The majority of the people have shifted to LED lightings. Haven’t you? Not because of one reason, as there are multiple of them. Moreover, from a business point of view, the LED light market is considered to be one of the most profitable businesses in India. In this article, we will brief you about how to make the business plan to start your own LED lighting company in India and all the necessary guides you would need to know before starting the LED light manufacturing business in India.
With the expansion of every business and the evolution of technology has increased the demand for automotive, commercial, and residential incandescent bulbs have raised as well. This is why LED business is hitting the ground these days and many new manufacturers have dived into this competitive industry.
How to Start your own LED Lighting Company in India
So, it is better not to waste your time. Just go for it if you think it is feasible for you to opt for the LED industry after reading this article.
What are LED’s and why people have switched to them?
LEDs stand for Light-emitting diodes. These are semiconductor devices that emit visible light at the time when an electric current passes through them. LED lights are available in several colors and range varies from 2700k to 6500k.
The LED lighting system is comprised of Lumen efficiency of 110 lumens per watt due to which it consumes very less electricity as compared to a conventional lighting system. Furthermore, it involves a minimal cost of ownership, and have a longer life operating life. Apart from being cost-effective, it also creates better light quality than other types of lighting.
This is the major drift towards LED usage, as it lasts 20 times longer and consumes 80 percent less energy than incandescent lights. For instance, a 36 watt LED bulb is capable of emitting the same level of light output as rated by a 100-watt fluorescent bulb.
LED bulbs have replaced all kinds of lighting be it CFL, traditional bulbs, tube lights, and many others of the same kind. LEDs do not have demand in domestic markets, but also have great potential in international markets.
Types of LED Lighting Business
You have 2 choices to set up the LED lighting business-
1) Retail business
If you think that retailing is your cup of tea and you find it easier to sell industrial lamps, lighting tubes, or incandescent bulbs. You can open up a retail counter and tie-up with different universities, colleges, schools, government, and private institutions as well as offices. If you want to set up a retail counter, you need to find reliable suppliers, and most importantly get a profound understanding or pricing and quality.
These are some of the crucial aspects that should not be ignored if you want to persistently grow and survive in the market.
2) Manufacturing business
Although the manufacturing process may be more time consuming and challenging as it implies a complex production process along with large scale operation. However, it is not necessary that you have to set up the manufacturing business at a large scale, you can even initiate a small scale assembling unit.
It is imperative to understand the fundamental of LEDs production and its various inter-related units in order to set up its manufacturing unit. You would also require to get several licenses and registration from government authorities along with a couple of manufacturing machines.
Note: in this article, we have focused primarily on LED manufacturing business.
LED Light Manufacturing Business Registrations and Licenses
The entrepreneur who is jumping into the LED manufacturing business, need to obtain certain license and registration from the government authorities. They may also require to undertake specific documentation depending upon the type of LED lighting you are going to manufacture-
1) Company Registration with ROC (Registrar of Companies)- You can start your business either in partnership or proprietorship firm. If you opt for a partnership firm, you have to register your company as Pvt. Ltd. Company or limited liability partnership (LLP). Whereas, if you are a single entrepreneur to run your business and you believe in the one-man show, you need to register your firm as a Proprietorship.
2) Trade license from Municipal Authority- You need to approach local municipal authorities to obtain trade licenses.
3) Bureau of Energy Efficiency Certification- It is a requisite for the energy generation industries such as LED bulb manufacturing plant to apply for Bureau of Energy Efficiency Certification.
4) GST registration- Being a business owner, you might be knowing this already that it has become mandatory to apply for the GST number after the GST rule came in action.
5) NOC from Pollution Control Board- The LED manufacturing industries causes lots of pollution as it deals with some hazardous element that is not environment-friendly. Therefore, it is mandatory to apply for NOC from Pollution Control Board.
6) Udyog Aadhar MSME Certification- You need to apply for a 12 digit Udyog Aadhar Number for your manufacturing industry along with acquiring online method for MSME certification.
7) BIS Certification- BIS certification is required for specific items and is not dependent on the country. Certain items are notified by the Directorate General Of Foreign Trade, only for those selected items, one needs mandatory BIS certification.
8) Trade Mark- Applying for a Trademark is important to secure your business brand.
9) IEC Code- If you want to sell your LED manufactured products out of India, that to export the products you would need an IEC code.
