4th VDMA Mechanical Engineering Summit
The 4th VDMA Mechanical Engineering Summit was held on 9th October 2015 at Radisson Blu Plaza, New Delhi. Around 140 members attended this prestigious event. India is the second-largest sales market in Asia for the German engineering industry. Presently more than 525 VDMA member companies are engaged with their own business in the Indian market. The Summit began four years ago in Pune and continued in Bangalore and was held last year in Mumbai. Being the National Capital, New Delhi did attract both our members and senior dignitaries from the Government. With the recent visit of the German Chancellor Angela Merkel, both Germany and India have stepped up their bilateral cooperation and agreed upon 18 MOU’s. Today, the world is looking at India as the final destination for investments and growth and our Hon’ble Prime Minister has set clear goals and reforms to help achieve them. The objective of these engagements are to support and augment the "Make in India" programme through increasing the innovation and technology prowess of the Indian industry.
The Summit started with a welcome from Mr. Rajesh Nath, Managing Director, VDMA India. Mr Nath mentioned that the Prime Ministers clarion call to ‘Make in India’ holds enormous promise to transform the Indian economy. Complemented by initiatives such as "Skill India", Digital India, Schwach Bharat, Sagar Mala, a foundation is being laid for a multiplier impact on inclusive development. This has emphasized on the 4 Ds - demographic dividend, democracy, demand and the recently added 4th D - Deregulation. This effort shows to be bearing fruit as India saw the highest foreign direct investment (FDI) inflow for new projects among all nations in the first half of calendar year 2015, beating America and China. In January-June 2015, India attracted $31 billion (Rs 2.05 lakh crore) in capital expenditure (capex) from foreign companies, China, the largest economy in Asia, attracted $28 bn and the US got $27 bn in the period.
With India being the partner country at Hannover Industrial fair, VDMA India organised a 15 member delegation of German journalists, prior to Hannover fair. This visit in February 2015, covered the cities of Bangalore and New Delhi with visits to many reputed German companies in India. This helped the German media to gauge the positive sentiment in the Indian economy and contributed immensely to a good coverage prior and during the Hannover fair. During the Hannover fair, VDMA participated in various events in association with Department of Heavy Industry, EEPC and Indus Media. Further during the MDA Forum we organised a special session on India where the keynote address was delivered by Dr Katoch.
The vocational training project of VDMA in Cleaning System and Facility Management is progressing well. This program which commenced with the support of GIZ, has till date trained more than 350 youths. The response from the industry has been very encouraging. These youths, primarily from humble backgrounds, are being absorbed in the Facility Management industry with a good starting salary. Besides the 2 existing centres in New Delhi at GMR Foundation and Don Bosco Najafgarh, we started the program in Mumbai at Bosco Boys Home. Further this program was expanded to DB tech centre in Bangalore and recently along with GMR Foundation we inaugurated the training program in Hyderabad also. We thank our members- Karcher and Hako for providing their equipments free of charge at these training centres.
The 5th Anniversary issue of the VDMA India Quarterly Newsletter - German Machinery Industry was released on this occasion. This Newsletter covers the development in the various industrial sectors in Germany and is a valuable source of information to the Indian industry.
The Guest of Honour, Dr. Corinna Fricke, Head Economic Section, Federal Republic of Germany in New Delhi reiterated the strengthening bonds between India and Germany and the increased bilateral trade between the 2 countries which crossed 17 Billion Euros in 2012. Dr. Fricke finds immense potential for growth in the country but feels that it has been at a growing slowly but steadily specially in the last few months. She also highlighted the importance of the relation between the two countries giving example of the recent visit of German Chancellor, Dr. Angela Merkel to India even in midst of refugee crisis that Germany is facing today.
This was followed by the address of the Chief Guest - Dr. Rajan Katoch, Secretary, Department of Heavy Industry, Govt. of India. He enlightened the audience on “Manufacturing in India – Road to Progress”. Dr. Katoch explained the slew of measures taken by his Department as part of the ‘Make in India’ programme to increase country’s share of manufacturing in GDP to 25% by 2020 from present 15%. As a small step to realize this vision a framework memorandum of understanding (MoU) was signed between the Department of Heavy Industries (DHI), Govt. of India and Fraunhofer, Germany on “Technology Resource Partner” during the just concluded visit German Chancellor in India. The MoU is also a strong indication of German support to Indian economy. This will pave way for induction of latest technologies in capital goods sector. SME in industrial clusters will be the main beneficiaries. DHI will actively conduct technology need surveys with units and clusters and run a number of awareness, technology development and assimilation programs with the help of Fraunhofer. Dr. Katoch also informed the Government would introduce Nation Capital Good policy as part of the mission shortly. He also acknowledged the inherent strength of German Technology and urged upon the members to set up more establishment in India. He thanked VDMA for promoting India and creating awareness among the German investors through its members for investment in the engineering sector.
