This is changing for German companies in India
Become completely independent of the outcome of the election two things occur:
- The “Local Content Requirements” (LCR) will increase
- Local certification requirements will increase
Bis zum 1. June This year, around 968 million Indian voters in the world's largest democracy will be called upon to elect their parliament. That is more than twice the total population of all EU countries.
Regardless of whether the Hindu nationalist BJP party, currently in power under Prime Minister Narendra Modi, will be re-elected or an opposition party will win the election, we can do so now perceive two developments as certain:
- For one thing, they will LCR (= localization requirements) continue to increase, i.e. regulations to give preference to local value creation should be increasingly adopted. India will increasingly require companies that take part in public tenders, for example, to use parts that were manufactured in their own country. In doing so, India is following the example of many other economies (including France, Canada and the USA). The reason lies in the desire not only to import manufactured parts, but also the necessary know-how, as well as to create jobs in our own country. This will probably exclude products that are not yet available in India in sufficient quality and whose imports are even encouraged.
- As a foreign company, you should therefore expect that your products, the import of which may currently be encouraged in India, will eventually become one Manufacturing share in India itself must be included.
- As a German (medium-sized) company, you should already keep this in mind when planning your medium-term strategy for India. We also advise you to check regularly whether your products are already affected by such regulations or whether corresponding changes to the guidelines are already being developed in India.
- We would be happy to support you with the relevant checks and, if necessary, in the search for suitable solution strategies, both in a short-term case (= where can I quickly meet the minimum requirements through local sourcing?) and in the medium-term perspective. Ask us.
- On the other hand, we are currently local standard and certification requirements tightened (Keyword “BIS”; Bureau of Indian Standard). While in the past compliance with EU, UK or US standards was often sufficient, India has in recent years invested in establishing its own standards, some of which are – to say the least – “sophisticated” and can also be understood as a defense against foreign technology. Even if this defense is aimed primarily against “cheap Chinese imports” and is not actually intended to hinder cooperation with European high-tech providers, it is at least accepted that companies (e.g. you) may incur a not insignificant additional time and financial effort .
- So you may become certain costly testing laboratory activities etc. have to be carried out in India in order to obtain the desired certification for your product. (For more information see here: https://www.wb-indien.de/2020/01/10/zertifizierung-indien/)
- Do you need support in dealing with Indian standards or regulations of the Indian BIS? Then give us a call.
The path taken under Prime Minister Modi over the last 10 years to further increase India's industrialization, create jobs, attract foreign investors, train technical and commercial personnel, transfer know-how, substitute imports, improve infrastructure, etc., will also pursue every other party in India contesting the election. Likewise, the increase in local certifications fits with the shift we have observed in India's self-image towards greater self-confidence and national pride.
