010-2018, there was an increase in the population. The growth of … % in 2015 compared to the previous 2014 is due, in addition to natural growth and growth due to migration, to joining the territory of the state of the Republic of Crimea and the city of Sevastopol. However, at the beginning of 2018, the population growth rate fell to ... % compared to the previous 2017, in 2019 (as of January 1.01.2019, 2017) population growth stopped, and the level returned to the value of 1. As of January 2021, there was another decrease by …%. This factor has a negative impact on the market in question.

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From 2014 to 2017, there is a downward trend in the real incomes of the population and living standards. In 2014, the real incomes of the population fell by … %, in 2015 by … %, and in 2016 by another … % compared to the previous year. But in 2017, we can observe a decrease in the rate of decline of this indicator to ...%. According to Rosstat data, the growth rate of real disposable income in 2018 amounted to … % instead of the projected … %, which indicates the absence of growth in the purchasing power of the population. At the end of 2019, there was a slight increase in real incomes. For the period from 2014 to 2019, the base rate was …%.

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2.4. Estimated consumption per capita

Chart 12. Consumption in the LED lamp market per capita, 2014–2021 (est.), units/person

The average per capita consumption of LED lamps in India since 2014 has increased by … times - from … pcs/person. up to … pcs/person per year, which is due both to the growing popularity of the use of such goods among the population, and state and regional programs to increase the efficiency of electricity use.

2.5. Analysis of sectoral indicators of financial and economic activity

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Important data for analyzing the state of the industry is the dynamics of such indicators as profitability, liquidity, and business activity.

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The equity ratio characterizes the availability of own working capital of the enterprise, necessary for its financial stability, it is calculated to assess the solvency of the enterprise. Lack of own working capital, i.e. the negative value of the coefficient indicates that all the current assets of the organization and, possibly, part of the non-current assets are formed from borrowed sources. The normative value of the index Equity ratio - ... (...%) - was established by the Government of India. Consider the data on the dynamics of financial stability.

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2.6. Compact location of industry companies in certain regions

Since the volume of the market is more than …% correlated with the volume of imports, the main Indian companies in the industry in India are importers. The structure of the market and the compactness of the location of companies in the industry can be traced to the structure of obtaining imported goods by region.

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Chapter 3

Macroeconomic factors affect the dynamics of all sectors of the Indian economy, including the LED lamp market in question. The main groups of factors are: economic, political, social and technological.

3.1. Economic components

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Retail trade turnover is a reflection of the effective demand of the population and the level of real incomes of the population. The retail trade turnover in 2015-2016 showed a negative trend: in 2015 the decline amounted to … % compared to 2014, and in 2016 – “minus” … % compared to 2015. Such a deep decline in trade turnover was not even in the previous crisis of 2008-2009.

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3.3. Technological components

Also, significant factors in the LED lamp market include a constant increase in electricity tariffs, which stimulates both the population and companies to switch to energy-saving technologies, incl. LED.

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Among the technological factors affecting the LED lamp market, we can also highlight:

Transition of organizations to energy-saving technologies to reduce costs.

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3.4. Political Components

The tense political situation in interstate relations has a negative impact on all spheres of the Indian economy. The main activities of the state and the strategic tasks at present are the development of new models of cooperation with the US and the EU and the approval of India in the world monetary system. Anti-India sanctions and the generally sharp deterioration in relations between Western countries and India largely determine India's foreign policy. On the other hand, this trend supports the import substitution policy pursued in many sectors of the economy.

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The Government of India is actively working towards the availability of credit funds. As can be seen in Table 3 and Chart 24, the weighted average interest rate tends to decrease in 2016-2021. Low stable interest rates will allow more confident business planning and consumer spending planning. The positive influence of the factor.

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1. Energy security:

full and reliable provision of the population, objects of the budgetary and social sphere and enterprises of all forms of ownership with energy resources at affordable prices;
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2. Energy efficiency of the economy:

APSS. In India, the Association of Manufacturers of LEDs and Systems based on them operates.

APCC is India's only professional association for the LED industry.

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3.5. STEP-analysis of the market of LED lamps

Concluding the assessment of the factors affecting the Indian LED lamp market in India, we will summarize the key ones in the framework of the STEP analysis.