Also Read: Top 20 Franchise Business in India (2020)
Steps to Control Pollution while Manufacturing LED
Analyzing the current scenario, the air quality of many states in India is dreadful. Especially the states nearby India’s capital- New Delhi, the air quality has become worst. Recently, Delhi was announced to be the world’s most polluted city of 2019.
In order to take care of people’s increasing health sufferings due to increasing pollution, the following measures must be taken to control pollution:
1) The circuit boards are cleaned after assembly from certain chemicals like carbon tetrachloride, methyl chloroform, and CFC’s to remove alteration residues that are left after soldering and even foams that disrupts packaging process. Several alternative eco-friendly solvents are available that could easily replace methyl chloroform and CFC to clean electronics.
It is imperative to prohibit the usage of chlorinated compounds that were considered to be effective cleaners for the electronics industry such as methylene chloride, trichloroethylene, and perchloroethylene. Many other compounds can be used that are equally effective for all types of electricals cleaning such as alcohols and ketones, that are not hazardous to the environment.
2) The process involved in the manufacturing of LEDs such as dip soldering, wave soldering, or hand soldering emits harmful fumes and gases that are detrimental to the environment. Many new environment-friendly technologies have been introduced to lessen the usage of existing pollution technologies.
Numerous private companies have launched, developed, and initiated the usage of various new fluxes that contains less than 10% solids. Whereas, the traditional methods include between 15 to 35% solids.
Factors to Consider before Choosing LED Business Location
A minimum area required for the smooth functioning of the LED manufacturing industry is 600 sq ft area that must include a packaging unit, processing unit, storage room, and office operations unit. It is suggested if you divide the area of your industry into 3 compartments.
The first compartment as a processing unit (at least 320 sq ft) where the manufacturing machine is set up and all the production-related tasks are performed. The second compartment as a storage room (at least 100 sq ft) where all the raw materials and the LED components are kept. The third component as a packaging unit (at least 180 sq ft) which is used for assembly and testing of all the LED products.
Before you choose the location of your LED business, let’s brief you about the significant points to not to be overlooked-
You cannot ignore the transportation cost in a business. Isn’t it? Well, if you have located your business at a place which is located near the town or city, where you can get frequent deliveries uncompromisingly. It is always considered to be the best if your industry is located on the main roads or highways as the local transport links are easy to access from these places.
2) Foot Traffic
A successful entrepreneur can never ignore the Foot Traffic, as it is very important for an LED business. As higher the Foot Traffic, more will be the chances of the sale of your product. The LED business would not require confidentiality, hence there is no need to opt for a low-traffic location.
Before entering in the LED business, and setting up your manufacturing unit, always ensure the number and type of competitors already available. Opening up your new LED manufacturing industry and ending up with a huge loss just because your competitors are well-versed with the existing location’s suppliers, distributors, retailers, and customers. The whole aspect must be scrutinized in order to ensure your long-term survival and growth.
4) Business Pricing
Business rates must be gauged before you finalize the location of your LED business. It is imperative to do comprehensive research that caters to all your requirements. The factors determining cash flow for a business such as monthly rent, property tax, utility bills, maintainable cost, etc are crucial to consider. Also, the hidden cost needs to be snuffed out before you commit to a location like a security deposit, parking cost, etc.
Does the area has the potential for growth? Will your business be experiencing a spike in demand? You need to meticulously analyze these factors as moving your LED business premises can turn out to be very costly and time-consuming. Setting up such a big manufacturing plant is not viable for the short-term. Therefore, always think as per the long term business plan to beat the odds and keeping your business on track for future records.
