‘I am highly optimistic about the India growth story’

Q. India and Germany share a strategic partnership that has its basis in strong business and economic links. With a trade history of over 500 years, India and Germany are linked by a common past of economic cooperation. In the 19th century, it was German company, Siemens, which built the first telegraph connection between Kolkata and London, via Berlin. How have the economic and trade relations matured between the two countries over the years? 
A you rightly mentioned, the Indo-German relationship dates back to more than 500 years. And yes, the trade relations between India and Germany have also been developing very well over the years. In fact, presently, the bilateral trade between these two countries is almost approximately worth 20 billion euros and it’s been growing at the rate of 4% to 5% year-on-year. The last two years, however, have been an exception; we witnessed a slight dip during this time because of the economic slowdown caused by the pandemic.

Germany is India’s largest trading partner in Europe. Did you know that there are around 1,700 well-established German companies in India? These companies collectively employ almost
4 lakh people directly or indirectly. I believe this shows the commitment of the German industry to the Indian market. Indian companies, too, are doing good business in Germany. So, you see, it’s not just one way! I think, as we go ahead, this bilateral trade relationship will only get stronger.

Q. That’s very insightful! The growth of the Indo-German trade relations is clearly evident considering the number of German products — consumer and B2B — which we see around us. What is the role of VDMA India in facilitating Indo-German business activities?
VDMA is the German Machinery and Plant Manufacturers’ Association. We are the largest industrial association, not only in Germany, but in the whole of Europe. We have at least 3,320 companies as members of our association. The combined turnover of our members is to the tune of approximately 205 billion euros. Ours is a 127-year-old association, and so, it is very well established.

In the last 20 years, the commitment of German companies in India has only gotten stronger. Earlier, German companies were mostly present in India for sales and service support. But now, many have established manufacturing facilities here. This is a great sign for India.

An interesting thing to note is that a good chunk of this bilateral trade comes from the machinery industry. When we specifically talk about German machinery exports to India, it is close to 3,000 million euros, while from India to Germany it is about 850 million euros. We have about 600 members in India, and every year, we see more and more German companies establishing their facilities in India.

I am happy to share that VDMA has a played a key role in these bilateral trades between these two countries over the years.

Q Indian businessmen have immense respect for German engineering. What is it that the Germans do differently? What should India learn from Germany?
I would like to highlight a few aspects here.

Firstly, I believe, what distinguishes Germany from other countries is the dual system of education or training it offers. I think this plays an important role in the development of the German engineering industry. Allow me to elaborate. When students graduate, they have the option to avail of practical training. The curriculum is framed in such a way that a significant amount of time is spent on practical training in a real work environment with companies. So, when they graduate, they are ready for the job and don’t have to undergo much training. In India, the education system is more theory based. Not much emphasis is put on the practical training aspect. I think this should be made a part of our education system.

Secondly, I’d like to discuss the importance Germany gives to research and development (R&D) activities. This is a critical distinguishing factor. Germany spends roughly around 3.5% Thirdly, a stronger industry-academia interaction needs to be facilitated. I think this is very strong in Germany. In fact, many projects that are done in Germany are conducted jointly by the industry and the academic institutions. This not only boosts the R&D activities but also furthers the cause of skill development.

So largely, I think these three factors are what, perhaps, we can also try to inculcate in India or, at least, try to start this practice in our country.

Q. According to the VDMA, its member companies in China, Russia, Brazil, and India, expect a double-digit increase in sales in 2021. What factors will particularly drive the sales in India?
We are all in the midst of a very strong second wave. The pandemic has significantly impacted the industry. Last year, our GDP contracted by about 7% to 8% largely because of the pandemic. This year, different rating agencies have projected an approximate 12.5% growth. The year 2021 started on a good note. Things were going well until we got hit by the second wave. The GDP growth has now been pegged down to 8.5% to 9%.

Now, everything depends on how soon we are able to recover from this lockdown. Most states are currently under lockdown and their ability to bounce back will define the growth in the coming months. Of course, there will be a lot of pent-up demands to meet. We have seen this before. The largest customers of tooling, and automotive industries bounced back once the market opened after the first wave of the pandemic.

