Interview with Ulrich Ackermann | Managing Director | Foreign Trade Department – German Engineering Federation (VDMA)

First published in M+V India Insight in December 2014

M+V: How do the members of the German Mechanical Engineering Industry (VDMA) feel about the election of India’s Premier Mr. Modi?

Ulrich Ackermann (U.A.): The fact that there was such a large majority win for Narenda Modi has raised hopes for economic stability within the business community as a whole – including among our members. Now we hope to see this promise transformed into concrete action points. There are already 500 VDMA member companies established in India, and they are counting on the government to take the right decisions and bring about a stable and trustworthy investment environment. There is a lot to do to improve the situation we had reached just before the election. Our export trade to India had declined constantly since 2012, and we saw no improvements in the figures for the first 6 months of 2014 when export volumes further dropped 18% (when compared to the same period of 2013). This was visible in nearly all industry sectors, the exceptions were Pumps and Systems, General Air Technology as well as Printing and Paper Technology. The segments Products Machine Tools, Textile Machinery and Power Transmission Engineering achieved the highest demand during the first half of 2014.

An ongoing issue is that many VDMA member companies in India will continue to be dependent on supplies from Germany due to local quality constraints. But here also, the continued weakening of the Indian rupee is decelerating the local business development. The future looks more positive, as we foresee further business opportunities for the German capital goods industry because India’s economy needs a lot of modernization and automation, and the Indian industry has huge demand for machinery and equipment that cannot be satisfied locally. However, the pace of modernization will depend on how fast the government’s new initiatives show results.

M+V: What is on VDMA’s wishlist for the Indian government?

U.A.: The German Mechanical Engineering Industry is technology-driven and therefore highly dependent on qualified personnel in the foreign markets most important to it. Currently only 5% of Indian school graduates gain higher qualifications and this has to be considerably improved. We count on the new Indian government to create more access to higher education to better support the industrial sectors of our members.

M+V: What are your expectations for India in 2015?

U.A.: We held the ‘3rd VDMA Mechanical Engineering Summit’ in Mumbai this September and we asked participants the same question. Our member companies are optimistic that the investment ‘grid-lock’ will be cleared and that we will see again more projects realized in India. We also expect that the reforms initiated under the ‘Make in India’ campaign will show results and we hope to see economic growth in the year 2015, which will in turn boost our German exports. For us, it is important to see concrete steps from Modi’s government, that follow through with their announcements.

Thank you Mr. Ackermann for this interview!