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Asia Today ISSN 1861-4604 Saturday, January 20, 2018

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Indian firms in Germany generated billions in 2016

Indian companies in Germany currently generate 70 percent

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BERLIN, Germany - According to a study conducted by CII–EY–Bertelsman Foundation, Indian companies in Germany have generated combined revenues of 11.4 billion euro in 2016.

The study revealed that around 80 Indian companies in Germany generated the 11.4 billion euro combined revenues.

Further, these firms, the study revealed, had employed a total workforce of 27,400 in 2016.

The study was based on interviews with leading Indian CEOs and revealed that Indian companies in Germany currently generate nearly 70 percent of their turnover in the labour-intensive sectors of metals and automotives.

Citing the study’s findings, CII said, “Important players in these sectors are Tata Steel, Hindalco industries and Sona Autocomp. The Indian IT industry accounts for a revenue share of nine percent.”

The study also revealed that 83 percent German Mittelstand or small and medium-sized companies do not have a succession plan in place at present.

According to figures generated in 2015, more than 40 percent of company owners in this economic strata were aged 55 or older.

Analysts have noted that overall 9 percent companies envisioned succession taking place within the controlling family, meanwhile 8 percent or around 2,90,000 owners expected external succession by 2018.

The study has noted that this represents huge potential for Indian investors and since 2010, nearly 140 major investment projects by Indian companies have been initiated in Germany. 

This, the study noted, includes FDI announcements as well as M&A. 

Germany was the second-largest recipient of Indian FDI in Europe with 96 projects between 2010 and 2016.

According to the report, the top sectors for investment in the European nation include Automotive industry, Metal and Metal processing industry, professional, technical and scientific services, Chemical and Pharmaceutical industry, Electrotechnics and Manufacture of machinery.

However, this trend is witnessing a slow shift, with the study pointing out that access to high-tech products and the brand “Made in Germany” are also important factors which influence Indian Industry’s decision to invest in German companies.

According to the report, as many as 80 percent of the CEOs surveyed for the report said access to innovation and technology are important factors that influence the decision to invest in Germany.

Chandrajit Banerjee, Director General, CII said, “This is borne out by the M&A activity over the past six years.”

CII said, “Examples include Motherson Sumi and Bharat Forge. Moreover, the planned merger of the steel businesses of Tata Group and ThyssenKrupp has taken Indo-German cooperation to a whole new level.”

The study said that German companies can benefit from this development through accelerated integration with the huge Indian market, access to the innovative potential of Indian companies as well as to the large pool of Indian professionals.

The report said, “How Indian investment develops in Germany in the future will depend on a number of factors such as Brexit and regional marketing in Germany. As on date, 46 percent of all Indian investment projects in Europe are made in the U.K. Germany comes in second with 17 percent of these projects.”

Hermann Mühleck, India expert at EY said that Brexit, however, could reduce this gap.

90 percent of surveyed Indian CEOs were of the opinion that the Brexit will increase the attractiveness of Germany as an investment location and therefore will be favourable for volume and diversity of Indian investments in this country.

 

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