Lighting Companies Increased CFL Bulbs' Prices Due to Soaring Prices of Key Raw Material

Lighting companies, Philips, Havells and Bajaj Electricals, have increased the prices of CFL (compact fluorescent lamp) bulbs by up to 15% due to soaring prices of key raw material - rare earth element - after the Chinese cut its production and exports. Phosphor, the rare earth element, prices have shot up almost six times to $300 per kg in the last few months because its supply fell short of demand following the Chinese government's move to protect its CFL industry. An entry level CFL bulb, which was selling at Rs 80 a few weeks ago, now costs Rs 90 in the domestic market. "Increase in rare earth prices diluted the advantage we had earned through economies of scale," Havells India president Sunil Sikka said. Weakening rupee too has made imports costlier. Sikka said his company has proposed to the government to remove taxes on rare earth imports to keep prices of the energy-efficient bulbs under check. Indian companies are paying a tax of close to 20% on imports of rare earth. About 97% of global rare earth is produced in China. The country also dominates the global CFL production with a share of 70%. China's move to limit rare earth exports makes the industry's movement towards clean energy products difficult because there are no alternatives for phosphor, Philips Lighting India President Nirupam Sahay said. Rising incomes, along with falling prices and increased awareness, have helped CFL lighting to become a Rs 2,000-crore industry, growing 25-30 % a year. The total lighting market in the country is pegged at Rs 7,000 crore, still dominated by incandescent lamps, or light bulbs. Philips Lighting has increased CFL prices by 7-10%, while Bajaj Electricals increased them by 8-10%. The cost component of phosphor in CFL has increased to 18% from 5% till the second quarter of this year, Philips Lighting's Sahay said. Companies have not revised the prices of LED, or light-emitting diode lamps, because the cost component of rare earth in LED bulbs is low. Source: economictimes.indiatimes.com