By the way, Manojit Acharya makes a comment that you would never hear in Germany at the moment. “I won’t see the end of growth during my working hours,” says the Indian Managing Director of forklift truck manufacturer Jungheinrich. The 2015-year-old has been building up the business for the traditional Hamburg company in Mumbai since 53. The engineer knew well what made German companies tick. He had previously worked for Demag in neighboring Pune for a good 16 years. Acharya's track record is impressive. In 2023, the India subsidiary moved for the fourth time and gradually expanded its location with warehouse, workshop and administration from initially 450 square meters to now 7000 square meters. Between 2014 and 2023, sales grew eightfold. “We have never achieved such a dynamic anywhere in the world,” enthused Jungheinrich’s Sales Director Christian Erlach at last year’s logistics congress in Berlin. During his visit to Mumbai, he felt a positive energy in the room that he had never experienced before.
In the Asia-Pacific region, India shines with the best ratings
India is scoring and making more headlines than it has for a long time. “This is India's moment,” Prime Minister Narendra Modi is convinced. “Will India be the new China?” is what the media has been asking since India replaced China as the world’s most populous country. 44 percent of Indians are younger than 25 years, emphasizes Dirk Matter, managing director of the German-Indian Chamber of Commerce in Düsseldorf. However, this huge workforce potential is both a blessing and a curse. Prime Minister Modi has to accommodate 1,4 million young school and university graduates on the job market every month. If this does not succeed in the long term, it could threaten social peace. But first of all, the news of the population record came at a good time for the country. No other major economic nation can shine with stable growth rates of around seven percent. The fifth-largest economy, which hosted the G2023 summit for the first time in 20, made good use of the meeting to showcase the location - especially in the run-up to the 2024 parliamentary elections. With Germany, its most important trading partner in the EU, India reported a record exchange of goods (2022: 31,4 billion US dollars). Also at In the World Business Outlook presented by the German Chambers of Commerce in November 2023, the subcontinent achieved the best ratings in terms of the current business situation, business expectations and investment and business intentions compared to all countries in the Asia-Pacific region. Germans are currently investing the most in production (60 percent), sales and marketing (40 percent) and research and development (35 percent).
Smart strategies are required despite good general conditions
However, local success is not a sure-fire success for German companies, even if, like Jungheinrich, they benefit from laws that are favorable to the company, such as the Goods and Services Tax (GST), which replaced a variety of different taxes, enabling a unified internal market, simpler tax returns and more transparent business. After tariffs were eliminated at state borders, the shipping industry replaced many small warehouses with very large ones. And forklifts were needed. “In order to bind buyers to us, we have established a very close network of customer service locations in all economic metropolises,” explains Acharya. He also started selling shelves, among other things. “So we offer the customer everything from a single source.”
Typical German rise to India
While Jungheinrich imports all vehicles from international factories, mainly from China, to India, Boellhoff Fastenings Pvt Ltd, a subsidiary of the Bielefeld specialist for fasteners, assembly technology and processing systems, went one step further - and achieved a rise in India that is typical of German companies: slowly and thoughtfully. Started in 2007 with pure sales to test the acceptance of the products locally, the family business founded in 1877, which now has more than 3300 employees and sales of 783 million euros (2022), later started small production before the Indian subsidiary opened in Gurugram in 2019 Greater Delhi opened a larger factory. Today, 80 employees work on four floors in administration, production and the warehouse. In the “classroom”, as the large training room is called, old and new employees regularly go to school in order to meet the high quality standards of the German company parent. That paid off. “Ninety percent of Indian cars use Böllhoff connection technology in production,” says Managing Director Shiv Kumar. Most recently, the Indian subsidiary achieved sales of the equivalent of 90 million euros, 8,3 percent more than in 36. The company can still expand in its existing area. If more space is needed, the industrial areas around the capital offer sufficient opportunities. “We may build another factory in Gurugram in 2022,” said Kumar.
