Made In Germany - December 2012 by Infomedia18

SEARCH - Supplement December 2012

Editorial

CO-CONQUERING IN COMPETING WORLD

he year 2011–12 was (as the year is almost ending) a significant year in the lives and times of India and Germany, as the two democracies celebrated 60 years of diplomatic relations. The initiatives that are part of this ‘co-conquering’ have already left a remarkable footprint. What is more exciting is the fact that the year 2012–13 is going to be a landmark year as it is a year of ‘India in Germany’ under the motto ‘Days of India in Germany - Connecting Minds 2012–2013’!

While a lot is happening between these two countries, one tends to agree with Michael Steiner, the German Ambassador to India, when he says, “We can do more!” According to him, Germany and India have become important strategic partners on the global stage. The friendship and trust has grown manifold. But both countries are far from achieving their true capability. The EU is the biggest trading partner for India and Germany is the biggest European trading partner. And the stats justify this logic. The German Ambassador has a point when he says, “If you account for 20% of the world’s population and only contribute 2% to global trade, but still want 8% growth, you need to open up.” We now know that in the age of globalisation, we cannot succeed staying in silos, and India is taking steps towards this reality and advantage. The recent decision of the Indian Government to liberalise FDI in aviation and retail was met with cheers from German business houses. German investors know that India is a country which is going up, not down. The question is how steep is the ascent. The German companies are bullish about the brimming domestic demand in India. But along with success in the Indo-German trade relations, there are some setbacks as well. India’s most ambitious free trade deal with the European Union has hit a major stumbling block. The deal will not be ready for signing any time soon, and will definitely miss the targeted deadline of December 2012. The reason for this deferred decision can be attributed to the fact that such strategic decisions involve negotiations on detailed issues and prompts protecting the interests of companies in both Europe and India. Things get all the more complex as realities are not necessarily identical, because the industries/ companies/products are on different levels and life cycles in the demographies involved due to the difference in the maturity of the economies involved. Then again, as the experts point out aptly, free trade and investment agreement is not something for the next year or even for the next five years. The time horizon for a programme like this is 15 years. This means that the two countries must have strategic interests which are sustained. With ‘sustained economic relationship’ as a guiding thought, here’s dedicating this edition of ‘Made in Germany’ or ‘MiG’ to TRADE, and here’s bridging the growth barriers between the two super highways!

Archana Tiwari-Nayudu archana.nayudu@network18publishing.com

Guest Editorial

SEARCH - Supplement December 2012

Michael Steiner German Ambassador to India

he German Constitutional Court has decided that the two major instruments in resolving the Euro dept crisis—the European Stability Mechanism (ESM) and the Fiscal Compact—are in full accordance with the German Constitution. This verdict is good news for Europe. Germany, Europe’s anchor of stability, is now able to ratify the ESM and the Fiscal Compact and will do so swiftly. Germany is 100% committed to the Euro. This is an overwhelming cross-party consensus—from the governing coalition to the main opposition parties in Germany, from Chancellor Angela Merkel and Foreign Minister Westerwelle to the Social Democrats and the Green’s Party. Not only in Germany, all over Europe and around the globe, the important political leaders welcomed the verdict. Also, the Indian industry praised the Court’s decision. Political backing is essential, but the true litmus test was the international financial market reactions. The eagerly awaited verdict had immediately boosted global stocks from Rome to Frankfurt, from New York to Mumbai. The Euro stays near four-month highs against the dollar—it is the winner of the Court’s decision. Now, we have something I call a true “Elephant’s tool box” to stabilise the Eurozone. It consists of a powerful triad: First, a maximum firepower of €780 Billion, which corresponds roughly to US$1 trillion. The ESM paves the way for a sustainable financial assistance to Euro countries in need. Second, the fiscal compact— in reality, the nucleus for economic governance in the Eurozone and the missing link between the national fiscal policy and the European monetary policy. The Fiscal Compact paves the way to fiscal responsibility of all Euro countries. Third, the decision of the independent European Central Bank to buy—if necessary—unlimited sovereign bonds of countries in need, of course provided they apply for assistance under the clear rules of the ESM. US$1 trillion; binding fiscal restrictions; unlimited purchase of sovereign bonds—an Elephant’s tool box indeed! The verdict of the Constitutional Court is a clear signal that Germany is and remains deeply and firmly committed to a united Europe. Germany wants more Europe, not less. And we want to have a stable and prosperous Eurozone. That requires a solution based on three pillars, viz., solidarity, fiscal sustainability and growth. Solidarity with countries having liquidity problems is indispensable— and Germany stands by its Eurozone partners. Just take the approval of the ESM by the German Parliament. This entails a German share of financial guarantees, which correspond to more than 15 % of the Indian Gross Domestic Product. A decision taken with a two-third majority in both chambers. In doing so, also the main Opposition parties refrained from cheap anti-European populism. Equally important is fiscal sustainability. The ESM ties assistance to strict conditions under the new fiscal compact as it requires the Eurozone members to adopt national debt-brake rules limiting structural debt to 0.5 % of GDP. Finally, growth. Eurozone members are actually going through major structural reforms in order to become even more competitive. Europe has decided to no longer ease the symptoms of the crisis by fighting debt with more debt, but to go for better spending and reforms. The verdict of the Constitutional Court is also good news for India. India is fundamentally a power house, but also for India going it alone is not an option, however strong your economy might become. The situation in the Eurozone matters directly to India. As Europe needs a strong, solid and prosperous India, so does India need a strong, solid and prosperous Europe. The EU is India’s largest trading partner and Germany its biggest trading partner in Europe. Don’t underestimate Europe—its fundamentals are pretty strong. Indian economic growth very much depends on foreign investment and international trade. India needs fundamental structural reforms and a step-by-step market liberalisation as soon as possible. India is actually going through difficult economic times, therefore a EU-India Free Trade Agreement in due time would be a powerful signal to the markets—to the benefit of both our continents. So, the verdict is good news for Europe and India! I am confident that we will emerge stronger from this crisis and will again be an engine of growth. Europe is a vibrant continent. Bear in mind that the World Economic Forum’s ‘Global Competitiveness Index’ lists seven European countries in its World Top 10 list. Yes, the crisis is still not overcome, there is no quick and easy fix. We need stamina. We need more reforms. But we have already achieved results unthinkable only two years ago. We are pro-European. And this was now legally certified by the highest judicial institution in Germany, the Constitutional Court.

CONTENTS 7 8 12 14

EDITORIAL

Opinions & More GUEST EDITORIAL

NEWS

Ulrich Ackermann, MD – Foreign Trade, VDMA

‘It is important for India to open the market and economy’

BEYOND BOUNDARIES INDO-GERMAN TRADE CONTINUES ITS DREAM RUN

27 16

INNOVATION AND R&D GERMANY: WHERE INNOVATION COMES HOME

‘By 2020, India is likely to be among the top three markets for passenger cars, commercial vehicles’ Dr Wilfried Aulbur, Managing Partner & CEO, Roland Berger Strategy Consultants Pvt Ltd

29 18

KEY INDUSTRIAL SEGMENTS STRENGTHENING ECONOMIC TIES

GROWTH AVENUES BRINGING GERMANY TO BUDDING INDIA

BUSINESS BASICS ‘MSMEs & SMEs WILL PLAY A SIGNIFICANT ROLE IN THE INDUSTRIAL GROWTH OF OUR COUNTRY’

TRADE & COMMERCE OPPORTUNITIES GENERATING RICH BUSINESS PROSPECTS

Rajesh Nath, MD, VDMA India

‘Co-operation with the intention of mutual benefit for all involved is the key for a high success rate’ Hubert Reilard, MD, EFD induction Pvt Ltd

‘The USP of any German product or technology is excellence in engineering’ Tosher G Hormusjee, Director, GW Precision Tools India Pvt Ltd

‘Times are changing and Indian companies are showing innovative zeal’ Werner Deggim, CEO, NORMA Group AG

‘The objective is to supply costoptimised products to the Indian automotive industry at global quality standards’ Ashwani Aggarwal, President, Brose India

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NEWS, VIEWS & ANALYSIS L A T E S T

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GERMANY CONFERS ‘CROSS OF THE ORDER OF MERIT’ ON BABA KALYANI AND KIRAN NAGARKAR The German Ambassador to India Michael Steiner conferred the prestigious ‘Bundesverdienstkreuz’, Germany’s ‘Cross of the Order of Merit’, to businessman Babasaheb Kalyani and writer Kiran Nagarkar. Through this Order, Germany acknowledges the personal commitment and the outstanding contribution of the two awardees to Indo-German relations over the past decades. Steiner said, “The strategic partnership between India and Germany is no hollow phrase. It can be spelled out in ever so many trusted and long-term relations—be it in politics, science & technology, education, vocational training, or the arts. The recipients of today’s award cover a large scope of these relations.” Babasaheb Kalyani is one of India’s most successful businessmen, who is also deeply connected with Germany. Not only has Kalyani led his company Bharat Forge to become the largest exporter of automotive components from India, he has also led a remarkable turnaround of German medium-sized company, Carl Dan. Peddinghaus, which he made into a profitable new venture by the name of ‘CDP Kalyani’. In establishing a master

degree course for engineering at Pune University, together with the University of Kaiserslautern (Germany), Kalyani has set a landmark for Indo-German academic relations. He currently serves on the boards of various prestigious German companies and supports NGOs as well as charitable institutes. On the other hand, Nagarkar, who is one of India’s best known authors in Germany was also honoured. Nagarkar’s works, which have been widely translated in German, make a colourful, complex and in many ways a complicated society tangible to our senses. His books, particulary ‘God’s Little Soldiers’ was a bestseller in Germany, offering a unique insight into the world of extremism.Bestowing the honour upon Nagarkar, Steiner said, “At the crossroads between our cultures, he became a major voice of India in Germany, and I trust, also a resounding voice of Germany in India.” Steiner added that while the two men come from very different backgrounds, yet at the same time, they both are ‘true friends of Germany, refined interpreters between our societies, bridgebuilders in the word’s most nobel meaning”.

APOLLO LOGISOLUTIONS FORMS JV WITH GERMAN LOGISTICS COMPANY FIEGE Apollo Logisolutions, a subsidiary of Apollo International Group, is going to invest `500 crore in expanding its presence across India in the next three years through acquisitions and greenfield projects. The company recently signed up a 60:40 joint venture with Germany based $2 billion Fiege Logistics. The new company called Apollo Fiege will provide integrated logistics services like customs brokerage, freight forwarding, transportation, etc. The logistics company has been operating a container freight station (CFS) at the Jawaharlal Nehru Port for about four years and is planning to set up its network of seven container freight stations across India. Four out

of these will be operational by the end of 2013 in locations including Delhi and Chennai. Apollo Logisolutions is hoping to benefit from Fiege’s expertise in the logistics sector especially in sectors like automobile, luxury and e-commerce. Company’s clientele includes Swatch, Aurbindo Pharma and Home Shop 18 among others. By March 2013, Apollo Fiege will have offices across 20 locations in India and make an investment of about $10 million in the next two to three years. As a part of its expansion, the company will set up 28 warehouses through lease agreements and partnerships in key locations.

