Key Takeaways
- There are currently over 1600 collaborations and 600 joint ventures between German and Indian companies
- To achieve the true potential of the scope of cooperation, SMEs from Germany are looking at better security.
- German SMEs have less risk appetite. They have a long-term view for their businesses: they think in terms of generations, and not months or years.
- Success of German companies is also due to the common European market which provides all these fundamental securities.
- Over the recent years, not only has the bilateral trade increased but German companies have discovered new business and investment opportunities in India and so have the Indian firms in Germany. Thereby, India as one of the fastest growing economies in the world offers various opportunities for German Small & Medium (Mittelstand) companies, which have the greatest potential.
- On the job creation front, employment as per data available in the National Sample Survey (NSS) during the period 2015-16, MSME sector in India supports 111 million jobs in the rural and the urban areas.
- This demonstrates the vast footprint and the immense contribution that the MSMEs make in the overall nation-building and growth.
- As India has become more economically stable, there is a realization that there is a greater value for money for German products, with their superior quality, and better lifetime cycle cost and durability.
- German Mittelstand are the “Hidden Champions” of Germany and are internationally extremely successful medium-sized companies, but hardly anyone knows their names. Over 99% of the companies in Germany are small and medium-sized.
- SMEs generated 78% of turnover in the economic sector of construction, accommodation and food services in Germany and around 56% of the total 31.6 million employed in Germany worked in SMEs.
- Make in India Mittelstand (MIIM) is supported by Ministry of External Affairs (MEA) and Department for Promotion of Industry and Internal Trade (DPIIT), Government of India. Embassy of India in Berlin is running the program for more than six years with an idea to attract German Mittelstand companies, offering a premium market support entry program. The program is now replicated in several other European countries.
- MIIM is playing a key role in changing the perception, generating confidence, building capacities and convincing German SMEs to look at India as at potential investment destination.
- MIIM has been successfully achieving its overall objective of supporting the national programme – Make in India since September 2015. The program currently has 152 Members inAutomotive, Renewables, Construction, Consumer Goods, Electronics & Electricals, Chemical, Waste & Water management and others, with a consolidated turnover of over Euros 88 billion.
- The program has successfully implemented Euro 447 million of investments till now through 20 manufacturing plants: 7 expansions and 6 subsidiary set ups. An investment of over Euro 578 million is in progress through 14 manufacturing plants; 3 expansions; and 1 subsidiary set up.
- Most German companies are technology oriented and have financial strength but expect transparency.India,on the other side,has lot of policies and initiatives are in place, butlags in implementation. India has to focus on taking the investors through the ground level implementation on a day-to-day operational basis.
- Germany’s familiar ecosystem is already existing in India, India must leverage the same for the benefit of the German Mittelstand companies.
- India is a competitive market and is very price sensitive, so India’s strategy must include localisation of products, the possibility of dual branding, and pricing strategy, among others.
- Leveraging India’s advantages of low costs, IT skills, engineering and other services, global sourcing possibilities should be utilised while identifying a German small firm’s place in this competitive market.
