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Boosting German Technology in India
German technologies and products have always been long-time favourites of all sectors in chemical industry. Rajesh Nath, Managing Director, German Engineering Federation (VDMA), India Office, talks about the current market situation of German technologies and products in India and worldwide.

Key Markets for German Technologies / Products
According to Nath, Germany's economic policies enhance a broad and competitive industrial environment with a strong focus on innovative future technologies. Many small- and medium-sized enterprises utilise this potential, thereby making them leaders in their respective markets. German technology has a good global demand. The German mechanical engineering industry expects further significant growth in Asia & Africa. All indicators like population, rise of GDP, infrastructure and environmental issues etc underline this opinion. Already in 2010 about 50 per cent of the export growth in the engineering sector came from developing countries.

Clearly China will play the most important role for the next years. But India and the ASEAN-countries are picking up. In the context of India, it is very important that the European Union and India are concluding a very ambitious free-trade-agreement. Negotiations are going on for some years now and clearly quality comes before speed. After China, India is the most important market for German Machinery and Plant manufacturers in Asia. Out of the total export of German plant and machinery to Asia, India has a share of around 9 per cent.

German Exports
Nath is of the opinion that science and research in Germany are characterised by a distinguished infrastructure, a wide variety of disciplines, well-equipped research facilities and competent staff. German companies are increasingly sourcing components and castings for various industries like construction machinery, material handling, valves, process equipment, pumps, etc.

The German chemical process plant equipment division exported 428 crores (EUR 65.8 million) worth of equipment to India in the year 2010; whereby gaining a market share of 14.8 per cent of total imports in this sector by India. In 2010, India has imported pumps and compressors equipment from Germany to the tune of 476 crores (EUR 73.28 million), which was around 23 per cent of total import in this sector.

German manufacturers of industrial valves achieved nominal sales growth of 6 per cent year-on-year in 2011. German industrial valve manufacturers recorded an export volume of 17,550 crores (EUR 2.7 billion) in the period from January to November 2011 (+7.7 per cent). In 2010, India imported 2685 crores (EUR 413 Million) of valves and fittings, out of which the German share was around 16.5 per cent.

The Fluid Power system exports to India reached 563 crores (EUR 86.5 million) in 2010, which was an increase of 48.5 per cent compared to 2009.

Strong Asian Demand China has certainly been quite proactive in attracting German investment. Nath feels that the total export of German Machinery and Equipment to Asia in 2010 was about 2,35,300 crores. Out of which the share of China was about 98,826 crores compared to India which was approx 21,000 crores. Hence we find that the Chinese market for German machinery is almost 4.5 times bigger than India.

However, India with approx 8.6 per cent market share of export of German Machinery to Asia was ahead of Republic of Korea with 7.3 per cent, Taiwan 4.5 per cent and Japan 4.4 per cent.

Meeting Demands of Indian Market
India has been growing at around 7-8 per cent in the last 5-6 years. Nath believes that such tremendous growth can only be sustained with efficient and environmentally friendly technology. German Engineering exactly offers same with its innovative products and energy efficient solutions. With a trade history that spans more than 500 years, India and Germany share a strategic partnership that has its basis in strong business and economic links. Over the years, not only has the bilateral trade increased, but German firms have discovered new investment opportunities in India and so have the Indian firms in Germany. The trade volume between the two countries has increased nearly six times since 1991, with exports to Germany increasing by five times, and imports from Germany to India almost seven times. In 2011, Germany exported approx 70,000 crores of goods to India. Out of this the machinery export was approx 24,000 crores. This was an increase of about 18 per cent in comparison to 2010. The exports from India to Germany attained a value of 48,750 crores in 2011. This was an increase of 21 per cent. The bilateral trade reached 118,750 crores in 2011. The strength of the German industry lies in the Small and Medium Enterprises (SME) structure. This has been facilitated by the close cooperation between the Industry and the R&D institutes in Germany.