Help from external experts is essential
Despite numerous advances, particularly in the digitalization of payment transactions and business processes such as filing tax returns, India is still considered difficult, complicated and bureaucratic. Like many German companies, Boellhoff also seeks help from outside. Wamser + Batra supported the Westphalians Search for an Indian managing director, optimized all contracts, carried out administrative work, built our own administration and accompanied corporate compliance issues. Like Boellhoff, the Bavarian SFC Energy AG offers its Hydrogen and methanol fuel cells for stationary and mobile hybrid power solutions via Indian
Sales partner to Indian customers. “In the future, however, we will also produce locally and purchase a large proportion of the preliminary products locally,” says the General Manager for India, Thomas Martensmeier. In doing so, he is following a requirement of the Indian government, which is increasingly linking the awarding of government contracts as part of its Make in India program to local production. Despite years of India expertise, there are now a number of bureaucratic hurdles that need to be overcome. In order to focus energy and management capacities on the actual business, SFC has used local service providers in India from the start. A human resources consultant takes care of recruiting qualified personnel, another service provider takes care of taxes and accounting. “Without consultants we would lose far too much time,” says Martensmeier.
Sufficient space for expansion
Even if the Indian market is not easy, according to Stefan Halusa, German companies are significantly expanding their commitment. “Above all, the robust economic growth and the high government investments in physical and digital infrastructure make companies optimistic,” says the managing director of the Indo German Chamber of Commerce. Not only German companies such as Airbus and Siemens Mobility, which received billion-dollar orders for aircraft and locomotives in 2023, will benefit from this. There are also signs of expansion among German medium-sized companies. And like Boellhoff's India boss Kumar, the managing directors have planned wisely. The factory of the Hamburg air conditioning specialist Stulz is located in the east of Mumbai, the country's second largest megacity. From his office, managing director Suresh Balakrishnan has an unobstructed view of a large wasteland. The excavators will arrive soon. Balakrishnan is having a fifth factory building built for 15 million euros, doubling capacity and increasing the number of employees from 800 to 1000. Oliver Mirza, managing director of Dr. Oetker India Pvt. Ltd. In 2008 he founded the Indian subsidiary of the Bielefeld food company and made it the third largest plant in the international Oetker network. In the Asia, Australia and Africa region, India boasts the highest sales, recently overtaking Australia. “From the last 35.000 tons annually, production on the property could be increased to 200.000 tons. We can introduce the night shift, purchase new machines and there is still space for new halls.”
New challenges and opportunities
If you want to be successful in India, you need patience, a lot of patience. Despite the huge supply of workers, it is not easy to find and, above all, keep qualified employees. Because Indians quickly change jobs if there is more money or advantages elsewhere. “It has become more difficult to find the right people for some positions. “That takes time,” observes Kumar von Boellhoff. Many entrepreneurs are also concerned about the government's strong Hindu nationalist course in the country with, according to Wikipedia, the third-largest Muslim population in the world. In their multi-religious workforce, qualifications, not religion, play the decisive role. A free trade agreement has been on the wish list of German investors for years. In a survey by AHK India and AHK Singapore, 90 percent of companies said that a free trade and investment protection agreement between the EU and India was important to very important for their business, emphasizes Halusa, who, however, did not have one before the election in May 2024 more progress is expected. Last but not least, new laws bring new problems. “There are still large parts of Indian industry that do not even have the issue of the Supply Chain Due Diligence Act on their monitor,” says Halusa. The AHK has organized many events, including with the consulates, the embassy, Indian chambers and associations. Ultimately, the law will continue to be perceived as a trade restriction and interpreted in such a way that Europe wants to bring back production. Despite all the challenges, Asia's third largest economy has one unbeatable advantage: Jungheinrich board member Erlach: “There is no reason to withdraw from China, but India offers huge market potential. The strong population growth also contributes to this.”
Be part of this dynamic development and feel free to contact us
The article was written by Ms. Eli Hamacher on behalf of WB. The starting point of the article is a research trip to India on the current economic situation from the perspective of local German companies.