M A N U F A C T U R I N G

NORMA GROUP INAUGURATES NEW PLANT IN TALEGAON NEAR PUNE NORMA Group, an international market and technology leader for engineered joining technology, officially recently opened its new production plant in Talegaon near Pune. With the new 6,500 sqm facility, NORMA Group enhances its production capacities in order to cater to the increased demand in India and Asia for connectors and joining elements. “We have been present in India for many years with our business evolving greatly. The opening of this facility is a logical step for us in adjusting our capacities to the growing demand for our joining technology solutions in the Indian market and the entire Asia Pacific region,” said John Stephenson, COO & President – Asia-Pacific, NORMA Group. “In the new facility in Talegaon, we will expand our engineering services. This increase means that we can support the design work for NORMA Group in many regions of the world including Australia, Europe, Japan, Korea, and North America,” Stephenson added. The new site is equipped with the latest production technologies from NORMA Group and ensures safe and responsible operations for the employees working in Talegaon. The products manufactured in the facility comprise of hose and pipe connecting components like flexible nylon tubing for various applications such as fuel lines and crankcase ventilation. Customers from the aerospace, automotive, railway, shipbuilding, chemical, infrastructure and various other industries across India and Asia-Pacific will be served from the Talegaon plant.

NEWS, VIEWS & ANALYSIS L A T E S T

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GERMAN CERTIFICATION FIRM TUV SUD SETS UP LAB IN GURGAON German testing and certification company TÜV SÜD has set up a laboratory in India, equipped to meet requirements across sectors, from nutritional products and food supplements to leather and toys to jewellery. The €1.7 billion company has 10 labs in the country, but the new lab located in Gurgaon will be a hub to service companies in North India, similar to an existing hub in Bengaluru for companies in South India. Its other labs are located close to industrial clusters, like Ambur in Tamil Nadu that exports leather products; or labs to certify textile and apparel, located in Mumbai, Delhi and Bengaluru. The company will invest €5 million

(about `35 crore) in the new lab and the other satellite labs. The company clocked revenues of € 20 million (`140 crore) in 2011. An accredited lab for food testing, the company is also notified to certify medical equipment. The new lab is equipped with technology ranging from handling the physical and chemical aspects of testing. So in food or textile, it would be testing products to check their packaging or ability to withstand handling pressures, and these would be handled separately for different products, he explained. The chemical analysis would involve more sensitive and dedicated equipment to check for antibiotic or pesticide residues in food, azo dyes in textile or lead in toys.

DHL AND BLUE DART CELEBRATE 60 YEARS OF SUCCESSFUL INDO-GERMAN TRADE RELATIONS DHL, the world’s leading logistics company, and Blue Dart, South Asia’s premier integrated express package distribution company, part of the DHL Group, celebrated 60 years of successful Indo-German trade relations, by hosting a collaborative festivity called ‘Germany and India 2011–2012: Infinite Opportunities’. The main focus of the celebration was the ‘IndoGerman Urban Mela’ that looked at the implications of rapid urbanisation in today’s megacities, where a group set of modern multi-purpose pavilions were put up for 10 days in five different cities in India, including Delhi, which was the final destination. “DHL is strongly committed to

investing in Asia, which is expected to be one of the key drivers of growth. With our recent investments in India and China, we are confident of pursuing DHL’s global strategy to support trade and business development worldwide,” said Vikas Anand, COO, DHL Supply Chain. Through its pavilion, DHL shows how it is helping to shape our common future. DHL Express recently opened its biggest express hub in Asia—the US$175 million North Asia Hub in Shanghai. Additionally, DHL Supply Chain has announced an investment of US$130 million to strengthen logistics infrastructure in India.

GERMANY, INDIA TO FORM WORKING GROUP FOR IT COOPERATION India and Germany plan to form a working group to expand bilateral cooperation in the field of information technology (IT). “We have discussed the possibility of setting up a working group for cooperation in the IT sector. This group can look at areas like e-learning and e-medicine, among

other things,” German Vice Chancellor Philip Rosler recently said. Rosler, who is also in-charge of economy and technology in the German federal government, said both sides have also discussed the possibility of cooperation in urban planning, and furthering bilateral trade.

MERCK KGaA PLANS TO MAKE INDIA UNIT ITS EIGHTH GLOBAL COMPETENCE CENTRE German drugs and chemicals group Merck KGaA plans to make its Indian chemicals units in Navi Mumbai to cater to markets in select product segments, apart from being a customer training and application development location. Merck currently has seven such competence centres located in Germany, Japan, Taiwan, Korea, Brazil, China and the US. The Indian unit will be its eighth and will be part of the global network of Merck’s production and application training centres. By being a global competence centre, the Navi Mumbai facility will also provide consumer training to its local and foreign clients, apart from being an international sourcing base for performance chemicals such as effect pigments and cosmetics. The product segment that the German group is targeting at this centre primarily caters to industries such as paint, packaging and printing, brand protection including anti-counterfeit solutions, and cosmetics. The local market for performance chemicals including pigments, plastics and printing material, cosmetics and others is approximately worth `20,000 crore. Merck currently operates two entities in India—Merck Ltd, which is listed on local stock exchanges, and Merck Specialities Pvt. Ltd, a wholly owned unit. Both these companies are into making and selling of drugs and chemicals. The parent is also looking at acquisition opportunities in India in the pharmaceuticals and chemicals space.

Beyond Boundaries

SEARCH - Supplement December 2012

Indo-German TRADE continues its DREAM RUN The Indo-German relationship, for India, is one of the strongest bilateral relationships. Germany is India’s eighth largest trading partner and trade, investment, ﬁnance & technology transfers and collaborations form an important basis for this partnership. The relationship has been going steady for the past few years and India’s bilateral trade with Germany is likely to touch €20 billion during 2012, showing a growth of 11% over the previous year. With such promising prospects in store, experts are of the view that Indo-German ties will continue to grow beyond boundaries. NISHI RATH

ndo-German trade touched €13 billion in financial year 2009. Besides, Germany has also consistently ranked among India’s top investing countries in terms of Foreign Direct Investment (FDI). And industry experts are confident that Indo-German ties will continue to flourish. In recent years, the economic cooperation between India and Germany has increased substantially despite weak global economic conditions—total trade in 2010–11 was $19.1 billion as compared to $7.6 billion in 2006–07. Throwing light on the same, Sameer Shah, Senior Manager, Arcum Engineering (P) Ltd, says, “We are into pipe bending machines and have been doing business in India since the last 15 years. Germany is an export-oriented country and India has been one of its major clients since years. The bilateral relations between both the countries have been good and encouraging. Additionally, last year was very good in terms of business.” “But this year, it has been quiet,” he continues, adding, “The government should work on the policies and reforms which, at times, are a hindrance for companies like us.” India’s exports stood at $7.2 billion and imports from Germany were at $11.9 billion in 2010–11. In April 2011–

January 2012, exports to Germany expanded by over 25%, while imports went up to $12.9 billion—an increase of 31%. India’s exports consist of electrical and non-electrical machinery, apparel, organic chemicals, articles of iron and steel, vehicles and leather items, while the country imports machinery, precision instruments, vehicles and parts, project goods, organic chemicals, etc., from Germany. Bilateral investments too have been robust. The total FDI from Germany has been $4.5 billion in April 2000–February 2012, and Germany is the eight largest source of FDI for India. About 600 Indo–German joint ventures are operational in sectors such as machinery, automotives, metallurgy, etc. Germany is also India’s second largest source of technology transfer partnerships. Indian companies have displayed high interest in Germany, and total Indian FDI stock into Germany surpassed German investment stock in India. According to a CII report, the two countries can set a trade target of $30 billion by 2014. Areas for economic cooperation include trade in goods, trade in services, investments and technology cooperation. Strong mutual complementarities are driving trade and potential

SEARCH - Supplement December 2012

sectors of trade and investment include chemicals, textiles, tourism & ICT, among a wide range.

GERMANY: A GATEWAY FOR INDIAN INC TO EUROPE

foreign investment in multi-brand retail and other economic reform measures has created the perfect investment climate to attract foreign players. Besides, German companies are keen on making long-term strategic investments in India. The decision to allow multi-brand retail and also to attract foreign investment in pension and insurance are not only attractive for companies but also create a good psychological effect on them to invest further. This, in turn, has led to a good investment climate and has helped towards building investor trust and confidence. Substantiating the same was the recently held Asia-Pacific Conference (APK) of German Business in Gurgaon, which saw more than 700 CEOs of German companies in India to explore opportunities. Undoubtedly, German firms are looking for longterm strategic investment in India

15 Beyond Boundaries Foreword

which is the most prominent business destination for other countries, including India. Taking into consideration that Germany is India’s most important trade partner in the EU and 150 German companies are active in Bengaluru, he said that his country is keen to further deepen business ties with India. “An important step would be the quick conclusion of a Free Trade Agreement between the EU and India. We will continue to work on this,” the minister stated, adding, “In addition to trade and economic issues, we discussed thrust areas between our two countries such as education, innovation and research in cutting-edge sectors to enhance our bilateral relations.” The two-way trade increased to $110.26 billion in 2011 from $83.37 billion in 2010.

Economic growth in India coupled with sustained and continuous liberalisation of outward FDI regime have opened up an attractive space of global opportunities for Indian firms. While companies are faced with increased competition at their home ground, domestic and overseas success has put significant slack resources at their disposal. Encouraged by government support to outward FDI, Indian firms have rapidly emerged as a significant source of FDI. According to official figures, between March 2001 and March 2010 India’s outward FDI stock, increased more than 28-fold, LOOKING BEYOND BOUNDARIES from $2.6 billion to $77.6 billion. As the trade ties between the two Germany, along with the US and countries intensify and more Indian the UK, has emerged companies venture abroad, as a primary target for Germany will become 2010 2011 Annual Growth Germany’s exports to India 9.28 10.87 17.1% Indian FDI. The largest indispensable for many Germany’s total exports 951.96 1,060.20 11.4% economy in Europe Indian firms. Owing to India’s share in Germany’s exports 0.98% 1.03% 5.1% provides attractive market geographical, cultural India’s ranking as export partner 21 21 opportunities. And with its and linguistic distance, Table 1: Germany’s exports to India in billion Euros and India’s relative position established technological Germany, however, 2010 2011 Annual Growth prowess, high-quality continues to be a tough Germany’s imports from India 6.24 7.50 20.2% infrastructure and reliable market for some Indian Germany’s total imports 797.10 901.96 13.2% institutional setup, Germany firms. Nonetheless, with India’s share in Germany’s imports 0.78% 0.83% 6.4% is considered an excellent careful cultivation, it India’s ranking as export partner 26 25 investment target by many is possible to achieve Table 2: Germany’s imports from India in billion Euros and India’s relative Indian firms in their pursuit extraordinary success in this position of newest technologies highly attractive market. and commercially viable cutting-edge and German firms like Bosch and Though some German companies innovations. Commenting on the same, Siemens—which are household names have been facing turbulence this year Hon’ble External Affairs Minister Shri in India—have created a confidence in business, they are positive to bounce SM Krishna had recently stated, “We in the industry. With India opening back. As Winfried Heinemann, Dipl.are quite optimistic of achieving growth up, the inevitable effect would be that Ing, Vertriebsdirektor - Sales Manager, in our trade with Germany despite the outside investment would come in, AWS SCHAFER, aptly concludes, debt crisis in Europe and the global opine experts. “Our business has witnessed good economic slowdown. Germany is our growth in India. We have been doing largest trading partner in the European business here since the last 40 years. FUTURE PERFECT Union (EU) and our trade with them is Although we face some competition According to the External Affairs going very strong.” from our Chinese counterparts, we Minister, Germany is in the best position hope to create more opportunities in to lead the fight against the debt crisis future.” that had deeply affected some countries GERMAN COMPANIES LOOKING in the European Union (EU). This is FORWARD TO INDIAN REFORMS because it had as much stakes in Europe, India’s decision to open its doors to nisi.rath@network18publishing.com

Innovation And R&D

SEARCH - Supplement December 2012

Germany: Where innovation comes home The investment from Indian firms directed towards Germany and vice versa, has been going on a stable course in the past couple of years. As the global market becomes more and more mature, the openness towards bilateral trade between these two nations is also increasing—a fact which is evident from the numerous significant investment projects and also from the positive outlook of Indian subsidiaries towards FDI. As the bilateral trade gates open up amid these two nations more & more firms understand the benefits of using German technology, their expertise & infrastructure are being adopted by the Indian firms for enhancing their R&D competency and innovation assortment. This tendency is promoted by the brilliant growth that most Indian firms are witnessing in Germany and vice versa.

