Unless demand and consumption rise, Make in India won't succeed: Sunil Mathur

Interview with MD & CEO, Siemens India

Lauding the government for its reforms-oriented action, Sunil Mathur, managing director and chief executive officer of Siemens India, tells Sanjay Jog and Hamsini Karthik that the India story is as robust as ever. Edited excerpts:

A lot of capital expansion is happening on the power transmission side, particularly in upgrading the existing technologies. What is your view on the progress made so far?

Power Grid is in sync with the technology changes that are happening around the world. They are getting the best technology and that’s a statement of fact. T&D (transmission & distribution) losses are being resolved by deploying better technology such as HVDC (high-voltage, direct current), STATCOM (static synchronous compensator), and AC (alternating current) transmission systems. The tender-to-delivery phase is more-or-less according to the global timelines of two or three years. Power Grid’s project management is probably one of the best. Where we see slippage is in other projects in the public sector where the customers are not clear about the timeline. Here, projects are missing schedule by one or two years, which is abnormal. If we had 10-15 more PSUs (public sector units) with the competence levels of NTPC and Power Grid, India would be pretty well off.

Competition in the sector is also increasing... 

Competition is good. But, my concern is that we need to make sure that suppliers in the Indian market are committed to the domestic market. If outside players come in, pick up orders, drop prices and  upset the local market, customers will go for the cheapest. Siemens has got factories in China, the US and in many other countries. But, we’ve been in India for 150 years and have heavily invested here. We have set up factories here and there is an investment cost that has to translate into product cost. Unless we increase demand and consumption within the country, Make in India like schemes will not succeed.

Are you conveying this to the government?

We are. As long as customers decide to go on the basis of digitisation, reverse bidding, online bidding, it is good. But if you chose to seek the lowest cost, then you got to accept that the lowest cost supplies might not necessarily come from within the country. The government needs to say at least those manufactured indigenously and are available today, should be consumed domestically.

Do you see the opportunities in power sector increasing?

The PM is talking about increasing (the share of) manufacturing to 25 per cent from 15 per cent of the GDP, translating into capex opportunity of $1 trillion. That is a demand which has to come up at some point in time. Also, if ‘Smart Cities’, ‘Power for All’ and ‘Make in India’ projects have to be executed, the power requirement will be humungous. Steam gas generation will have to be increased. If generation rises, transmission has to increase. That is where we at Siemens are ideally positioned. We have got presence in generation and transmission. We have been here for 150 years; our factories were not born yesterday but 20-25 years ago. Some like our Kalwa factory are 50 years old.

Are you upbeat on the Railways?

Rail minister Suresh Prabhu is turning around the Railways quietly. There were two large locomotive orders (~70,000-80,000 crore) tendered, which we (Siemens) unfortunately lost. This is something people are not talking about. Nowhere in the world have orders of this size been placed. Work is progressing without any litigation. Railways is an organisation, which will be the engine of the country. I can’t give you exact revenue targets because the opportunity hasn’t been quantified as yet. But, I can execute electrification, signalling, bogies, locomotives, electric locomotives, high-speed rails, metros, speed upgradation, or any project you name in the sector.

How are you gearing up in the renewable sector? 

The acquisition of Gamesa (Spanish wind turbine maker) globally should help us in India also. Siemens is a market leader in offshore globally and Gamesa leads in the onshore wind segment. Together, we can serve the entire market. Siemens exited solar globally. But, we are present in the T&D aspect of solar power distribution. However, one important factor in solar power is storage of power. Nobody has cracked that puzzle, including us.

How do you see the regulatory aspects shaping up now? 

Siemens set up a state-of-the-art air-conditioned factory to produce blades and other equipment for wind mills. The day Siemens commissioned it, it wrote off the investment as the government withdrew accelerated depreciation scheme. But today, I feel a lot more confident in taking decision as the government is aware that they will have to be consistent. That is why the global board of Siemens AG committed one billion euros to India last September. They would have never done that but we were able to convince that India has got a story, which is why they have given us the commitment.