Table 4. STEP analysis of factors affecting the LED lamp market

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Chapter 4. Assessment of the degree of competition

4.1. Scale of competition (local, regional, national, global)

The LED lamp market in India is characterized by a high level of competition and a low concentration of market players and product brands. At the same time, the vast majority of products on the Indian market are imported. On the other hand, the market has the potential to increase production volumes to replace imports and meet domestic needs.

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4.2. Number of competitors and relative market shares of the largest competitors

To date, there are over 400 brands of LED lamps in the Indian market. Moreover, it is necessary to pay attention that there are also Indian brands, but they are produced in China and then imported to India.

Table 5. The main companies participating in the LED lamp market in 2021

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4.3. Competition from substitute products

From the data of the comparative table, it can be seen that LED sources are superior to others in most of the parameters presented.

In addition to the main characteristics considered, LED lamps have the following advantages:

low power consumption;
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Chapter 5 Industry Forecasts

5.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)

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Table 7. Assessment of the impact of recent crises on the industry

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Diagrams

Diagram 1. Dynamics of the market volume of LED lamps, 2014–2021 (est.), million units

Diagram 2. The ratio of imported and domestic products in the LED lamp market, 2014–2021 (est.), %

Chart 3. Dynamics of LED lamp production volumes in India, 2014–2021 (est.), million units

Diagram 4. Volume and dynamics of imports of LED lamps in physical terms, 2014–2021 (est.), million units

Chart 5. Volume and dynamics of imports of LED lamps in value terms, 2017–2021 (est.), USD million

Diagram 6. Volume and dynamics of export of LED lamps in natural terms, 2014–2021 (est.), million units

Chart 7. The volume and dynamics of exports of LED lamps in value terms, 2017–2021 (est.), mln USD

Chart 8. Share of exports in production, 2020–2021 (est.), %

Diagram 9. Population dynamics in India as of January 1, 2010-2021, million people, %

Diagram 10. Population forecast in India for the period 2021-2024, million people

Diagram 11. Dynamics of real incomes of the population of India, 2011 - 2020, 2021 (Q1-Q3), % to the previous year

Chart 12. Consumption in the LED lamp market per capita, 2014–2021 (est.), units/person

Chart 13. Profit margin before tax (earnings for the reporting period) in the LED lamp industry compared to all sectors of the Indian economy, 2015-2021 (Q1-Q3) , %

Chart 14. Current liquidity (total coverage) for the LED lamp industry for 2015-2021 (Q1-Q3), times

Chart 15. Business activity (average receivables turnover) of the LED lamp industry, 2015–2021 (Q1-Q3), days days

Chart 16. Financial strength (capacity) of the LED lamp industry, in comparison with all sectors of the Indian economy, 2015-2021 (Q1-Q3), %

Diagram 17. Compactness of location of companies in the industry in certain regions in 2019-2021, %

Figure 18. Life cycle stage of the LED lamp market

Chart 19. India's GDP, 2012-2021 (Q1-Q3), % to the previous year

Chart 20. Monthly dynamics of the US dollar against the rupee, 2015-2021, Rs. for 1 US dollar

Diagram 21. Dynamics of India's IPP in 2014 - 2021 (Jan.-Sep.), % to the previous year

Diagram 22. Dynamics of retail trade turnover, 2013 - 2021 (Jan-Sep), % to the previous year

Chart 24. Dynamics of the average interest rate on loans, 2015-2021 (Jan-Jun), %

Diagram 25. Shares of the largest competitors in the LED lamp market in 2021, %

Diagram 26. Forecast of the market volume of LED lamps in 2022–2026, million units

Tables

Table 1. Gross Margin of LED Bulb Industry vs. All Industries in India, 2015-2021 (Q1-Q3), %

Table 2. Absolute liquidity of the LED lamp industry in comparison with all sectors of the Indian economy, 2015-2021 (Q1-Q3), times

Table 3. Weighted average interest rates of credit institutions on credit operations in rupees, excluding PJSC Sberbank (% per annum), 2015-2021 (Jan-Jun)

Table 4. STEP analysis of factors affecting the LED lamp market

Table 5. The main companies participating in the LED lamp market in 2021

Table 6. Comparative analysis of light sources

Table 7. Assessment of the impact of recent crises on the industry

Table 8. Analysis of the impact on the industry of the state aid proposed to date

Table 9. Forecast indicators of the development of the Indian economy in 2021-2024 (base case), %

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