India – R&D Destination for Global Manufacturers
January 22, 2011 11:37 am
Mr. Nath, why India is the preferred export market for German manufacturers?
India’s GDP is currently US$1.3 trillion, making it the eighth largest economy in the world. However, in PPP terms, which recognizes India’s low cost base, the GDP notionally rises to three times this amount (US$3.8 trillion) which places it on a similar size to Japan and, by 2013, it will become the third largest economy in the world after the USA and China in PPP terms. India’s economy is currently growing by 8.75% per annum (in 2010) and this GDP growth rate is expected to increase to 9–10% per annum for each of the next 10 years. The Indian economy offers investors exposure to a wide range of opportunities from consumer goods and pharmaceuticals to infrastructure, energy and agriculture. India is one of the youngest countries in the world, with an average age of 25 years and likely to get younger. India’s working–age population will increase by 240 million over the next 20 years.
With a savings rate of 37% of GDP, India’s domestic savings fuel most of its investment requirements and only 20% of India’s total public debt is sourced from foreign borrowing. India’s domestic consumption, generally led by the private sector, has played a significant role in India’s growth and is expected to remain firm as more people enter the workforce and the emerging middle classes. India has a robust, diversified and well regulated financial system which has allowed it to weather the global financial crisis without any major difficulties and present an image of quality, resilience and transparency. Hence the growing Indian market and the investment in core sectors offer optimal opportunity to the German machinery manufacturers and technology suppliers.
Which are the industry segments the German manufacturers have significant market share?
Indo–German trade increased by 18% during January–September in 2010, over the same period in 2009, to reach Euro 11.2 billion. The total Indian exports were at Euro 4.5 billion (+ 4.2%) and that of imports were Euro 6.7 billion (+19.5%) in the first three quarters of 2010.
In 2009 among the machinery, major demand of German equipment was for Power Transmission at 10.3%, Machine Tools was 8.5%, Textile Machinery at 5.9%, Construction Equipment & Building Material Machinery was 5.8% and Printing & Paper Technology was 5.2%. In 2009 out of approximately Euro 13.3 billion of machinery imported by India, Germany’s share was 18 %.
It is learnt that a number of component manufacturers from India are exporting to the German industry. Can you name this export is basically for which industries?
Germany has now become India’s favourite investment destination; when businesses from the sub-continent decide to set up shop in EU region. Germany tops the list for its state-of-the-art technology which helps Indian companies enormously. In the recent times a lot of Indian companies have invested in Germany and the trend is ongoing. Germany is now India’s 3rd most important suppliers excluding Oil & Petroleum Exporting Countries (OPEC).
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