RESEARCH GREETS INVESTMENTS

PRATEEK SUR

here is a commonality between aspirin (the medicine), the electron microscope, the MP3 music format and LCDs. Any guesses? They all have been German inventions that have revolutionised the world. Zillions of such inventions keep coming to the fore everyday of the week and German scientists and R&D experts are always working towards bettering the present technologies for a better future. Some of these inventions happen on a grand scale and thus people from all across the globe get to know of it. Nonetheless, there are numerous infinitesimally small inventions that no globe trotter keeps track of. Most of these inventions have an impact on our day-to-day lives... inventions we can simply classify as ‘German ingenuity’.

Excellency status for engineering brilliance, innovation and R&D resound that customers purchasing German goods are characteristically looking for that little extra—whether it is cutting-edge technology or the particular, flawlessly designed part that cannot be found elsewhere.” According to a recent study released by KPMG, Germany is ‘an international leader in terms of science and technology industry share of the total workforce—alongside Holland and Australia’. Germany, along with Japan and the US, invest the maximum amount of their total domestic production in R&D. Germany was placed at eighth position among the 139 countries for R&D and innovation in the World Economic Forum’s (WEF) ‘Global Competitiveness Report 2010– 11.’ According to the WEF, Germany is the global leader for the capability for modernisation. Germany also holds fourth place in the amount spent on R&D. Lastly, Germany secures the sixth position in the category of quality of the scientific research institutions across the globe.

INNOVATIONS AT THE HEART German companies, especially SMEs, which control the financial system, are out-and-out innovators in themselves. Innovations done by most German companies are ideally based on the characteristic deep technical expertise of the Germans, which permits even undersized German enterprises to come out and be market leaders in their specific niche segments. These companies may not be very big in size but they succeed in the market by presenting the best available technology in their particular segment. According to Martina Stöver, Export Manager, Authorised Signatory, STAPPERT Deutschland GmbH, “German companies are acquainted with the fact that price is not always the selecting factor in a buyer’s mind. Germany’s

Last summer, Intel fixed on investing €12 million ($15.2 million) in the forthcoming five years in the venture Intel Visual Computing Institute. Recently, the same institute started a cooperative lab with another university research centre. It is because of these institutes that Germany is coming up in the fields of supercomputers. In total, there are three locations in Germany that have very fast supercomputers and these institute labs are among them. “German companies, in fact, are well acquainted with the knowledge of highperformance computing,” adds Stöver. The global conglomerate, Intel, also, of late, granted payments amounting up to $1.4 billion for the wireless chip business of Infineon Technologies AG stapled at Munich. Germany flaunts numerous research institutes (some of which are famous

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globally) and people from all across the world come in to study there. Institutes like the Max Planck Society and the Fraunhofer Society are hotspots for foreign students flowing in from across the globe.

FROM THE LABS TO THE MARKETS German companies, according to a recent study, file in for the third maximum patents (per million workers) in medium-high and medium-lowtechnology fields (after Switzerland and Sweden). In the high-technology fields, they stand in the eighth position. The best part about the German innovations is that they are good at transforming innovations on the drawing board into reality. Germany is one of the top five nations for the development and marketing of high technology. “German scientists are efficient and, besides Sweden, have even produced more cost-effectively viable new developments from a preset R&D budget,” avers Stöver.

SECTOR-SPECIFIC GROWTH Germany is very strong in execution and systemising. Their innovations take the least amount of time to reach from the labs to the markets. German companies are fast and good at cooperating in clusters. They form good networks which foster innovation, technology improvisation and product creation. This is generally applicable in terms of the chemical, automotive industry, medical engineering, electrical equipment industry and mechanical engineering sectors. Germany’s precise environmental rules and regulations have also given birth to numerous innovations which come in from the renewable energy to emissions control and energy efficiency. German researchers are burning the midnight oil to make coal a cleaner and more environment-friendly fuel. German scientists are also devising ways to capture carbon from heavy industries and make them environmentally safe. The chemical industry is in quest for

oil alternatives, while the automotive sector is looking out for substitute fuels such as hydrogen and electricity. The Government of Germany openly and actively encourages its researchers to network globally. Germany has set up centres for R&D in nations as far off as Brazil, Russia, India, China, and the US. The BRIC nations along with the US & Canada are typically stimulating collaborator nations for German players; they are helping Germans in academia as well as industry expertise. “Most of these partnering nations are making noteworthy investments in R&D, and Germany is always

17 Innovation And R&D Foreword

before all the nations. “Innovation is bettered by teamwork. Germany brings the greatest scientists and researchers together and plays catalysts to ensure better innovation and R&D,” asserts Stöver.

PARTNERING FOR A BETTER FUTURE Global researchers and international investors find an optimistic partner in Germany. Germany helps by being a facilitator for collaboration among researchers, industry players and investors. The German Government supports R&D with strong monetary assistance. The Government of

FUNDING FOR R&D The chief financial support for R&D comes from the private sector. Businesses financed 68% of R&D spending way back in 2007 and this quantity increases year by year. The German regions of Braunschweig and Stuttgart lead the EU in R&D concentration or R&D spending as a percentage of GDP. Moreover, Germany had 11 regions among the top 25 for R&D concentration in 2006–07. Germany has an R&D concentration level of 2.54%; putting it in the top 10 among urbanised and developed nations. Venture capital in Germany is fairly thin—a prime reason that the government and private companies account for so much of R&D. This also helps foreign investors to have a better opportunity to harp on. On an average, in Germany has 33 to 41 ‘business angels’ per million inhabitants that is way more than anywhere else in the world. Many high-tech start-ups German firms have had fairly great success. SAP AG was started by five Germans in 1972, and presently, it is one of the world’s largest software companies. SAP AG employs almost about 50,000 employees in 50 different nations. The German ideologies, and government processes, have been supportive of industrial exports. “Innovation is a chief part of an export economy. Innovation helps create a response loop where strong exports profits from innovation and innovation profits from physically powerful exports. They are like two sides of the same coin and feed on each other. It is the government’s zeal and enthusiasm towards innovation and R&D that have helped Germany keep a strong industrial base even at times when it was a high-wage country,” Martina Stöver, Export Manager, Authorised Signatory, STAPPERT Deutschland GmbH. dedicated to long-term investment in R&D,” adds Stöver. These centres were made to help globally renowned experts and researchers from academic institutions, industry and government to come together under one roof and help in the betterment of all nations on the whole. This also helps enhance the communication between various nations, especially on the critical challenges which the 21st century poses

Germany launched the ‘High-Tech Strategy’ in 2006. This helps to gather funds amassing to a sum of about €4 billion a year just directed for R&D, which also includes money in the form of grants. Their government, on the whole, spent a total of about €12 billion on R&D in 2009. This amount is growing every year. prateek.sur@network18publishing.com

Key Industrial Segments

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ARINDAM GHOSH

ndia’s emergence as one of the fastest growing economies and Germany already being an established hub for developing state-of-the-art technologies & solutions, has led to the formation of the most successful partnerships for both the countries. Today, Germany is one of India’s biggest trading partners in Europe and globally, the country ranks fifth as India’s biggest trading partner. The bilateral trade between India and Germany has more than doubled over the last five years to reach nearly US$23.64

have invested over US$6 billion in Germany. And Indian industry majors such as Tata Motors, Bharat Forge, Suzlon, Mahindra & Mahindra, Wipro and Infosys have all established their base in Germany. There are 215 Indian companies active in Germany employing over 24,000 people. Commenting on the importance of the Indian market for German companies, Mitesh Shah, Development Manager – Globalisation Services, SAP Labs India Pvt Ltd, informs,

Strengthening Economic Ties

The bilateral trade between India and Germany has more than doubled over the last ﬁve years to reach nearly US$23.64 billion last year. Further, it has been estimated that the trade between India and Germany will touch $30 billion by 2014. However, the global economy is currently tackling the Eurozone crisis and the Indian economy remains largely unaffected. All this coupled with Germany’s technological prowess has created a lucrative opportunity for German companies to establish base in India. Under such a scenario, industry verticals like electrical appliances, industrial machinery, automobiles & auto components and renewable energy have the potential to strengthen the partnership and enhance the bilateral trade beyond the projected ﬁgures. “The Indian market is very critical for German companies, billion last year. In addition, Germany has also been an because India is currently one of the fastest growing economies important source of Foreign Direct Investment (FDI) in India. in the world. This opens up huge scope for businesses.” During 1991–2010, the cumulative FDI from Germany stood Besides, the technologies that German companies provide are at US$ 3.75 billion. In the period April–November 2010, a perfect blend between a developed and a developing country Germany was the eighth largest investor in India with FDI that would foster growth and development, he adds. inflows of US$ 104 million, constituting approximately 2% share of the total FDI inflows into India. In the case of exports and imports, Indian exports SECTORS GAINING FROM PARTNERSHIP grew by over 19.5% to reach €5.66 About 65% of German manufacturing billion, while the country’s imports companies already have their presence Today, India no longer remains a from Germany registered an increase in India. In order to further strengthen mere recipient of technology or of over 16.4% to reach €8.36 billion. co-operation, India and Germany investment. The country is taking Indian corporate leaders have been have formed a Joint Commission on various initiatives to develop itself as equally enthusiastic about investing Industrial and Economic Cooperation an equal partner in terms of offering in Germany. Given the natural that meets once every two years at the quality, reliable and cost-effective synergy that exists between the two level of Finance Ministers. Further, solutions. countries, Indian corporate entities these two nations have also created