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Raw Materials required for LED Manufacturing
Listed below is the raw material you require for assembly of LED-based lighting system up to 10W-
- LED chips
- Heat sink devices
- Metallic cap holder
- Rectifier circuit with filter
- Reflector plastic glass
- Plastic body
- Soldering flux
- Connecting wire
- Packaging material and other miscellaneous items
- Equipment required for LED Manufacturing
The following types of equipment will facilitate the entire process of manufacturing or assembly of the LED lights. However, it may also depend upon the specific LED type, but there are some major machines required to carry out the manufacturing and assembly process of LEDs. These are listed below-
- LED lights assembly machines
- LED PCB assembly machine
- LED chip SMD mounting machine
- High speed LED mounting machine
- LED Tube light assembly machine
- LED candlelight assembly machine
You may require other small equipment to manufacture or assemble the LEDs which are mentioned below-
- Sealing machine
- Soldering machines
- Drilling machine
- LCR meter
- Packaging machines
- Digital multimeter
- Continuity tester
- Lux meter
- LED Manufacturing Process
Listed below are the 4 steps in the LED manufacturing process:
1) Making Semiconductor Wafers
- The semiconductor wafer is the primary material needed for manufacturing LEDs which is to be made. It is a composite material like GaP, GaAs, and many others that are determined by the LED color while it’s being fabricated. You would need high pressure and a high-temperature chamber to grow the crystalline semiconductor. The chambers are mixed with certain chemical elements such as Arsenic, Gallium, and/or phosphor.
- The chambers full of heat and pressure liquify the elements and press them together which are further mixed into a solution. A layer of boron oxide is covered in order to prevent the escaping of these elements from the chamber as the layer seals them. This entire process is called liquid encapsulation or the Czochralski crystal growth method.
- A rod is dipped into the uniform solution which is made once you mix the element well. After dipping the rod, it is pulled out slowly from the chamber. The solution crystallizes and cools on the end of the rod forming a long, cylindrical boule (crystalline got) of GaAsP, GaAs, GaP.
- The crystal ingot is sliced into a very thin wafer of semi-conductor, the thickness of not more than 10 mils.
- Until the surfaces become smooth, the wafers are kept of being polished to accept more layers of a semiconductor on their surface. It is very similar to the process of wooden furniture polishing. Sanding wooden furniture is important before polishing it.
- Always ensure, whether crystals that make LED, are functioning properly or not. The reason is that sometimes it may happen LED might not function properly because of crystals variability, or polishing process that degrades the device performance. Lesser the imperfections, the more the wafer behaves like a single crystal.
- Then, the wafers are cleaned up with several chemicals and using various solvents followed in the ultrasonic process. All the impurities, dirt, or clutter that may have settled over the polished wafer surface are removed. The process of cleaning is very crucial as LED will be able to create a better light only if it is cleaned rigorously.
2) Adding epitaxial layers
- The surface of the wafer is added up with additional layers of semiconductor crystal over it. In this way, the possibility of adding impurities or dopants to the crystal increases. However, there is a process called Liquid Phase Epitaxy (LPE), which facilitates the manufacturing of semiconducting crystal layers on the surface of the polished clean wafer.
- This technique comprises semiconducting layers that have the same crystalline orientation which is deposited on the wafer while it is drawn under reservoirs of molten GaAsP. The wafer rests on a graphite slide which is pushed through a channel placed under a container filled up with the molten liquid. Multiple layers of electronic densities are created by adding different dopants in sequential melts, or several in the same melt.
- LPE creates a uniform layer of material that is thick enough and equals enormous microns.
- Once the multiple layers are added, then it becomes a pre-requisite to adding additional dopants to modify the characteristics of diodes for enhanced color and efficiency.
- Once the additional doping is done, it is vital to place the wafer again in a high-temperature furnace tube so as it gets diffuse in the atmosphere with the existing dopants mainly Zinc Ammonium and Nitrogen. To make the color of the light more green or yellow, a thick layer of Nitrogen is added to the top of the diode.
3) Adding Metal Contacts
- Metal contact is defined on the wafer. Although, the contact pattern depends upon the diode combination and design stage (if it is singular or combined).
- Contact patterns are cloned in photoresist which is a light-sensitive compound. This compound is distributing over the surface of the wafer, while it spinning. To harden the photoresist, one has to do it by a brief at a low temperature of around 100 degrees Celsius.
- The next thing to be done is to place the mask on the photoresist over the wafer. Doing this will duplicate the mask and then expose the resist with ultraviolet light. The exposed areas are washed away with the developer, while the unexposed areas remain as it is, covered with the semiconductor layers.
- Now, the contact metal is filled in the exposed area by evaporating in a high-temperature chamber, but this time the chamber will be vacuum sealed. The metal chunk starts vaporizing when it is heated to very high temperatures. At that point, it sticks to the exposed semiconductor wafer. Acetone chemical is used to clean the photoresist along with leaving the metal contacts behind.