Government initiatives are also likely to offer a fillip. For instance, the PLI scheme will help various Indian industries in the long run. In the last budget, the government increased its allocation to infrastructure projects by 10%. When we talk about infrastructure and the automotive industry, it will help the growth of sectors such as the cement industry, steel industry, capital goods industry, and power sector, among others. Industries such as medical, agricultural equipment, construction equipment, white goods, and electrical & electronics industries are also poised for growth in the coming days. Keeping all these factors in mind, I believe the Indian manufacturing industry is ready for significant growth in coming years.

Q. Germany is a frontrunner in the adoption and promotion of smart manufacturing. In fact, Industry 4.0, which is the current buzzword in the global manufacturing industry, was coined by Germany. How can the Industry 4.0 concept help Indian MSMEs, especially the tool and die makers?
When it comes to Industry 4.0, there are many myths surrounding it, especially among MSMEs. Many think that adopting Industry 4.0 may not be financially feasible, while others feel it is very complex and they may not be able to deal with it. However, to put it simply, Industry 4.0 is nothing but connecting machines, gathering data from the machines, and using this data for analytical purposes. So, one does not need to have an Industry 4.0 setup in one go. It’s a journey; one can adopt it step-by-step, as per their requirements and understanding.

Industry 4.0 is very much relevant and needed in MSMEs. Let’s compare the scenario of a one-day breakdown in a small enterprise and a large enterprise. Considering the finances, infrastructure and resources, among other factors, of these two enterprises, the impact on the small enterprise is most likely to be greater as compared to what a large enterprise will have to deal with. However, with Industry 4.0 in place, MSMEs can avoid breakdowns and enhance their efficiency. I am sure that tool and die makers will immensely benefit if they adopt Industry 4.0.

Q)  What are the major manufacturing trends shaping the manufacturing industry? How will they impact the tool and die makers?
There are a few noteworthy trends that are shaping the manufacturing industry and are having a significant impact. The trends include:

• Industry 4.0: As mentioned earlier, Industry 4.0 is going to significantly change the way we manufacture and source parts. All the trends will definitely revolve around Industry 4.0 and smart manufacturing.
• Automation will be key: The pandemic has taught industries an important lesson — automation is key to sustain in this uncertain economy. I feel the usage of robotics will increase in the future. Collaborative robots are going to play a vital role, as they can work collaboratively with humans and could be a great addition for applications that are dangerous or unhygienic.
• Additive Manufacturing (AM): AM is gradually becoming a mainstream manufacturing technology. With the level of innovations happening in the 3D-printing space, I am sure that the adoption of AM will increase in all the industries.
• Virtual Reality (VR) and Augmented Reality (AR): VR and AR are already impacting the consumer industry in a big way. They are gradually stepping up in manufacturing as well.

Q. Any words of advice for Indian toolmakers? Is there something they should learn from their German counterparts?
Germany is the leader in manufacturing technologies because they absolutely refuse to compromise on quality. This is something that stands out when we talk about German technologies and processes. German companies, whether they are small job shops or large OEMs, always stress upon quality and consistency. However, in India, we go a little flexible on quality. We must learn to maintain the quality with consistency. Having said that there has been considerable progress in the Indian industry as well. And now, Indian companies are servicing global giants, which is only possible if we maintain quality. I am sure things will improve in the coming days.

Q. How can toolmakers from these two countries collaborate to leverage on each other’s strength?
India holds huge business opportunities, as we are one of the fastest-growing economies, we have the largest population of youth, and our consumer purchasing power is increasing at a fast pace. Germany is an engineering powerhouse that exports technologies to the world.

This is like the perfect match. Germans need markets and Indians need access to technologies. Indian tooling companies should explore partnership opportunities with German companies. Germans have the technological
know-how, while Indians have a good understanding of the market. The two need to leverage on each other’s strengths.

All in all, I am highly optimistic about the India growth story. We are going to witness a GDP growth of 11% to 12% in the years to come.

Courtesy: TAGMA Times

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