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German companies are favorably inclined to invest in Indian High-Tech market: Study
German industry delegation to visit India in November 2015 to promote ‘Make in India’ drive
in automobiles, renewable energy, bio-tech and MSME sectors
NEW DELHI, 21 May 2015. In order to impart a thrust to Indo-German collaboration in High-Tech
Manufacturing, FICCI jointly with the Embassy of India in Berlin and the support of German Embassy in New Delhi
organized a Panel Discussion on‘Unleashing opportunities: Indo-German High-Technology Manufacturing’ here
today. The discussions were held in the wake of a study by the Embassy of India in Berlin in partnership with EY
(formerly Ernst & Young) in pursuance of Government of India’s efforts to encourage Indo-German collaboration in
High-Technology Manufacturing. The study is titled on ‘Prospects for Indo-German collaboration in High-Technology
Manufacturing’.
The objective of the Study was to identify High-Technology sectors that are most suitable for Indo-German
collaboration. The purpose is to develop investor-related sector information resulting in a platform that facilitates
trade and investments in these particular sectors. The Study is anchored to the Make in India initiative and other
national programmes of Government of India, which have been initiated by Prime Minister Narendra Modi. The
following sectors have been determined to be the most appropriate in the Indo-German context: ESDM (Electronic
System Design and Manufacturing), photonics, IT, automotive, civil aviation and airports, transportation
infrastructure, water, renewable energy, heavy engineering, biotechnology, pharmaceuticals, space and defence
manufacturing.
As regulations governing export controls and dual use of items have a bearing on High-technology trade and
investments, an impact assessment of these regulations on the identified sectors have been carried out. A case study
of an ongoing Indo-German collaboration in the Machine Tools sector has been undertaken.
The Indo-German High-Tech Partnership for manufacturing has the potential to significantly benefit both countries
and contribute to the betterment of their societies. Germany and India have complementary potentials that together
are suitable for a healthy and sustainable partnership. While Germany has well established High-Technologies, its
population is ageing which will not provide a sufficient young skilled workforce and academics in the long run. On the
other hand, India has a vast, young and high quality manpower that Germany could benefit from. Together, both
countries have the complementary resources to overcome the challenges of the future. Greater trust and
understanding between both the partners can bring about a close cooperation between the two – and wider Europe
– in the High-Technology sectors. When accomplished, this could unlock the significant potential for mutual growth.
Implementation of the strategic instruments detailed in the roadmap section of this report will hold the key to this
success.
Key findings
The key findings of the report are: German companies are favorably inclined to invest in the Indian High-Tech market;
India is assumed to be the highest performing country among the BRIC markets; there is high market readiness in
India for High-Tech products; Indo-German collaboration in High-Tech Manufacturing can become an important part
of the ‘Make in India’ initiative; a set of challenges are impacting German companies’ investment decisions; seven
High-Tech sectors offer greatest convergence for Indo-German collaboration; India has strong IT and Space sector
capabilities that German companies could benefit from; recent Government of India initiatives in FDI, ease of doing
business and infrastructure can significantly impact the business environment in High-Tech sectors; and Indo-German
collaboration in High-Tech Manufacturing has the potential to favorably impact both economies.
The Way Forward
The roadmap suggested by the report has been prepared with the following objectives:
• To forge a transformative collaboration between the two countries in manufacturing technologies that goes beyond
buyer-seller cooperation, to promote joint and wholly owned ventures through strong industry linkages, R&D
collaborations and skill development across a wide range of High-Tech sectors
• To facilitate entry of German companies and their technologies to India across the High-Tech sectors. To that
effect, to identify steps that can help create a favorable environment for High-Tech trade and collaborations
• To initiate Indo-German High-Tech partnership at the political level with the involvement of industry and other
stakeholders
• To create the appropriate political, administrative and economic instruments for successful High-Tech trade and
collaborations
Dr. Corinna Fricke, Minister Counselor, Head of the Economic and Commercial Division, Embassy of the Federal
Republic of Germany, India, said that an industry delegation would visit India in November 2015 to promote the
‘Make in India’ drive in areas of automobiles, renewable energy, bio-tech and other MSME segments. She added that
the bilateral relations between India and Germany had deepened and there was huge scope for cooperation for the
two countries. Mr. Sidharth Birla, Immediate Past President, FICCI & Chairman, Xpro India Limited, stated that India needs to put
its house in order. As a strategy, there was a need to improve India’s share of hi-tech manufacturing and bring about
R&D orientation to take a leap towards achieving a greater level of economic growth. He added that Germany is a
technology leader and complements India’s ambition in Hi-tech manufacturing. Hence, it was with this perspective
that Indian Embassy in Berlin and EY identified opportunities and challenges in high-technology Indo-German
collaboration, especially for dual use technologies where there are export controls. Mr. P S Gangadhar, Editor of the Report and First Secretary, (Economic & Commerce), Embassy of India,
Berlin, gave a detailedpresentation on ‘Prospects for Indo-German Collaboration in High-Technology Manufacturing’.
He noted that the study has identified various sub-sectors within the High-Technology area that hold the most
potential for trade and investment in the coming years. The study highlights sectors that hold maximum potential for
business collaborations. The market potential, technology gaps, convergence of strengths and challenges in each of
the focus sectors have been covered in detail.
Later a panel discussion on ‘Indo-German collaboration in High-Tech Manufacturing: Opportunities and
Challenges’, wasmoderated by Ms. Marita Maier, (Head of French & German Desks in India) National – Markets,
Ernst & Young LLP.
Speaking on ease of doing business in India, Mr. Atul Chaturvedi, Joint Secretary, Department of Industrial Policy
and Promotion, Ministry of Commerce and Industry, Government of India, said that a number of initiatives and
processes have been implemented by the government to make the complicated business environment simple and
transparent. He added that after the installation of the present Government, the country recorded its highest ever
FDI in India's history.
Responding to issues related to IPR, Mr. Vishvajit Sahay, Joint Secretary, Department of Heavy Industries, Ministry
of Heavy Industry and Public Enterprises, Government of India, pointed out that with the exception of
pharmaceutical sector, IPR does not pose a big challenge in other sectors. He added that German companies have
been active in auto sector and similarly there were other sectors where IPR would never be an issue.
Reverse engineering, innovation and IPR are all interlinked issues, said Mr. A. Chakraborty, Director, Indo-German
Science & Technology Centre. He stated that industry-academia link is very low in India and so is the trust between
government and industry. There was a need to bridge this trust deficit and encourage industry and academia of both
India and Germany to collaborate.
Narrating the success story of Siemens in India, Mr. Sunil Mathur, Managing Director & CEO, Siemens India, said
that a company essentially goes through three phases to become successful. The first is when it brings a new tech
product and sells it at a premium. Next when the competition enters the market, the company localizes the product.
Finally, when the consumer demands the original product with high quality, the company needs to produce smart
products that are designed, developed, sourced and engineered in India and sold in Indian markets.
Mr. Som Mittal, Chairman, FICCI Electronics and White Goods Manufacturing Committee, observed that there were
already numerous foreign companies in India and focus should be on taking care of them as they would eventually
become the spokespersons for India and spread the good word. Touching on the issue of IP, he said that IP was
important and many big German companies were sharing critical information with India under strong contractual
agreements and so far no IP infringement case had been reported.
FICCI MEDIA DIVISION