Mr. Ulrich Ackermann, Managing Director, Foreign Trade Division within VDMA Frankfurt gave an insight into the German engineering industry which attained a turnover in 2014 of 212 bn. Euro, out of which the export share stood at 77% with Asia contributing to 27% of this export share. India was the 5th most important country for German Machninery exports while the top three include USA at first followed by Italy and Mexico. While India on the other hand imported machinery from China followed by Germany ranking second and this was followed by Japan in the third position.
The Knowledge Partner – BDB India released a publication "Overview of Core Sector Industries in India" along with the other dignitaries and it was circulated amongst the delegates at the Summit. Mr. K. C. Mani, Managing Director of BDB India spoke about the publication and gave an overview of the same. He mentioned that Core Sector Index which measures the output of eight infrastructure sectors rose 2.6% in August 2015 compared with 1.1% in the previous month. Seven out of eight sectors in the index posted positive growth and the natural gas production finally bounced back into positive zone after many years of decline.
The Key note address on “Overview of the Indian Economy” was made by Mr. Arun Maira, Former Member, Planning Commission. He mentioned about the predictions that are misleading regarding the growth of the country as only 50% of predictions made by economists have seen some impact. He gave an insight into the real India stating that 45% of Indian children suffer from mal-nourishment, only 31% Indians have adequate sanitation facilities, with a population of around 480 million people under the age of 18 years only 139 million people have access to clean drinking water.
He mentioned about the various hurdles India is today facing in the areas of Infrastructure, Land Environment, Inefficient regulations and Public services and delayed Projects. The areas of concern boil down from the Centre to State and finally the city or local bodies. The vision for India would be with inclusive growth and democratic capitalism, a government and business that are more so of, for and by the people. He urged the industry to take a holistic approach on GDP growth and work for the inclusive growth for the welfare of the society.
Mr. Sandeep Gupta, Partner, ASA & Associates LLP, spoke on “Goods and Services Tax- Impact on Manufacturing Industry”. He mentioned that full set of input taxes are not available ie. exempt sectors; specific input taxes; cross set-off between excise/service tax with VAT. Presently we are faced with more Interpretational issues relating to levy on manufacture: definitional issues of manufacturing; deemed manufacturing; valuation issues, sales v. works contract which is increasingly becoming complex; frequently leads to overlap between Centre and States; vested motive of States to tax as goods. It lacks uniformity in rates, procedures, exemptions and complex due to lack of automation and knowledge. The clear objective of GST is to provide a common national market eliminating state boundaries. He presented the various tax models implemented in developed countries and reiterated that Dual GST is to replace different indirect taxes on goods and services by the Central and State governments. The GST hence would be a positive tool in shaping the economy and would lead to more progressive growth overall.
The post lunch session began with Mr. Ajay Shankar, Chairman, and Expert Committee on Regulatory approval on ”Ease of Doing Business – Approach from Indian Government”. India ranks 142th among 189 economics in the world as per the ranking given by World Bank which the government has set target to improve to 50th thus reducing regulatory burdens to make it more efficient and create over all conducive business environment. Therefore an improvement in “Ease of Doing Business” ranking would have a huge impact on the overall development of the country in various perspective like infusion of foreign funds, employment, improvement in entrepreneurship eco system within the country so that the Indian can get into manufacturing on a large scale. He touched upon the various issues like creating regulatory layovers, Implementation of GST, Digital India and third party certification issues.
The second leg of the Technical session began with "Prospects for Indo-German collaboration in High Technology Manufacturing" by Mr. Hermann Muehleck, Head of German Business Center India, Ernst & Young GmbH. In pursuance of Government of India’s efforts to encourage Indo-German collaboration in High-Technology Manufacturing, the Embassy of India in Berlin in partnership with EY had undertaken a Study 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 programs of Government of India, which have been initiated by Prime Minister Narendra Modi.
India is assumed to be the highest performing country among the BRIC markets. He mentioned that the aggregation of geo-location based consumer preference data linked with personalized lifestyle data for the Indian High-Technology consumer market results in a highly fragmented demand structure today: it will be even more so in the next decade. He gave an overview of the Governmental projects which includes 100 Smart Cities, Digital India, Clean India, Skill India, Corridor projects and Innovate India. The prospects for Indo-German Collaboration in High-Technology Manufacturing could be in Electronic system design and manufacturing (ESDM), Photonics, IT, Automotive, Transport and Infrastructure, Civil Aviation and Airports, Water, Renewable Energy, Heavy Engineering, Biotechnology, Pharmaceuticals, Space and Defence Manufacturing. The Study is available for download under: www.de.ey.com/HighTech-India
The session continued with topic on “Application of Industry 4.0 in Manufacturing” presented by Mr. Volker Schmid, Head of Asia Pacific, Festo Didactic SE. The Industry 4.0 concept was to inform and prepare for manufacturing of tomorrow which is presently led by primarily Europe and other developed countries. Gaining importance in High-Tech Manufacturing, process automation and end-to-end digitization of business will become a key driver for enhancing production and cost efficiencies. The Indian IT sector holds strong know-how on software development and on digitization of business processes from which collaboration partners can benefit.
