The Indian government rolled out a massive green policy last October to replace the country’s 750 million tungsten bulbs with LEDs. But it will be Chinese companies that will acquire the potentially INR 240 billion (US $3.78 billion) worth of LED orders in the Indian market, due to domestic companies limited supply and lack of finances to meet this demand, reported Hindustan Times.

Indian companies’ projected LEDs long lifetime and durability indicated “the market would be sewn up for about two years,” according to the report.

Industry sources claim LED bulb orders in India could reach as high as 2 billion bulbs, and with each bulb selling at an average of Rs 120, the business could eventually reach INR 240 billion.

"This goes against the Prime Minister's 'Make in India' initiative," said Praveen Khandelwal, the national general secretary of the Confederation of All India Traders (CAIT), an industry lobby group representing local SMEs.

Even bigger LED players in the Indian market did not have required manufacturing capacity, and are importing bulbs straight from China. "This disrupts the entire value chain for small players," said Khandelwal, adding domestic companies need about six months to scale up production capacities.

The Indian government recognized there might be an issue.

"We are concerned that the largest value items are not made in India," said Ajay Mathur, director general of the Bureau of Energy Efficiency. "We are looking at doing the packaging of the light source within the country in the next two years."

However, the tendering process is open to all and does not discriminate between small and big enterprises.

"Even retailers are getting impacted. It is not the government's business to distribute these items at people's homes,” said a senior officer with one of the bigger companies, who declined to be identified.