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19 Key Industrial Segments Foreword

technologies to find applicability. The are highly accepted in the Indian working groups for various other project aims to develop 20,000 MW market. We have experienced good important sectors such as automobiles, of solar power by 2022. Undoubtedly, growth in the market.” coal and infrastructure. In India, Pune this sector offers several opportunities Industrial machinery and electrical is a major hub of Indo-German joint in terms of collaboration between both appliances ventures in the manufacturing and the nations. The importance of using India’s demand for machinery and service sector with more than 250 joint and implementing renewable energy electrical equipment from Germany ventures already operational in the city. in various activities is fast catching up. forms about US$4.5 billion of the total Some of the major industrial sectors Commenting from the renewable energy US$10 billion imports for the sector. In that have gained immensely from the perspective, Shah said that there is the case of electronics, India is growing partnership include: immense scope for the implementation rapidly in the electronic manufacturing Automobile of German technologies to develop service providers and semi-conductor The German automobile industry renewable energy, especially from solar manufacturing. Given the situation is the largest in Europe. Over a and wind. where the market is huge for electronics period of time, German cars have in India, collaborating with the German emerged as one of the largest selling technical know-how, can lead to the vehicles under the luxury car segment THE PARTNERSHIP IS BRIGHT & development of competitively priced, on Indian roads. The automobile SUSTAINABLE better quality solutions. The overall industry offers huge scope of Leveraging on their respective strengths Indian electronics industry was at about collaboration between the two nations. is the key for Indo-German ties to €29.2 billion and is expected to grow at In a bid to further strengthen the flourish. In terms of the competitive a fast pace in the coming years. collaboration, the Indian Government advantage that India offers German Renewable energy has also cleared a national mission companies, Eisenschmidt states, “India In 2025, Germany will be the world for electric mobility to promote the is a very dynamic market and Indian leader in green energy. Currently, manufacturing of electric or hybrid workers are technologically strongly.” German cities are among the greenest vehicles in the country. The step Agreeing with the viewpoint, Shah in Europe. And for a country like is going to play a critical role in adds that the growth of Tier II and India where there is a big gap between developing electric vehicles. Currently, Tier III cities in India offers German the demand and supply, developing there are about 1,500 electric vehicles companies lucrative opportunities. renewable energy in India is very operating on German roads. By 2020, Besides, there is easy availability of important. In a move to promote the Germany aims to have at least one skilled manpower. Further, some of million electric vehicles the major advantages to operating on the roads. do business in Germany The Indian market is very critical for German Offering a perspective include favourble business companies, because India is currently one of the fastest growing economies in the world. on the same, Michael climate, availability of stateThis opens up huge scope for businesses. Poznanski-Eisenschmidt, of-the-art technology and Mitesh Shah, Development Manager – Globalisation Dipl. Ing., Director its geographical location, Services, SAP Labs India Pvt Ltd – Technical Office, among other factors. Volkswagen India Pvt Today, India no longer development of renewable energy, Ltd, explains, “Given the size of the remains a mere recipient of technology the German Government-owned Indian automobile market, it is very or investment. The country is taking development bank KfW signed a important for us. We believe, for various initiatives to develop itself loan agreement worth €250 million a company to be successful in any as an equal partner in terms of (approximately `1,600 crore) with country, it needs to understand the offering quality, reliable and the Indian Government in 2011. market there and offer quality solutions cost-effective solutions. Additionally, The concessional loan will finance according to the needs of the customers India’s strong ties with Germany offer a 125-MW solar PV power plant based in that region. This theory has dual advantages—it can provide an to be constructed by Mahagenco at been followed very strongly by German edge to India’s offering and, at the Shivajinagar, Sakri, in Maharashtra’s companies and has heavily contributed same time, open up business scope Dhule district with the option for to the success of German companies for Germany. This, in turn, would further expansion by 25 MW. in India” lead to the formation of a sustainable Further, the Jawaharlal Nehru He adds, “At Volkswagen, we have win-win partnership. National Solar Mission (JNNSM) has always developed according to Indian provided ample of scope for German conditions and that is why our products arindam.ghosh@network18publishing.com

Growth Avenues

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Bringing Germany to Budding India Doing business in India is one of the most Quixotic career options that any foreign individual can choose. Let us shed light on how trouble-free or complicated it is for a foreign entrepreneur to start and run an SME business while abiding by the pertinent rules and regulations required to be followed for setting up base in India. PRATEEK SUR

he economic pendulum is slowly and swiftly swinging towards the rapidly developing nations, like India. Venture capital abundant nations, like Germany, are willing to come forward and invest in India, which is proud of its transparent market setup. The Indian industrial sector is experiencing its own paradigm shifts, reflecting a growing globalised world. According to Frank Funke, Technical Sales Manager, SCHOLZ Maschinenbau, “The globalisation of the Indian industrial sector ranges from worldwide fund-raising and cross-border investment, to exits on foreign stock exchanges or foreign acquisition.” Foreign companies are breaking the boundaries and trying to venture into places where the land is well known to them but the policies unknown. They are partnering with Indian firms or at times buying out an Indian firm and starting up their business set up with the available labour force and the executive expertise of the existing people. This expansion is helping companies bring varied colours into their portfolio and making their products more accessible to the Indian markets. Companies are analysing the trends in India and then fund-raising their ventures from their home-country investors. Germany is one such nation which is up and about in the various investment patterns between their mature & emerging venture market

and the geographical & demographical advantage provided by India. By doing so, these German companies are getting good funding from their parent companies, back in Germany. They are not only expanding at a very fast rate in India but are also funding the new sources going forward.

MAJOR CONCERNS The major concerns for most of the German companies setting foot in India can be measured by tracking the changes in regulations affecting 10 areas in the life cycle of a business—starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. The companies coming to India are presented with quantitative indicators on business regulations and the protection of property rights that can be weighed against the same across 183 nations round the globe. The indicator, that help German companies come forward to India, are used to analyse economic outcomes and identify what reforms have worked, where and why. However, Michael Kohnle, MD, KOHNLE Gmbh, explains, “The business methodology in India has limitations”. Companies looking to invest in India are concerned about certain important issues. These include: Economy’s proximity to large markets Quality of its infrastructure services (other than those related to trading across borders and getting electricity) Security of property from theft and looting Transparency of government procurement Macroeconomic conditions or the underlying strength of institutions.

THE GENERAL NORM Most of the German businesses submit to a precise type of working module, generally a local limited liability company operating in the largest business city. They join hands with the local company to give them an initial start up for a better future in India. This is because of the usual assumptions that the German companies are catering to in India such

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as data collection, comparisons and the various benchmarks set here which are valid across the other world economies. The data collected by companies not only highlight the degree of impediments to doing business in India; they also help recognise the source of those hindrances. They also help by supporting policy makers in designing regulatory reform for foreign companies willing to invest in India.

POLICIES AND REGULATIONS Indian policy makers are trying to better the state of the Indian economy by improving the rules and regulations of the environment. Elaborating further on the same, Kohnle adds, “The policy makers should also compare the Indian rules and regulations with the regulatory environment in other economies, thereby making the required changes so that the specific countries are catered to and they do not have a problem starting their business in India.”

GERMAN FDI: TOP SECTORS In the last fiscal year, the German investment in the services sSector went to an all-time high with investments of US$45.76 million. This inflow of German money from the services sector took up nearly 23% share of the total FDI inflows from Germany. This data was closely seconded by the chemicals (excluding. fertilisers) sector and the prime movers (excluding electrical generators) sector which stood at the second and third positions respectively in terms of the FDI inflow from Germany. While chemicals accounted for a 13.4% share with investments worth $26.80 million, prime movers accounted for $15.7 million of total investments with a share of nearly 7.9%. Consultancy Services ($13.11 mil., 6.56% share) and Railway-related components ($10.49 mil., 5.25%) were the fourth and fifth most important areas for investments from Germany during the last financial year. The more the investment from Germany, the more indication towards

the fact that the investments are more diversified and spread evenly over all categories.

THE TRADE ENVIRONMENT Initially, for business start ups a formal registration of companies has numerous instant advantages. The benefits are for company owners, employees and also customers. Resources are taken into account by the companies as many stockholders come together for starting the enterprise. According to Kohnle, “Companies that are formally registered always have better entrée to services and institutions from courts to banks. They are also better accepted by the new markets and the new customers. The employees can also benefit a lot from the protections

Assumptions that are mandatory: A limited liability company; located in the largest business city Conducts general commercial or industrial activities Has a start-up capital of 10 times income per capita Has a turnover of at least 100 times income per capita Does not qualify for any special beneﬁts Does not own real estate Is 100% domestically owned provided by the law.” The limited liability companies enjoy better benefit from the others in the same field. All of them limit the fiscal accountability of an enterprise to the specific investments. This helps to protect the personal assets of German companies trying to invest in India. Thus, they can heaving a sigh of relief thinking that their money is not at stake. If the registration processes are simple enough for German companies to set up their businesses then in all possibilities it would create better jobs for the labour force in India and also generate more revenue for the Indian Government.

21 Growth Avenues Foreword

GOVERNMENT TO THE RESCUE German companies measure the ease of starting a business in an economy by recording all procedures that are officially required or commonly done in practice by an entrepreneur to start up and formally operate an industrial or commercial business—as well as the time and cost required to complete these procedures,” comments Funke. German companies also trace the paid-in leastamount money that entrepreneurs must submit before registration (or within 3 months) to the governing organisation. The government authorities issue the licence for to do business in India based on the four prime component indicators—procedures, time, cost and paid-in minimum capital requirement. The Indian Government assures that all information is readily available to the entrepreneur. They also maintain the identity secretive so that there are no issues of being biased towards any company in specific. The government also ensures that all government and non-government entities concerned in the process always function without any bent towards corruption.

WHAT DOES THE FUTURE HOLD? German companies are willing to come to India and set up companies here. The government is opening up to them but the process is very slow. There are rules and regulations, but, at times, they are made very stringent and tough to follow; thereby losing out on the German investors. Pune has become a new hub for German companies coming to India as most of them have set up their manufacturing plant in or around Pune. There is a flight directly from Frankfurt to Pune without stopping at any other place for facilitating better transport for the German people to come to India and do business. The future seems to be very bright for any budding entrepreneur in Germany who wants to invest in a company in India. While the government’s action may not be instant, they are not averse to progress.

Business Basics

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ermany offers an attractive investment climate. It has a well-established system of arbitration of commercial disputes, and enforces (through its courts) arbitral awards. Germany has introduced various incentives and other special conditions to encourage investments in eastern Germany.

POLICY INITIATIVES FOR INDIAN COMPANIES WANTING TO INVEST IN GERMANY Strategically positioned at the heart of Europe and a key player in both the EU and NATO, Germany has the fifth largest economy in the world. Its strongest exporting

‘MSMEs & SMEs

is freely available from various government departments/ agencies and other authorities.