Information technology will play an increasingly significant role in future production – both for the operation and control of production plants and for the collation and evaluation of machinery data and information on energy consumption that are relevant to servicing. The increasing possibilities of data acquisition and processing in real time are opening up new opportunities in terms of factory control and ability to react. New applications are arising, for example anticipatory servicing.
In this process, the virtual world of IT meets the real world of the shop floor: IT oversees the production network up to the level of machine control and provides the necessary infrastructure, e.g. databases, servers and development platforms. The software required for the operation of the machines is a core competence of the machinery producers. However, it is not always possible to draw a sharp distinction between these areas of competence: interdisciplinary cooperation and mutual understanding of each other’s environments is becoming more and more important. In addition, IT topics are becoming an integral part of specifications in the purchase of plant and machinery. Standardized IT interfaces and norms are playing a decisive role above all in the networking of production plants. Festo works in co-operation in SAP to implement Industry 4.0 standards worldwide.
The Technical session ended with the insights on “Make in India Mittelstand” by Mr. Satish Sharma, Deputy Secretary (EW), Ministry of External Affairs. Make In India Mittelstand (MIIM) is a first of its kind business support programme designed to offer services in coordination with the Indian Govt. and other entities. The entire program will be guided by the Embassy of India supported by KP; a steering committee and partner network secures access to all relevant resources. The MIIM programme starts with the company selection and on-boarding; in the second stage market entry support will be facilitated. Case-by-case support is offered in four different ways: hotline, workshops common for all and projects/ individual workshops would be conducted for MIIM companies. Common workshops are open for all participants and will be conducted every 6-8 weeks. The first 2 have been scheduled until Dec 2015. Customized workshops and project support will be provided by relevant MIIM partners based on scope of queries. Half yearly networking event will be conducted at EOI in Berlin to share MIIM program status quo and learnings over a business networking platform. A hotline and email have been set up to facilitate direct interaction with the stakeholders; webpage and social media to further facilitate communication.
The final session of the summit was devoted on “Make in India- A slogan or Reality”. This panel discussion was moderated by Rajesh Nath-Managing Director, VDMA India. The participants in the discussion were Mr. Ajay Bhargava, Managing Director, Rittal India Pvt. Ltd; Mr. Dharmesh Arora, President & CEO, Schaeffler India; Mr. Ruediger Schroeder, Managing Director, Karcher Cleaning Systems Pvt. Ltd; Mr. Rashmikant Joshi, Managing Director, FESTO India Pvt. Ltd and Mr. Sushil Lakra, Industrial Advisor, Department of Heavy Industry.
Mr. Lakra emphasized on the importance of the “Make in India” program by the Government which is truly instrumental to help the growth, lead to more job opportunities and help utilize the educated workforce which are below the age of 28 years in India. The Department is encouraging manufacturing with the new reforms planned with the “National Policy for Capital Goods”. The participating members agreed to Defence and Electronics sector being huge opportunity and drivers for growth while emphasis on creation on Centre of Excellence for Skill Development from the Governments side to lead to and keep up with the pace for innovative and conclusive growth for the future. The panelists highlighted the German dual system of education which provides theoretical and practical knowledge to students. The students are given an opportunity to not just learn but also work in the industry hence creating technically skilled workforce from the very beginning.
If India has to grow at 8%, the industry has to grow at atleast 10%. However various challenges like land reform, labour laws and bureaucratical hurdles have to be surmounted. It is necessary that government takes various steps in "Ease of Doing Business". Though FDI inflow in the first half of this year has been good but investment from the domestic industry has been limited. Despite growth of over 7% GDP, the industry is feeling lack of demand. The government should roll out projects to create a demand for the industry which is the need of the hour.
The Summit concluded with an evening Cocktail and dinner at the same venue which provided a good interaction and networking opportunity for both the members and speakers at the event. The German companies on the continue their constant investment in India and are very serious and aligned with the “Make in India” campaign. The expansion plans would be on the higher side and would continue with greenfield and brownfield projects. The German companies’ unanimously stood together in the government’s initiative and bestow their trust and support in India’s growth success story in days ahead.
Source of the image : VDMA