- There might be a requirement of adding another layer of metal as the layer may already be evaporated on the backside of the wafer. This also depends upon the final mounting scheme for the LED.
- An amalgamating process is conducted by the deposited metal to heat the wafer for a long duration in the furnace with the atmosphere containing these 2 gases- Hydrogen and Nitrogen. This entire process makes a robust connection between the metal and the semiconductor which ensures the contacts do not flake off.
- One can repeat a similar pattern up to 6000 times when a single 2-inch wafer is composed the same way mentioned above. This further helps in demonstrating the size of the finished diodes.
- To cut the diodes, you can either to it by sawing with a diamond saw or by cleaving (snapping the wafer alongside a crystal plane). These small segments which are sliced from the wafer are called as the Die. One of the biggest challenges that you could come across manufacturing LEDs is to limit the production cost of semiconductor devices as cutting results is far less than 6000 total usable LEDs.
4) Mounting and Packaging
- All the dies are mounted to the ideal package, respectively. It is mounted on 2 metal leads about 2 inches long if the diode will be used for jewelry or as an indicator light.
- Subsequently, the back of the wafer forms an electrical contact with the lead as it is coated with metal. The other lead is fastened with a tiny gold lead and patterned contacts on the surface of the die are wire-bonded. You might want to know what is wire-bonding. It is a situation when the end of the wire is pressed down on the surface of contact metal with a sharp needle. Whereas, the gold is soft enough to contort and reconstruct to the metal surface.
- Now, the whole assembly is airtight in plastic. The shape is made as per the optical requirements of the package. The dies and wires are assembled inside the mold once after checking the optical parameters (with a lens or connector at the end) and the mold is filled with epoxy or liquid plastic.
Maintaining Quality Standards
Usually, 2 concerns are faced during the manufacturing of semiconductors. The first concern is with the end product that is ready to use, and the second concern could be with the manufacturing facility.
It is necessary to check every LED especially at the time when it is getting wire-bonded for operation characteristics. The voltage or the current level also plays a crucial role in evaluating the brightness of the LED. To check the color of light precisely, every batch of wafers is persistently tested and some LEDs are scrutinized further for stress testing like lifetime tests, mechanical damage, heat and power breakdown.
The above steps can be completed effectively and efficiently if they could be automated. The cleaning process conducted for incoming blank wafers and the entire facility should be observed prudently. All of these checks are very important to improve the quality standards and the production of successful LEDs per wafer.
Marketing of LEDs
It is the most crucial step that you should focus on intensely. You have a couple of options where you can sell the LEDs you are manufacturing which are mentioned below-
- Retails Markets- You can target local retail markets including electronic shops, big fancy showrooms, or multiple shopping complexes nearby the location you have set up your manufacturing plant.
- Wholesale Markets- One of the other ways to boost up your sales is to tie up with the wholesale market of your city to sell the LED lightings manufactured in your plant. This could cut off your margins as compared to selling off your product in the retail market. However, you can have orders in bulk quantity from the wholesalers, which will increase your overall sales, and hence profit.
- Online Market- There are 2 options from which you could choose if you want to sell your LED lighting online.
- i) B2B Websites– You can register your business with B2B websites such as Alibaba, Tradeindia, Exportersindia, Indiamart, etc. These are the leading platforms that will help you sell your orders in bulk. These platforms will facilitate boost up your sales by keeping the margin minimal. Predominantly, the traders or stockists will order the products from these websites.
- ii) B2C websites- These websites are ideal for you if you want to double up your margins regardless of keeping the sales minimum. These are the websites where the buyer itself orders the products, which will be delivered to their doorstep. Some of the best B2C websites are Amazon, Flipkart, SnapDeal, eBay, etc.
- Export Market- This option is the best for the ones who have direct international contact in the country where the price of your manufactured product is higher than in your native country. You would just need the IEC code to sell your products internationally.
- Top-Rated LED Manufacturing Companies in India
- India’s LED market is currently considered to be one of the largest markets across the world, as per the reports suggested by Frost and Sullivan (F&S). According to F&S, India’s LED market share will boost by more than 50% globally. This has become possible with the help of these big giants who are able to deliver the customers a superior quality product in bulk. These companies are listed below:
1) Havells India Ltd
- Havells India Ltd is situated in more than 14 states in India. Havells started manufacturing the LED lighting since 2010 and in a very short span of time. It has proven out to be one of the best-LED brands in India. It provides a comprehensive range of LED modules to general lighting, from lamps to exterior modules, etc.