MEASURES THAT INDIA CAN ADOPT FROM GERMANY MSMEs and SMEs will play a significant role in the industrial growth of our country. The penetration of automation products has been low as only large manufacturers have been using it, but small and medium players could draw significant benefit by automating. The automation & mechanical industry will experience significant increase in demand in the years to come. Understanding the public policy and market forces that shape the manufacturing landscape is essential to winning in the global economy. The ability of a company to be competitive in the market place is not about advertising or lower prices. It is about a company that has vendors as partners and employees who own the process, as well as a marketing system that completely exceeds the customer’s expectations. It is this passion for excellence that requires constant improvement, innovation and deep rich

will play a significant role

in the industrial growth of our country’ “The ability of a company to be competitive in the marketplace is not about advertising or lower prices. It is this passion for excellence that requires constant improvement, innovation, and deep rich relationships. ‘Excellence’ and ‘world-class’ are not slogans, they are attributes of the ﬁnest and most successful businesses,” informs Rajesh Nath, MD, VDMA India. sectors—chemicals, vehicles, machinery and household goods—set standards of quality and efficiency not just within Europe but globally, making doing business in Germany a priority for international organisations worldwide. Germany has various specific incentives and regional programmes for the industry. In the west, this applies particularly to high-tech industries with strong orientation towards research and development. Programmes in the east are less specific, in line with the more general aim of overall economic support. Companies benefitting from programmes receive incentives and other support on fulfillment of specified conditions, most of which are negotiated individually and usually include a guaranteed minimum employment level. Apart from duty-free areas of ports and airports, there are no free-trade or similar zones within Germany; neither are there economic zones with their own special privileges. Similarly, there is no specific industry encouragement, although there are certain activities, such as in renewable energy generation, that find official support. Perspective investors from India can take advantage of full range of consulting services readily available in Germany at all levels of sophistication. There is thus no hindrance to obtaining in-depth marketing information, initiating searches for potential investment targets. Information

relationships. ‘Excellence’ and ‘world-class’ are not slogans, they are attributes of the finest and most successful businesses. Germany has a long-standing tradition in vocational training. By constantly improving and adapting the education and training systems to meet the current requirements, Germany now has one of the most efficient training systems in the world. This system is characterised by its strong practical component, its close alignment with the business community and the job market, as well as the integration of professional, social & methodical competencies and skills. The cooperation between German and Indian partners can take many forms. German training services range from consulting services and standard education courses to tailor-made in-house trainings. The wide range of services lays strong emphasis on employability. Further, R&D plays an important role in Germany. The companies invest around 4–5% of the profit in this. Focus on R&D and global experience of the German manufacturers helps to give this technological edge to ‘Made in Germany’. Also, the interaction among the industry and R&D as well as educational institutes in Germany is quite intensive. The Indian companies could take a clue from this and adopt such business policies. Email: vdmaindia@eth.net

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23 Trade & Commerce Opportunities Foreword

Good economic growth rate, well regulated ﬁnancial system, large market size and increasing purchasing power are some of the factors that have helped catapult India to emerge as one of the most lucrative business destinations for global investment. However, setting up a business in India requires considerable time and effort as compared to some of the other countries. Germany, on the other hand, has always remained a favoured business investment region as it offers state-of-the-art infrastructure, competitive tax & incentive system and open & free market for almost all sectors. Besides its geographical location, the country offers active co-operation in science, research & technology, which are critical factors that facilitate growth and development. ARINDAM GHOSH

s India moves into the league of developed nations, it is increasingly looking at seeking European-stamped technologies and solutions. This, in turn, has created huge opportunities for Germany, which has expressed active interest in sharing its intellectual skills with India. The ‘Made in Germany’ brand has always been a symbol of quality, reliability & precision and both the countries have made massive efforts to strengthen bilateral co-operation. Today, Germany is India’s most important trading partner from the European Union and the two countries have the largest co-operations in the field of machinery, heavy vehicles, electrical appliances, etc. Further, due to the presence of a good financial regime in the country, the Indian subsidiaries of parent German companies have delivered better results as compared to their counterparts. This has helped boost FDI between Germany and India.

industrial environment with a strong focus on innovation. With an exceptional business climate for investments, most companies operating in the country across various sectors have been highly successful. In terms of regulatory reforms, the legal environment is highly transparent and reliable. Individual rights & property are protected and the laws are stringently followed. Further, Germany has a robust and supportive taxation system along with a strong incentive regime, which allows the business to thrive. In addition, Germany has taken a lot of initiatives towards constantly improving the education and training system to meet the current industry requirements. The country now has one of the most efficient training systems followed in the world. The training system is an integration of practical approach, close co-ordination with the business community and the market’s needs. Further, unlike India, the country has energy security.

GERMANY: OFFERING BUSINESSES AN EDGE

EFFORTS MADE BY INDIA

Germany’s economic policies enhance a broad and competitive

Maharashtra, with 57% share of German investments,

Trade & Commerce Opportunities

remains the most attractive destination in India. While Pune has been the hotbed for German investments, Karnataka and Gujarat are other important destinations. Of late, southern states like Tamil Nadu and Karnataka are gaining popularity owing to the conducive investment environment they offer investors. As per the database on registered German companies with the Indo-German Chamber of Commerce (IGCC), there are 1,280 German companies in India, which have created more than 200,000 jobs. In Germany, the state of Hesse has attracted the highest number of Indian subsidiaries with 29% followed by North-Rhein Westphalia, Bavaria and Baden Württemberg. German organisations have several options to set up operations in India through various modes—100% subsidiary; a branch or liaison office; or a joint venture or merger with a local company; or its acquisition. Foreign companies can set up their office in India after approval from RBI. However, the company needs to register with the Registrar of Companies for obtaining approval to establish business in India. Further, as part of the initiatives taken by the policy makers in both countries, India and Germany have formed a Joint Commission on Industrial and Economic Cooperation that meets once in every two years at the level of Finance Ministers. Further, these two nations have also created working groups for various other important sectors such as agriculture, automobiles, coal and infrastructure. Further, in terms of FDI, the government is constantly opening up various sectors to attract investments. The impressive growth in partnership has been possible primarily because of strengthening one of the major industrial verticals, viz., the manufacturing and engineering sector. Some of the specific initiatives taken in this direction, among others, include: • Removal of tariff protection on capital goods • Reduction of custom duties on

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India’s trade with Germany: USD Billions

\Year EXPORT %Growth %Share IMPORT %Growth %Share TOTAL TRADE %Growth %Share

2005-2006 3,586.12 3.48 6,023.63 4.04 9,609.75 3.81

2006-2007 3,984.81 11.12 3.15 7,552.64 25.38 4.07 11,537.45 20.06 3.70

2007-2008 5,121.53 28.53 3.14 9,884.83 30.88 3.93 15,006.36 30.07 3.62

2008-2009 6,388.54 24.74 3.45 12,006.02 21.46 3.95 18,394.56 22.58 3.76

2009-2010 5,412.86 -15.27 3.03 10,318.85 -14.05 3.58 15,731.71 -14.48 3.37

Source: www.commerce.nic.in

India’s trade with Germany

CII Report - India-Germany Economic Cooperation

various industrial machinery • Introducing the National Manufacturing Policy • Making FDI norms flexible.

ROLE OF INDUSTRY ASSOCIATIONS Karnataka and Maharashtra were found to be most important source regions of Indian FDI in Germany (33% each), followed by Delhi (20%) and Tamil Nadu (15%). Here, industrial associations like German Engineering Federation (VDMA) and IGCC along with CII have played an important role in this regard. For instance, they have played a critical role in facilitating the process of setting up a business in either of the countries. Besides, they are involved in several activities such as organising trade fairs & exhibitions to promote India and Germany as investment destinations.

FOLLOWING GLOBAL BEST PRACTICES HOLDS THE KEY As the Indian economy is projected to become the second largest economy after China, there is ample of scope for Indo-German co-operation to grow further. However, for German companies to grow in India, a detailed understanding of the regulatory framework in the country will play a key role in determining the success of the company in India. Further, it is also critical for Indian policy makers to imbibe some of the best practices followed globally, which will allow German companies to operate freely and expand its business without much restriction and more importantly, protect its business interest in India. arindam.ghosh@network18publishing.com

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25 Opinions & More Foreword

It is important for India to open the market and economy “If a country like India has to grow at the rate of 8–9% annually, it cannot attain this growth ﬁgure only through the domestic market. For this, FDI is necessary,” avers Ulrich Ackermann Ackermann, MD – Foreign Trade, VDMA and Rajesh Nath, Nath MD, VDMA India, Ghosh. Bringing in both the perspectives during an exclusive interview with Arindam Ghosh viz global and Indian, these two experts share the mantra for harnessing successful trade ties. Excerpts… Talking of investments, we have noticed that, German businesses always have a long-term interest. Indians understand this mindset of Germans and hence, have the confidence to do business with German companies. These are some of the major reasons which have contributed immensely to the development of a strong and successful IndoGerman partnership.

KEY CO-OPERATION AREAS

AYING A STRONG FOUNDATION FOR A SUCCESSFUL INDO-GERMAN PARTNERSHIP

Ulrich Ackermann: India and Germany have shared strong traditional ties for centuries. Besides, the two countries are culturally close as they are both part of the Indo-Aryan culture. This could certainly be viewed as one of the biggest reasons for a successful Indo-German partnership. Further, in terms of language, Germans do not face any linguistic barriers when communicating with Indians in English. This is one of the biggest advantages. Also, ‘Made in Germany’ products enjoy huge amounts of respect globally not only because they are high in terms of quality & functionality but also because they are durable, reliable, eco-friendly and ensure customer satisfaction, among other factors. Over time, this acquired goodwill has allowed ‘Made in Germany’ products and German companies the opportunity to firmly establish their base in India. Also, from the technology point of view, Germans invest a lot in R&D, which has helped them gain a leading edge.

Ulrich Ackermann: Germany has traditionally been an industrial country having a very strong engineering base. This is very well reflected in the figures. If you observe, the top five sectors of German machinery have already made their presence felt in India. The first is traditional or mechanical power transmission. This includes gears, couplings, bearings and everything else that is related to mechanical power transmission. The next is material handling technology, machine tools and textile machinery followed by construction machinery and equipment. It is critical to note here that machine tools have been an important industry vertical in this partnership because of its application across various sectors. Also, one cannot rule out the role of R&D that has helped Germany deliver the best technological standards. This, in turn, enables Indian companies to develop high-quality products, thereby making them globally competitive. I would like Rajesh to give an Indian perspective. Rajesh Nath: Sure… One of the most upcoming industrial segments is food processing and packaging industry. In India, in terms of percentage, processed food comprises less than 5%, but, in Germany, it is about 70–75%. So, there is

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a lot of potential for processing food in India. Moreover, processing goes hand-in-hand with packaging, which is a must when it comes to storing the product hygienically and also while transporting the product. Around five years ago, the German export for food packing and processing machinery was only €5 million. In 2011, the figure rose to around €100 million. Thus, it is clearly evident that there is considerable demand for state-of-the-art technology and quality machining. Even in the mining machinery segment, Germany has been traditionally strong. Currently, the export of German machinery to India in this sector is to tune of about €80 million. Around five years ago, this figure stood at approximately €30-32 million. Also, there are a lot of initiatives taken in India to develop renewable energy. This offers huge scope for co-operation between Germany and India as Germany has a stronghold in wind energy. Taking a step in this direction, Siemens had established a plant in Chennai, which caters exclusively to gearboxes for wind mills. It is the only manufacturer of gearboxes for wind mills.

