VDMA India: A bridge-head between German & Indian Industry
VDMA India is seen as a "bridge - head" between German and Indian Industry. It is promoting technical collaboration and seamless technology transfer between German and Indian Industry for mutual benefit. Please eloborate.
The VDMA office in India acts a "bridge-head" between the German and Indian Industry and serves the Indo-German economic relations in different engineering sectors. To establish a successful business in India, the characteristics of the market must be considered. To support its member companies, VDMA India office offers comprehensive assistance for both newcomers in the orientation phase as well as for established members in further development. We offer services to the Indian manufacturers like furnishing information on the complete product program of the German industry to assist Indian companies to identify right partners for mutual business relationship, and information on market trends, prospects, future development, new projects and tenders. We also help Indian companies looking for German tie-up and collaboration.
How is German's CE and mining industry looking at our Government's "Make in India" initiative and its efforts towards ease of doing business in the country?
The government under Prime Minister Narendra Modi has carried out a series of business-friendly measures and has eliminated both bureaucratic and trade barriers. A huge breakthrough came in August this year with the adoption of a Goods and Service Tax (GST). With this measure, a harmonized market has finally been created in India, which will lead to lower production costs and give a boost to the Indian economy. The government program "Make in India" is also giving an important impetus.
In the recent past, reports have indicated India as the fastest growing economy in the world with 7.5 to 8 percent growth. Even agencies such as S&P Global Ratings think that the Indian growth story is pretty solid. It has praised the Indian government's handling of the economy and its effort to push the growth potential. But in order to sustain this growth, India needs more investments in the infrastructure sector. As per the recent Union Budget, the government has committed to increase spending on total infrastructure investment by 22% over the next two years.
A number of German companies are operating in India successfully, and they have plans for further investment to strengthen their market position. How can VDMA as an interactive forum be instrumental in taking Indo-German economic relations to the next level of mutual growth?
The economic relationship between Germany and India has traditionally been good. Both our economies are strong and complement each other outstandingly, so it comes as no surprise that German machinery exports have quadrupled since the turn of the millennium and reached around €2.9 billion by the end of 2015. Presently, more than 550 VDMA member companies are engaged with their own business in the Indian market.
In 2015, the bilateral trade between India and Germany grew by 8.3 percent to €17.29 billion (Rs.129.67 thousand crore) from a figure of nearly €15.96 billion (Rs.119.70 thousand crore) in 2014. Indian imports from Germany experienced growth of 9.3 percent over the previous year and amounted to €9.75 billion (Rs.73.12 thousand crore).
VDMA India is the only association of its kind focusing on Mechanical Engineering Industry and is active in various specialized sectors. Over the years, VDMA India has developed a good network with the Indian industry. The varied activities of VDMA India since many years, have led to closer co-operation between the members of the specialized associations within VDMA and their Indian customers. Further, the delegation visits have fostered the Indo-German trade in engineering sector.
In 2015, the total import of machinery from Germany reached a volume of €2.9 billion (Rs.21.82 thousand crore). This increased by 15% as compared to the same period in the previous year. Among the machinery sectors, major demand of German equipment was for Air Handling Technology (9.6 percent), Power Transmission (9.4 percent), Textile Machinery (6.9 percent), Machine Tools (5.8 percent), Material Handling (5.5 percent), Valves (5.5 percent), Plastic & Rubber Machinery (4.7 percent) and Printing and Paper Technology (4.3 percent). There are other sectors like Food Processing & Packaging, Process, Construction and Building Material Machinery, which are growing steadily in India.
Do you think the Indian engineering sector, particularly construction equipment and machinery sector is attaining global benchmarks and would be globally competitive in the near future?
India is set to become the third largest construction market in the world by 2025, with a size of $1 trillion, thanks to the ramped-up activity in roads, buildings, irrigation, urban infrastructure, and railways.
India's construction market was around $400 billion in 2015, and now is the 4th largest in the world after USA, China, and Japan. By 2025, India is poised to overtake Japan.
However, it has just 8 percent of companies that rank as cutting-edge technology visionaries. About 64% of contractors and 73% of project owners rank as industry followers or behind the curve when it comes to technology. Many lack a clear technological strategy, and either adopt it in a piecemeal fashion or not at all.
How is the German engineering / machinery sector performing. Has it been impacted by Global recession?
In total, production in the German mechanical engineering industry grew by 1.1 percent in the first five months of 2016. The latest political developments sound a note of caution - so the forecast remains one of "stagnation for 2016 as a whole". Capacity utilization stood at 83.3% in July 2016, just below the long-term industry average. The low record since 2011 was 83.3% till July 2016. The all-time high was reached in July 2011 at 89.9%.
German exports of machinery shrunk by 4.4 percent year-on-year basis in nominal terms in May 2016. For the first five months of the year, exports were down by 1.7 percent. Of the 20 most important export markets, only Spain, Turkey, India, and Mexico grew in May. It will not be known with certainty until a few months from now if export business with EU countries is really worsening. Experience has shown that the internal trade figures for any reporting month are later revised upwards by around 5 percent of points. Of the largest sectors of mechanical engineering in the export business, only foreign exports from power systems, agricultural machinery, and food processing and packaging machinery exceeded the previous year's figure.
In the last three statistically documented months (April-June 2016), 14 of the sectors accounted for VDMA's incoming order statistics posted growth. Six sectors achieved growth rates of 10% or more. This includes construction equipment and building material machinery, foundry machinery, measuring and testing technology, machine tools, lifts and escalators, and electrical automation. However, textile machinery, machinery for metallurgical plants and rolling mills, and mining equipment recorded downturns of 30% or more.
NBM&CW November 2016