Industries Driving the Demand of German Technologies The German machinery manufacturing industry reached new milestones in 2011. The machinery production attained a value of approximately 1216 trillion crores (EUR 187 billion). This was an increase of around 12 per cent. The domestic demand as well as exports increased by around 12 per cent. The capacity utilisation increased to 88 per cent from 78 per cent in 2010. In fact, 23 specialised sectors within VDMA showed impressive growth. Prominent among them were Machine Tools (38 per cent), Robotic & Automation (34 per cent), Agriculture Machinery (25 per cent), Fluid Power (25 per cent), Compressor & Vacuum Technology (22 per cent) and Plastic & Rubber Machinery (21 per cent).

In India, among the various industrial segments, the major demand in 2011 for German technologies has been in the field of:
• Mechanical Power Transmission Engineering
• Material Handling
• Textile Machinery
• Machine Tools
• Construction Equipment and Building Material Machinery

Impact of Union Budget 2012-13 on German Equipment & Machinery Imports in the Indian Market
The budget that was recently presented has made nobody greatly happy nor anybody deeply unhappy. Amidst a stunted growth scenario beset by two global financial crises, India s growth rate has gone down to 6.9 per cent (estimated), the Finance Minister has tried to dish out a budget that is expected to give economic growth a boost to reach 7.6 per cent. The infrastructure has reasons to cheer as 8800 km under National Highways Development Project (NHDP) is proposed to be covered.

The allocation here has been enhanced by 14 per cent. With exemption of customs duty on coal and waiver on customs duty for mining equipment, this sector has seen a bright spot. Further the textile sector has emerged as one of the biggest gainers from the budget. The Budget has also resorted to cut in customs duty in imported capital goods used in Iron ore industry, agro processing companies, textiles and infrastructure to name a few. For the Manufacturing Industry, design innovations and focus on Research and Development (R&D) need to play a pivotal role. The announcement of 5 year rebate on R&D is encouraging. However the increased excise duty would have an inflationary impact on the industry, which as it is, is reeling under difficult times. Nath trusts that the increased spending in infrastructure projects and thrust on agriculture sector, would help the German Machinery Manufacturers to increase their presence in Indian market.

We foresee new investment from the German industry in the engineering sector in the coming years.

VDMA Strategies Maintaining Strong Position in the Indian Market Space
Some of the challenges faced by the industry are - Inadequate availability of power and water, poor infrastructure, unskilled labour, government policies, bureaucratical hurdles, rising cost of inputs materials and human resource, low technology implementation to name a few.

The Technology Platform among the Germany Manufacturers elaborated a Strategic Research Agenda (SRA). The 270 manufacturing companies involved in the process defined the most important research topics of German manufacturing industry as follows:

Intelligent Products: Future products will provide cognitive aspects and will be able to receive and handle manifold information.
High Performance: Integration of highly dynamic components into the production facilities and the maximisation of performance, flexibility and quality of the associated production equipment.
Energy Efficiency: Alternative technologies to generate, distribute and use energy.
Product Design and Configuration: Product designs with half of the development time and directly resulting in the construction of customer-specific products with highest reliability.
Adaptive Production: Adaptive production systems will continuously adapt their structure and configuration to their tasks and environment.

Role of R&D in the Success Process
According to Nath, innovation typically falls into three categories: product, process and business model. New product development (NPD) is the most obvious and common area of innovation, but process innovation is also important to industry.

The third type is more profound and involves a fundamental change in an entire industry. While there is still a long way to go for Indian manufacturing to transform itself through innovation, India as a destination for research and development (R&D) is well recognised. And the recent trends support this with many multinational companies in all manufacturing sectors, including automotive, life sciences, process and industrial products, establishing or increasing investments in R&D centers in India. Due to the availability of low-cost, well-educated and highly skilled talent, in some sectors, the cost of R&D in India is as low as a third of what would be spent in a developed country in the west making India an attractive destination.

Eco-friendly Initiative
Blue Competence is the new initiative of VDMA and its members. Responsibility is the driving force and the backbone of sustainability. Accordingly, responsibility for sustainability and for Blue Competence - the sustainability initiative of mechanical engineering! By sustainability, Nath means balancing and integrating economic, environmental and societal impacts. It is about responsibility in a broad sense, such as for welfare, education and security, the nature and the economic consequences of globalisation, structural change and demographic development.