EUROZONE CRISIS: AN OPPORTUNITY? Ulrich Ackermann: The Eurozone crisis has slowed the growth process in the southern region of the EU at the moment and the European nations are struggling with this scenario. But if we examine the situation closely, we would realise that the problem started with Greece, which contributes a mere 5% to the GDP of the EU. Thus, it is not a real crisis for the region. Nonetheless, most countries have tightened their spending and are taking various initiatives to ensure that such economic scenarios are avoided in future. Further, the whole world is going through a recessionary phase, which has worsened the crisis to some extent. To tackle this scenario, some strict measures have been taken by the stronger economies of the EU members like Germany and France. Germany is one of the leading

countries which is playing an important role in helping the entire region come out of this economic situation. With so many initiatives taken, I think it is only a matter of time when the EU will come of out this crisis. A noteworthy factor here is that despite the crisis, Germany has been able to deliver a growth of 1–1.5%, which is not a bad for a developed economy like Germany. In the context of the Indian Rupee, the currency has weakened quite considerably to the Euro. This has led to a condition where the exports from Europe or Germany, in particular, to India have become costlier for Indian companies. Herein is a good potential for India and Germany to work together.

KEY LEARNINGS TO IMBIBE Ulrich Ackermann: Firstly, India needs to open its market and economy because an open economy will automatically attract foreign investments. Besides, if a country like India has to grow at the rate of 8–9% annually, it cannot attain this growth figure only through the domestic market. For this, FDI is necessary. This move will not only help India attract investments but will also create more jobs. FDI will lead to the creation of new jobs as well as increase the business prospects for a company. Further, it may also help Indian companies grow in scale. All said and done, the Indian Government, in recent times, has taken a lot of initiatives to open up the economy. Germany, on the other hand, has a favourable business climate because it has an open policy. The country welcomes FDI and is open for investments in all industrial sectors. Rajesh, would you like to add to this? Rajesh Nath: Yes, thank you, Ulrich.... For instance, in the case of imports, Germany does have very low customs duties. However, in India, there is a basic customs duty of about 7–7.5%, which is an impediment for imports. Secondly, setting up a business in Germany takes less than 20 days, whereas the process of setting up a company in India takes about a minimum of 50–60 days

owing to factors such as bureaucratic hurdles. But the government is taking active steps in this direction, which I think will prove to be beneficial to the economy to a large extent.

CRITICALITY OF EDUCATION Ulrich Ackermann: One of the strong points of Germany is the dual system. Here, a young student attending a company is exposed to theoretical as well as practical training. A similar model should be created in India as well. Over to you, Rajesh... Rajesh Nath: According to a study, a mere 15% of graduates are directly employable; the remaining require further training or need to go through more skill enhancement programmes. The Indian education system is theory oriented. In the light of this backdrop, the government’s National Skill Development programme is a boon in this direction. Nonetheless, there is need for more participation from the industry for improving ITIs in India.

MESSAGE TO GERMAN COMPANIES Ulrich Ackermann: German companies need to look into three important aspects before establishing their base in India. Firstly, German companies need to come to India with a long-term vision. You have to be very patient in India, because the returns may not be immediate. Secondly, companies that have been able to sustain the initial few years in the market, have been able to establish themselves well in the country. Take, for instance, Festo. The company has been in India for the last 20–25 years. Thirdly, you have to have the right mix of local management as well as expats. Initially, the company may have a German head for sometime, but later, the responsibilities need to be given to Indians, which can be productive for the firm. For instance in India, Indians would understand the local conditions and would be able handle some of the scenarios much better than expats. arindam.ghosh@network18publishing.com

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CREDENTIALS

By 2020, India is likely to be among the top three markets for passenger cars, commercial vehicles “There is hardly a better way to build a good foundation for a long-lasting friendship and partnership than motivated people that understand both sides of the world and do their bit to drive co-operation forward,” avers Dr Wilfried Aulbur, Managing Partner & CEO, Roland Berger Strategy Consultants Pvt Ltd, during an interaction with Suprita Anupam. Excerpts….

In his role as Managing Partner & CEO, Roland Berger Strategy Consultants Pvt. Ltd., he works on issues of strategic relevance such as market entry into India as well as out of India into second and ﬁrst hemisphere markets, product portfolio optimisation, M&A, etc. Besides strategy, his work in India is focussed on operations such as lean manufacturing and operational performance improvement or restructuring. Prior to his work with Roland Berger, Dr Aulbur, the MD and CEO of Mercedes-Benz India, was responsible for the passenger cars, trucks and buses. He has held the roles of Chairman/VC of SIAM as well as President of Indo-German Chamber of Commerce. Besides having worked in India for 8 years, he has 10-year experience in the US as well as substantial work experience in various European markets.

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ERMAN CONTRIBUTION TO THE TECH-REVOLUTION IN INDIA...

German companies have already shown their commitment to the Indian market; Siemens and Bosch are two eminent examples. They have been consistently trying to provide customers in the Indian market the right product, which is reasonably priced, without compromising on quality. Besides this, in the recent years, India has begun to play a critical role not only as a market, but also as an R&D hub. Take, for instance, the 6,000+ strong R&D centre of Bosch or Siemens drive towards SMART engineering.

INITIATIVES NEED TO BE TAKEN BY THE INDIAN GOVERNMENT LIKE THEIR GERMEN COUNTERPART BMZ… It took some time for German officials to understand the important role that they must play in supporting German trade abroad and in securing German jobs at home. Today, German companies get support from the government and typically enjoy good support from their embassies as well. The Chambers of Commerce have played a relevant role in supporting German businesses and in providing a platform for networking. Similarly, the Indian Government

In the recent years, India has begun to play a critical role not only as a market, but also as an R&D hub. Take, for instance, the 6,000+ strong R&D centre of Bosch or Siemens drive towards SMART engineering. can play an active role in securing market access, facilitating network and economic ecosystem development in foreign countries besides promoting India and Indian companies as highly capable players in a complex global environment.

KEY SECTORS TO BE IMPELLED VIA THE INDO-GERMAN BILATERAL

Favourite Indian preparation Dal Makhni

complex products such as automotive. As a consequence, you need, among other things, a critical size/ecosystem in terms of capable suppliers, wellqualified employees and focussed R&D organisations, among others, to enable state-of-the-art automotive manufacturing. Proactive government policies have led to a situation where currently Pune, Chennai and NCR are dominant as far as automotive is concerned. However, Gujarat is fast catching up and other states such as Andhra Pradesh are vying for an opportunity to attract the automotive industry.

Favourite Bollywood movies… Morning Raga, Three Idiots

INDIAN AUTOMOTIVE SECTOR FIVE YEARS DOWN THE LINE…

UP CLOSE & PERSONAL

Favourite artists (painting) Anjolie Ela Menon and SH Raza Favourite music band… U2, Police, Three Doors Down, Nickelback, Cranberries are among my favourite music bands. Your hobbies and interests... My hobbies and interests include reading, traveling, history and politics.

TECHNOLOGY TRANSFER

India’s demand for individual luxury and its increasing consumption will drive the growth of both passenger cars and commercial vehicles. By 2020, India is likely to be among the top three markets for passenger cars, commercial vehicles, two-wheeler and three-wheelers. It is a market that nobody can ignore.

YOUR PERSPECTIVE ON INDO-GERMAN PARTNERSHIP POISED TO GROW BEYOND INVESTMENTS

YOUR COMMENTS ON THE UNEVEN CLUSTERING OF THE INDIAN AUTOMOTIVE INDUSTRY

As far as Germany’s partnership with India is concerned, we have barely scratched the surface. Germany will—assuming that government policies will remain market focussed— remain one of the leading economies in the world; India will continue to scale the ladder to become one of the global giants. There will be opportunities to work and grow together. One important step to improve and deepen relationships is exchange of students and professionals. There is hardly a better way to build a good foundation for a long-lasting friendship and partnership than motivated people that understand both sides of the world and do their bit to drive co-operation forward.

Manufacturing is a complex process in general and even more so for

suprita.anupam@network18publishing.com

There are obvious opportunities for larger engagement in areas where competition currently is not fully feasible (for e.g., in retail or in insurance). Significant opportunities also exist in the aerospace and defence as well as green sectors (water, waste, wind, solar, etc.) where Germany has clearly established its strength and India offers significant opportunity. In return, Germany can benefit from Indian frugal engineering (for e.g., in the medical devices space).

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29 Opinions & More Foreword

Co-operation with the intention of mutual benefit for all involved is the key for a high success rate “German engineering and Indian spirit can build a combination that is unbeatable in terms of quality, price and innovation,” opines Hubert Reilard, MD, EFD induction Pvt Ltd, during an interaction with Nishi Rath. Excerpts… the fast urbanisation and its challenges for modern cities. Apart from this, efficient energy supply, modern transport solutions, green building technology and city management are some of the key subjects where Germany and India can develop solutions for cities of the future.

HOW WILL VOCATIONAL TRAINING HELP?

NDO-GERMAN RELATIONS AND THE ASSOCIATED CHALLENGES

The success rate of German companies in India and Indian companies in Germany is high. Co-operation with the intention of mutual benefit for all involved is the key for a high success rate. German engineering and Indian spirit can build a combination that is unbeatable in terms of quality, price and innovation. The general theme of the Germany in India year 2012 is ‘Infinite Opportunities’. These two words are apt to describe the future of our relations. In June 2012, we had close to one lakh visits at the ‘Indo-German Urban Mela’ at Palace Grounds in Bengaluru to celebrate 60 years of diplomatic ties between India and Germany. The thematic focus ‘City Spaces’ addresses one of the major challenges for Germany and India,

Germany has a long tradition in a good system of vocational training. We call it ‘dual’ education where the practical training at the factory is accompanied by a theoretical training in the classroom for a three-year duration. This system is the basis for ‘Made in Germany’. The majority of 500 million Indians below the age of 25 years need jobs in manufacturing where high-quality vocational training will play a major role. In addition, German small and medium companies are key drivers for innovation and technology; they are the backbone of the German economy. Indian companies can benefit from the experience German companies have gained in the field of vocational training & innovation and adapt it to the needs in India.

INDIA, AN ATTRACTIVE DESTINATION One major reason is the huge market size and the purchasing power of the growing Indian middle class. However, there are more interesting considerations—one of them being manpower. Germany needs the support of manpower from India to fill the gap caused by presently 40,000 job requirements in the software industry

in Germany. India can play a positive role in global research and design activities to develop globally interesting products.

CHALLENGE FOR GERMAN PLAYERS Machine builders from Germany need a clear concept of how to compete in the Indian market. Quality equipment for an affordable price is a good foundation. Good local application know-how and service will make a package difficult to beat. Competition is the foundation of our economy and the driving force for innovation and progress

FUTURE PLANS FOR THE INDIAN MARKET The answer is simple: we plan to expand and build a new factory at the outskirts of Bengaluru. The intention is to improve our equipment and service for our present customers, develop & invent new products based on our technical experience and know how to expand our customer base. Induction heating is a fascinating technology and new applications are discovered almost on a daily basis. It is a very energy-efficient technology with a great future.

