VDMA: Constantly Looking To The Future
Mr. Rajesh Nath
Civil Engineering & Construction Review: Could you shed some light on VDMA and its operations? To what extent is the German Engineering Federation involved?
Rajesh Nath: The VDMA (Verband Deutscher Maschinen- und Anlagenbau – German Engineering Federation) is a network of around 3,200 engineering industry companies in Germany, making it one of the largest and most important industrial associations in Europe, with over 450 industry experts. VDMA is the largest network organization for mechanical engineering in Europe. It was founded in 1892 and since then, the engineering companies have been successfully working with us to create a powerful force to present their interests both at national and international level. The association represents the common economic, technological and scientific interests of this diverse industry.
Constantly looking to the future has been a key characteristic of VDMA for over 125 years. It represents the issues of the mechanical and plant engineering sector in Germany and Europe, successfully accompanies its members in global markets. Its technical expertise, industry knowledge and straightforward positioning makes it a recognized and valued point of contact for companies as well as the general public, science, administration and policy makers.
VDMA India office, acts as a ‘bridge-head’ between German and Indian Industry. Besides, it serves the Indo-German economic relations in the different engineering sectors and promotes the activities of VDMA member companies in India. With the head office in Kolkata and regional offices at New Delhi, Mumbai, Bangalore and Kolkata, we are close to around 600 members in India, to whom we provide necessary information and support.
CE&CR: How do you see your association’s growth record in India?
Rajesh Nath: India and Germany have been enjoying successful cooperation in many different sectors for a very long time, but never before have the relations been so close. Apart from the growing economic exchange, the political, scientific and cultural ties could hardly be better between the two countries. Germany is by far India’s most important business partner in the EU.
With almost 20 years of experience and a team of committed and qualified experts, VDMA India maintains close relations with the Indian Industry, Indo-German companies, Embassy and Consulates, as well as various Indian Industry Associations. VDMA India is the only association of its kind, focusing on Mechanical Engineering Industry and is active in various specialised sectors. Intensive and varied activities of VDMA India since many years, has led to closer co-operation between the members of the specialised associations within VDMA and their Indian customers.
CE&CR: What is your focus for the Indian market?
Rajesh Nath: India has always been on the radar for Europe, especially for Germany. With the long-standing relationship between the two countries since centuries, the prominence of India for Germany has only grown several manifolds and continues to be one of the most important markets in the Asian region. The VDMA India office offers a good many services which can support the organisations’ endeavours in the Indian Market.
To become successful in India, companies need to know the characteristics and peculiarities of the Indian market. Here, the VDMA offices in India support the companies based on the needs of the members. These support activities include the provision of information on taxation and the Indian market, such as market entry barriers, future market developments or the current legal situation. In addition, the VDMA India office represents the interests of the members, including support for promotion actions, for example, through participation in fairs and the organization of symposia, meetings or similar presentation platforms for companies. With four offices in India, VDMA is geared to cater to the needs of the members and act as an important bridge-head between the German and Indian industry.
CE&CR: Does the German Engineering Federation use India as a centre for product development, R&D and manufacturing to cater the growing global requirements?
Rajesh Nath: To establish a successful business in India, the characteristics of the market must be considered. To support its member companies, VDMA India office offers the comprehensive assistance for both newcomers in the orientation phase, as well as for established companies in further development. The spectrum covered is broad and is orientated towards the needs of the member companies.
Many German companies have set up and are setting up manufacturing in India besides the sale and service office. Several German companies and VDMA members are planning towards more investments in India. German construction equipment and building material machinery manufacturers like Liebherr, Schwing Stetter, Putzmeister, Wirtgen, ZF, Beumer and Thyssenkrupp to name a few, have invested substantially in the last 5 years. A lot of our member companies have established centres for product development and R&D, to serve the global requirements through the Indian workforce.
CE&CR: Are VDMA members increasingly exporting machinery from Germany to India? Do you have any statistics on this? Also, what is the total annual export to Germany?
Rajesh Nath: In 2018, Indian imports from Germany experienced a good growth of 17% over the previous year and amounted to €12.5 billion. India ranks 15 globally, in the list of top 50 destinations for German Mechanical Engineering exports. In 2018, the total import of machinery from Germany reached a volume of €3.36 billion. This was an increase by 9.3%, compared with the same period of time in the previous year.
Among the machinery sectors, major demand of German equipment was for Power Transmission (10.8%), Textile Machinery (without dryers) (7.05%), Machine Tools (6.76%), Valves & Fittings (5.38%), and Construction Equipment and Building Material Machinery (5.29%). There are other sectors like air handling technology, fluid power equipment, plastic and rubber machinery, and food processing and packaging, which are growing steadily in India. In 2017-18, India’s exports were worth US$8.68 billion to Germany and imports were worth US$13.29 billion. Germany is the 7th largest foreign direct investor in India.
CE&CR: How stiff is the competition your members are facing and from where? How are they responding to this?
Rajesh Nath: Germany is known globally for its engineering technology. The German manufacturers are internationally well-positioned with their broad range of sectors: In 23 out of 31 comparable sectors, they are among the global top three; in 14 of which, they are in first place.
World over, the new concept - ‘Industry 4.0’ is fast gaining momentum. This new, disruptive technology based on digital innovations has recently found its curve of progression and has transformed and reshaped the way things are viewed in the manufacturing segment.
By using Industry 4.0 technologies, companies can rise to the global challenge of increasing customer requirements and volatile market developments. When products and processes are interconnected, and data is available in real time and is transparent, the foundation for decentralised production control is laid. This allows greater flexibility in production and increases competitiveness.
CE&CR: What are VDMA’s concerns and suggested amendments in the policies for construction and manufacturing industry to prepare for a better tomorrow?
Rajesh Nath: The infrastructure sector has become the biggest focus area of the Government of India. The Government of India is taking every possible initiative to boost the infrastructure sector. Under Union Budget 2019-20, US$63.20 billion was allocated to the sector. Increased impetus to develop infrastructure in the country is attracting both domestic and international players. Private sector is emerging as a key player across various infrastructure segments, ranging from roads and communications, to power and airports. To boost the construction of buildings in the country, the Government of India has decided to introduce a single window clearance facility to accord speedy approval of construction projects.
India is expected to become the third largest construction market globally by 2022. However, the construction industry is responsible for 25-40% of the carbon emissions on a global scale. In the Indian perspective, this is even more pressing, as traditional means of manufacturing and construction is a large part of the process even today. Climate change and environment is a global agenda and governments across the world are pushing towards environmentally sustainable practices. New norms and regulations require companies to become more technology advanced and acquire skilled manpower. Caring about the environment is no more just a social obligation but a legal requirement.
The years ahead are crucial for the Indian construction industry, especially when it’s trying to make headway into the global standards. Technology and training will become the key answers to the problems and to bring back the confidence in its growth.
CE&CR: How do you view the current condition of the Indian construction industry, in comparison to the foreign market?
Rajesh Nath: The demand for Indian CE grew by 24% in FY 2017-18, and the sector crossed 90,000 units for the first time. Demand for Indian CE continued to grow mainly due to the increase in infrastructure spends.
The boom in the construction equipment sector is continuing, as more and more regions around the world are experiencing growth. In 2017, out of the total imports of India, Germany stood 3rd with a share of 13%, after China (26%) and South Korea (21%). This trend is expected to continue this year and in the coming years, and will stay consistent with very strong business sentiment in surveys amongst equipment manufacturers.
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