2) Philips Electronics India Ltd
- Philips is a big Dutch brand. It is one of the most popular and trusted brands not only in India but the whole world. It started its operation from Kolkata in 1930. it deals in a wide range of products such as LED kitchen lighting, Home LED light bulbs, Modern ceiling lights, Kitchen cabinet lighting, LED under cabinet lighting, and Solar Powered LED. Philips using cutting edge technology to manufacture all kinds of LEDs.
- How can we not talk about the Bajaj brand if we are talking about the most popular LED manufacturers in India? Its products are considered to have a longer life as compared to other brands. The company is doing business in India for more than 70 years which has gained the full trust of customers for all its products be it LED lightings or two-wheelers.
4) SYSKA LED
- SYSKA is the only brand that is the newest among all the brands listed here. It has just been 20 years since SYSKA started its LED production and became a renowned brand. Not only with the advertisements, but with smart innovation and fair priced products, this brand has drawn the attention of a mass audience in our country.
5) Osram India Pvt
- Osram is a german brand and has manufacturing plants in Kundli and Sonepat in Haryana. This reputed brand manufactures a wide range of lighting solutions including ceiling lights, lamps, spotlights, and many others.
- Surya deals in an extensive range of products with more than 40 different products in the Indian market currently. This brand is known for the products it manufactures, which saves more than 90% of the energy. This is why it was labeled as one of the most cost-efficient brands that create exceptional quality products.
- Apart from all these big-brand giants in the LED business, certain non-branded LED companies are also worth going for if you want to experience more or less the same quality at a lesser price-
- 1) Halonix
- 2)Eco Lite Technologies
- 3) 3S International
- 4) INSTAPOWER
- 5) Compact
- 6) ACM
- 7) Vinay
- 8) Subah
- 9) Superdeals
How can you Amplify Profits by Promoting your LED Lighting Products?
There are a few things that are significant if you want to make your brand established, recognized and survive in this competitive market such as creating your own website, app, regular promotions, and keeping in touch with the customers by regularly posting a blog on your website.
There are 2 cases, either you will promote the products for customers, or retailers/wholesalers.
1. A) For B2C Promotion
Numerous ways are available for the B2C selling option through which you can promote your LED products which include both traditional and online ways. The traditional ways include advertisements on TV, Radio, magazines, telephone books, and Newspapers, Direct Mail marketing, and Text Message marketing.
If you want to opt for online promotion strategies, you have several options including all social media platforms- Facebook, Instagram, and Twitter, building a robust network on Linkedin, generating website traffic with Pinterest, Email marketing, Video marketing, and capture email data.
2. B) For B2B Promotion
The fundamental B2B marketing strategies will ensure your persistent growth in promoting your LED products. All the ways mentioned above that are used for B2C promotion, are used for B2B clients as well. The retailers and distribution network is an excellent promotional option if you are into the LED manufacturing business. You also require to consider industrial selling option along with B2B marketing strategies, to amplify the sales and profits.
Why go for a Large Scale of Manufacturing LED Business?
As per the government norms, there are some benefits provided to the startups who are opting to set up a large scale LED manufacturing plant. The Indian Government grants an exclusive benefits package to encourage the large scale manufacturing LED business owners. These business owners or entrepreneurs can avail of the incentive in the Electronic System Design and Manufacturing (ESDM) sector, under the Modified Special Incentive Package Scheme (M-ISPS). However, the applicant (business owner/entrepreneur) can only avail of the incentives if they have invested in the project within 10 years from the application date.
Note: If you have sufficient resources, the budget is not the constraint, and you are already experienced in this profession, only then it is advisable to set up a large scale manufacturing LED industry.
As now, you would have got to know that LED has not only emerged as an outstanding way of saving electricity, but also the better source of creating better quality light at affordable prices. LEDs are the future of all lighting brands and cannot be overlooked as the demand for LEDs has seen a major boost.
So starting your own LED Lighting Company in India isn’t difficult, you just need to prepare in advance and consider the above factors. But if you still have any doubts then feel free to ask them in the comment section.