MESSAGE TO INDIAN/GERMAN COUNTERPARTS Please allow me to come back to the theme of Germany in India Year— ‘Infinite Opportunities’ It is a beautiful motto, but we should expand it further. “…convert opportunities into reality”. I am confident that we will succeed in this attempt. nisi.rath@network18publishing.com

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KEY LEARNINGS FROM INDIA Good cross-cultural understanding and analysing the positioning of the product are some of the key learnings from India. While a good crosscultural understanding is essential for a company, analysing the positioning of the product is also important as it enhances one’s market knowledge for a given region irrespective of whether your product actually merges in every segment.

SCOPE OF CO-OPERATION & EDUCATION

The USP of any German product or technology is excellence in engineering “This has helped us gain acceptance and earn respect in the Indian market,” avers Tosher G Hormusjee, Director, GW Precision Tools India Pvt Ltd, during an exclusive interaction with Arindam Ghosh. Excerpts…

OUR EXPERIENCE IN THE INDIAN MARKET

There were initial teething troubles. However, once our customers got a feel of our products, we did not face as much trouble. While we have not been able to reach the mass market due to our pricing, we have succeeded in creating a niche for ourselves in the marketplace owing to the quality of our products. We offer customers highquality products and ensure that the best possible service is given to them. Another factor that has helped us create a niche is the understanding our clients have of evaluating profitability in terms of ‘total cost of ownership and not cost per piece’. I believe that our strengths in some of

these aspects have not only helped us survive in the market but also tackle competition.

USP OF GERMAN COMPANIES One of the biggest advantages that German companies have is technology. Today, implementing technology is critical to increase productivity & efficiency and to maintain quality. German products are highly superior technology wise. Besides, they are safer to use (less rejections/rework due to tolerances) and are highly reliable. The USP of any German product or technology is excellence in engineering. I believe that this has helped us gain acceptance and earn respect in the Indian market.

I believe that the biggest scope for co-operation between India and Germany lies in education. India has a huge pool of academically qualified engineers. However, most of them are either not working in their areas of specialisation or are unable to find opportunities in their desired area of expertise. Through co-operation, Germany can share their knowledge in both pratical training and in research to utilise this vast talent pool. Thus, education will be one of the foremost areas of cooperation between India and Germany.

INITIATIVES REQUIRED There is a need for a framework or guideline on how interactions between Indian and German companies should take place. Small companies in Germany may not know how to be professionally managed—a fact which holds true for all the small companies in the world. Further, I think red tape has to be cut down to minimum levels. For India to become a more attractive and investment-friendly destination there is a need for transparency. Besides, there should be initiatives aimed at easing business operations. Further, with respect to IPR, there is a need for a method of securing & retaining IPR and being able to define it. Initiatives in this direction will come as a huge boon to the motivation levels for innovation. arindam.ghosh@network18publishing.com

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31 Opinions & More Foreword

Times are changing

and Indian companies are

showing innovative zeal “When I read about India’s booming economy, I think that German corporations can actually learn a lot from these successful Indian companies,” observes Werner Deggim, Deggim, CEO, NORMA Group AG, during a tête-à-tête with Prateek Sur. Sur. Excerpts…

ROWTH OPPORTUNITIES IN INDIA

India has a robust economy growing at a healthy pace. Its dynamic market offers huge growth opportunities in our industry. We started our business in India in 2008 with an 80:20 joint venture with Taurus Flexibles, a manufacturer of hoses for commercial vehicles. NORMA India took over the 20% share of the joint venture partner in 2011. Since our entry in the Indian market, our business has been growing significantly year over year, and we have established ourselves with major Indian OEMs within a short span of time. Today, NORMA India supports several Indian and foreign OEMs with its unique Engineered Joining Technology (EJT) providing solutions for commercial and passenger vehicles, agricultural & construction equipment, trains, shipbuilding, aviation,

infrastructure and water pipelines. This is a great success, but we are not resting on our laurels. Recently, we inaugurated our new production facility in Talegaon near Pune. Here, we manufacture fuel line assemblies, crankcase ventilation systems, urea lines, vent lines, clamps and connectors to a wide range of industries. We keep on expanding our presence in this dynamic market by driving our Distribution Services (DS) activities, where we sell a wide range of standardised joining technology products for a broad range of applications through various distribution channels to customers such as distributors, OEM aftermarket customers, technical wholesalers and hardware stores. We are setting up a strong distribution network that involves our distribution centre and dealership co-operation..

YOUR COMPANY STRENGTH LIES IN... Our strength lies within our strong local presence that brings us closer to our clients in India and gives us the opportunity to meet their individual needs. Besides serving our local Indian clients, we will leverage the new plant’s capacity in order to deliver our joining technology solutions to our customers around the globe. In addition, we will expand our engineering services in the new facility in Talegaon, thus supporting the design work for NORMA Group in many regions of the world including Australia, Europe, Japan, Korea and North America.

COMPANY’S INDIA EXPORT FRONT Besides serving our local Indian clients, we will leverage our new plant’s capacity in order to deliver our joining technology solutions to our customers

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around the globe.

MANTRA TO MAINTAIN A COMPETITIVE EDGE First of all, it is the quality of our products. Our Indian customers know about the precision with which we design and manufacture our solutions, and the value they offer for their end products. Our strong local presence— consisting of an extensive distribution network that we have been growing since October 2011—is another important factor. We already cover the major industrial regions with over 45 distributors today, and we have established ourselves as a one-stop shop for customers across all industries, providing a uniquely wide range of engineered joining technologies. In the coming years, we will further strengthen our distribution network to encompass different segments such as aviation, railways, shipbuilding, automotive, water supply, plumbing, food & beverages, agriculture, the industrial aftermarket, and many more in need of professional joining technology. Another important aspect is our focus on R&D. We recognise the needs of the market ahead of time and develop solutions which can guarantee our customers an advantage in terms of innovation—3–5 years before the production of our customers’ end products start. Last but not the least, we have a strong brand portfolio including ABA, BREEZE, Clamp-All,Gemi, NORMA, R.G.RAY, Serflex, Serratub, TERRY and Torca. These well-known brands are used for the DS part of the business. NORMA India, for instance, has successfully localised one NORMA Group product family for the Indian market by the brand TERRY. There are a few more products in the pipeline for localisation during the last quarter of 2012 and the first quarter of 2013.

PRE-DEFINED CONSIDERATIONS FOR INDIAN MARKET Our considerations and priority for the Indian market is to have a totally

domestic production, which includes the sourcing of raw materials. With the localisation of customer services, expansion of our distribution network and the new bigger facility in the country, we expect positive development of our business activities as well as expanding our customer base.

water supply systems or desalination systems. Toughening requirements in power generation, construction and agricultural equipment and in marine applications will equally lead to a higher demand for state-of-the-art joining products.

SOLUTIONS SOUGHT BY CUSTOMERS CURRENT TRENDS, DEMANDS AND EMERGING OPPORTUNITY AREAS The trends we see in India are the same as we see elsewhere in the world. As I mentioned before, we are facing global megatrends which are causing a rising demand for engineered joining technology used in customer end products. The demand for our technology in emerging markets is evolving rapidly as the standard of living increases and more sophisticated solutions are sought. Stricter emission regulations in India demand, for instance, exhaust gas treatment and other reduction processes. Our joining solutions support these processes while also optimising the engine in terms of performance and fuel consumption. At the same time, the trend towards hybrid cars increases the need for lightweight components. We introduced, for instance, thermoplastic instead of

Our strength lies within our strong local presence that brings us closer to our clients in India and gives us the opportunity to meet their individual needs. elastomer tubes helping to reduce weight and emissions substantially. Furthermore, we see growth opportunities in areas such as infrastructure, construction, water management or the pharma and biotech industry. For example, as buildings become higher and higher, performance requirements for joining solutions increase equally. We also see water as an important sector for our future. This resource is gradually becoming a precious commodity. Our solutions can help to prevent its waste e.g. in

In my opinion, customers are not looking for single products. They demand total engineering packages. These packages take into account the reduction of both warranty costs and production costs by, for instance, decreasing the assembly time. This can be achieved by offering our customers products that are suitable for their increasingly modularised production processes.

CHALLENGES FACED IN THE ADOPTION OF SOLUTIONS One of the challenges is that India is a highly fragmented market. However, we do not see real challenges in adoption. Our experience is that Indian customers quickly accept and adopt quality solutions and world-class goods. This is due to the rising standards of living in the emerging markets in the Asian-Pacific region which leads to an increased demand for high-quality products. This development increases our growth prospects significantly.

LEARNING AND IMBIBITIONS FROM GERMAN COMPANIES Times are changing and Indian companies are showing innovative zeal. When I read about India’s booming economy, I think that German corporations can actually learn a lot from these successful Indian companies. But, German companies have always been renowned for their passion for precision. The label ‘Made in Germany’ has stood for extraordinary quality for decades. Setting and maintaining high standards at all times with regard to products and services is part of our business model. prateek.sur@network18publishing.com

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INDO-GERMAN TIES IN TIMES OF ECONOMIC CRISIS

Given the current situation, it has become difficult to anticipate the development of the European automobile market. Much will depend on psychology: banks and politics need to regain the trust and confidence of the market participants. Presently, the Brose Group is still benefitting from the strong demand in the upper-medium and premium vehicle segment. Exports, particularly to Asia and the US, account for around 70% of the luxury class vehicles built in Europe. This compensates for the drop in European sales in the third and fourth quarters: for fiscal 2012, we expect our group sales revenue to increase by over 10% to about €4.5 billion against the previous year. On a global scale, we expect the automotive market to grow between 1% and 3%, with two different courses of development next year, too—the European market will decline or stagnate at best. For North America, we foresee a slight increase and for the Asian market further significant growth. Generally speaking, economic cycles are getting shorter. The challenge for all automotive suppliers will be to adjust swiftly to changing market requirements.

The objective is to supply cost-optimised products to the Indian automotive industry at global quality standards “The Indian automotive market is growing and OEMs are focussing on enhancing vehicle features related to comfort, safety, weight reduction and increased fuel efﬁciency in order to meet global requirements and enhance exports,” explains Ashwani Aggarwal, President, Brose India, in a tête-à-tête with Prateek Sur. Excerpts… WHY INDIA? The Indian automotive market is growing and OEMs are focussing on enhancing vehicle features related to comfort, safety, weight reduction and increased fuel efficiency in order to meet global requirements and enhance exports. Brose offers these technologies and is therefore elected to enter the

Indian market. The start up of a development centre and headquarters in Pune was the first step to establish the entire value chain in India— development, procurement, final assembly and delivery. We extended our activity in 2011 with the setup of a manufacturing plant both for exports as well as supplying products to the

OEMs in the country. The objective is to partner with the Indian automotive industry and supply cost-optimised products for the entire vehicle range at global quality standards.

BENEFITS TO THE INDIAN SUBSIDIARY AND THE LOCAL MARKET As a world market leader with over 100

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years of experience, Brose offers Indian suppliers and car manufacturers good global sales opportunities. We serve Indian and international manufacturers in India not only with competitive, cost-optimised solutions, but also hightech products of an international quality standard. Brose seeks cooperation with Indian automotive manufacturers in an early phase of development and also offers Indian suppliers its collaboration in projects outside India. As a result, we support Indian automotive manufacturers in their efforts to win market shares in and outside India.

European market leader in power seat adjusters, world leader in motors for Electronic Braking Systems (EBS), drive train actuators and cooling fan modules. Brose also numbers among the leading suppliers of HVAC blowers and electric steering systems. Our goal is to extend Brose’s development and quality leadership even further. Furthermore, we intend to step up our worldwide activities in the coming years, particularly in Asia. In line with this strategy, Brose India has localised all activities from design, development to manufacturing and marketing.

MANTRA TO MAINTAIN COMPETITIVE EDGE OVER OTHERS IN INDIA

PRE-DEFINED CONSIDERATIONS FOR THE INDIAN MARKET

The Brose Group is the fifth largest family owned company in the automotive industry. Approximately 21,000 employees develop and manufacture mechatronic components and systems and electric motors for vehicles in 53 locations in 23 countries. As a mechatronics specialist and system supplier, we are the only vendor in the market with the ability to develop and manufacture everything it sells itself. Some 2,500 engineers and technicians worldwide work on the continual development of our products and processes. Through this, we ensure that we offer our customers decades of expertise in the fields of mechanical, electrical and electronic engineering, as well as extensive experience in tapping new markets. Our market position underlines that we are following the right strategy: Brose brings 80 years of experience in window regulator technology to India and is the leading supplier worldwide. Moreover, we hold the leading position in door systems worldwide with a market share of over 30%. In-house developed and produced window regulator motors and electronics round off our portfolio. As the market leader for latch modules and a global manufacturer of closure systems, we complement our competence in door systems. Moreover, our company is the

Drawn from our long-term experience in our global portfolio, we provide solutions from our closure systems and window regulators that have been specially developed for the Indian market. During our development activities, we always consider the special requirements of our local customers. Those are costeffective products adapted to suit the environmental and climatic regional conditions. Additionally, our solutions comply with international quality & safety standards and are therefore suitable for use in export vehicles.

CURRENT TRENDS, DEMANDS AND EMERGING OPPORTUNITIES We expect a significant growth in the area of customer comfort and convenience products, for example, power operated seats, automatic transmissions and automotive electronics, such as anti-trap systems for window regulators and doors. Moreover, the focus will be increasingly on weight reduction and improving efficiency—as has been the case for many decades in the development efforts of the Brose Group. We are thus well equipped to address this market. Our OEM customers are looking for solutions that offer better product reliability, occupant safety, lightweight technologies and improved fuel efficiency.

LEARNING AND IMBIBITIONS FOR INDIA In German companies, there exists a certain discipline to follow a processdriven approach. This systematic approach for all aspects of the business from purchase to product development to manufacturing and sales is something that India can learn from and if deployed well, can support Indian companies to make great strides in the global marketplace.

EXPANSION PLANS IN INDIA CREDENTIALS Ashwani Aggarwal joined Brose India in October 2007. During this period, he has been actively involved in defining and implementing a market & business acquisition strategy in India and setting up the Brose office and plant in Pune. As a technocommercial professional with over 30 years of work experience, Aggarwal, a Mechanical Engineer from the National Institute of Technology, Surathkal, Karnataka, has expertise in Profit Centre Management, Business Development, Manufacturing, Supply Chain Management, Product Engineering and Quality Assurance with leading American and European automotive multinationals for Indian automotive component and systems industry.

Over the last few years, we have added significant capacities in the area of development and invested in training of our employees as well as in the development of our local supplier base. In 2011, we formally inaugurated our manufacturing facility and started serving our local and global customers with locally manufactured products. The strong demand for our products has fuelled our growth and has warranted that we move into a larger production facility. We will triple the manufacturing floor space that we have available by the end of 2012. In addition to manufacturing, the new facility will house a laboratory for validation testing. prateek.sur@network18publishing.com

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Product Updates

This section gives information about products, equipment and services available in the market. If you know what you want. . . refer to Product Index on Page 36 to find it quickly

CENTRIFUGAL PUMP

he centrifugal pump is equipped with open impellers, which is an ideal design for sanitary applications. Specially selected stainless steel alloying that lives up to all requirements and solid components with a minimum wall thickness of 6 mm provide for problem-free operation for product viscosities of up to 800 cps. The pump is available in 14 different sizes. It can handle system pressures up to 25 bar, discharge pressures up to 15 bar, flow rates up to 550 m 3/h and viscosities up to 800 mPa s.

Fristam Pumpen KG Gmbh & Co Hamburg, Germany Tel: +49-40 / 7 25 56 – 0, 49-40 / 7 25 56 – 166 Email: info@fristam.de Website: www.fristam.de

WRAPPING MACHINE

edium speed continuous motion wrapping machine with feeding belt unit for products is available in different wrapping styles. The machine is suitable to wrap chocolate products and other preformed articles. It is equipped with a feeding belt and integrated synchronisation for precise product separation. The exchange of the rotary heads allows a variable positioning of the products in the machine. Thus, the machine achieves high output rates even for complicated wrapping styles, such as top twist or side twist. The modular design enables an easy change of the product dimensions and wrapping styles.

Email: info@hinterkopf.de Website: www.hinterkopf.de

LABELLING MACHINE

he labelling machine is equipped with high-end technology universal cold glue labelling for glass and PET containers. Th is versatile machine with fi xed label magazines covers all traditional labelling requirements. The combination of established techniques such as stainless steel gluing roller, rubberised and adjustable glue pallets, split glue scraper blade with glue saving fi ne adjustment for glue thickness, overlay gear box drive for accurate label positioning and split table cam for efficient changeover of other container sizes makes these labelling machines unmistakable.

Gernep GmbH Barbing, Germany Tel: +49 (94 01) 9213 – 0, 49 (9401) 9213 – 29 Email: info@gernep.de Website: www.gernep.de

SPINDLE MOTOR

he spindle motor is a high performance motor suited to spindle axis of machine tools. High efficiency and low heat generation is achieved by spindle HRV control. Optimised winding design and effective cooling structure enables high power and high torque. The compact size of the motor is an added advantage.

Theegarten-Pactec Gmbh & Co KG Dresden, Germany Tel: +49 351 25 73 0, 49 351 25 73 329 Email: pactec@theegarten-pactec.de Website: www.theegarten-pactec.de

GE Fanuc Automation Germany Tel: +49-352-7279 79213 Email: ingo.kaiser@gefanuceur.ge.com Website:www.fanucfa.com

NECKING MACHINE

he necking machine satisfies the increasing demand on quality and shaping of aerosol cans. The machine is used for multi-stage necking of the can shoulder , bottle neck, the can or bottle wall. The 40 tool stations, the adjustable stroke and the sturdy construction offer our customers the possibility to produce a various number of can shapes at production speed up to 240 cans per minute with one machine.

Hinterkopf GmbH Eislingen, Germany Tel: +49(0)71618501-0, 49(0)71618501-10

DATA ACQUISITION SYSTEM

he Absorptometer E determines oil absorption number. Th is instrument and burette does not stop automatically, enabling evaluation acc B and C of ASTM 2414. The principle consists in measuring resistance which carbon black puts up against the rotating blades during oil addition. It also determines the carbon black oil absorption.

Brabender GmbH & Co KG Duisburg, Germany Tel: +49-203-77880 Email: plastics-sales@brabender.com Website: www.brabender.com

Product & Advertiser’s Index

SEARCH - Supplement December 2012

Looking For A Specific Product?

To know more about the advertisers in this magazine, refer to our ‘Advertisers’ List’ or write to us at search@network18publishing.in or call us on +91-22-3003 4653 or fax us at +91-22-3003 4499 and we will send your enquiries to the advertisers directly to help you source better.

Searching and sourcing products were never so easy. Just type SRCH (space) Product Name and send it to 51818 eg. SRCH Pump and send it to 51818

Products

Pg No

Balancing machine ................................................................................... FGF Bearing ........................................................................................................... 6 Cable carrier ................................................................................................... 6 Cable connector.............................................................................................. 6 Centrifugal pump ......................................................................................... 32 Chain.............................................................................................................. 6 Connector..................................................................................................6, 11 Control cabinet............................................................................................. 11 Control panel................................................................................................ 11 Control system ............................................................................................. 11 Countersink .................................................................................................BC Cup forming machine .................................................................................. 33 Cylindrical and internal grinding ................................................................... 5 Data acquisition system ................................................................................ 32 Diamond tool ..............................................................................................BC Didactic equipment for training ................................................................... 11 Drilling tool.................................................................................................BC Gun drill ......................................................................................................BC Handling system module .............................................................................. 11 Labelling machine ........................................................................................ 32 Measuring instrument .............................................................................. FGF Metal cutting tool .......................................................................................FIC Milling cutter ..............................................................................................BC Mobile loading lift........................................................................................ 33 Modular tooling system ...............................................................................BC Necking machine .......................................................................................... 32 Power source .............................................................................................. BIC Process automation and control equipment .................................................. 11 Reamer ........................................................................................................BC Shrinking technology ............................................................................... FGF Solid carbide drill .......................................................................................FIC Solid carbide drill with IC ..........................................................................FIC Solid carbide mill........................................................................................FIC Solid carbide reamer ...................................................................................FIC Solid carbide reamer with IC .....................................................................FIC Solid carbide special drill ............................................................................FIC Solid carbide special mill ............................................................................FIC Solid carbide special reamer .......................................................................FIC Special induction hardening machine ........................................................ BIC Spindle motor............................................................................................... 32 Standard induction hardening machine..................................................... BIC Surface and profile grinding ........................................................................... 5 Tap ..............................................................................................................BC Thermoplastic elastomer .............................................................................. 33 Tool grinding .................................................................................................. 5 Tool holder ............................................................................................... FGF Tool logistics system ................................................................................. FGF Torque rheometer ......................................................................................... 33 Tubing accessory........................................................................................... 11 Vacuum tube lifter ........................................................................................ 33 Valve ............................................................................................................. 11 Valve terminal ............................................................................................... 11 Wrapping machine ....................................................................................... 32

Advertisers’ Name & Contact Details

Pg No

EFD Induction Limited

BIC

T: +91-80-7820404 E: sales@efdgroup.net. W: www.efd-induction.com Festo Controls Pvt Ltd

T: +91-80-22894100 E: info_in@festo.com W: www.festo.com Guhring India Private Limited

T: +91-80-40322500 E: info@guhring.in W: www.guhring.in GW Precision Tools India Pvt Ltd

FIC

T: +91-80-40431252 E: info@gwindia.in W: www.gwindia.in Haimer India Pvt Ltd

FGF

T: +91-20-66750551 E: haimer@haimer.in W: www.haimer.in Igus India

6 T: +91-80-39127800 E: info@igus.in W: www.igus.in

Korber Schleifring Gmbh

T: +91-80-30257601 E: sales@schleifring.in W: www.schleifring.in

Our consistent advertisers

RNI No; 67827/98 Postal Regd. No: G2 / NMD 81 2011-13 Posted at Mumbai Patrika Channel Sorting Office - GPO - Mumbai 400 001 on 22nd & 23rd of Every Previous Month Date Of Publication: 18th of Every month