We want to grow seven times in next 7 years in India: Axel Stepken

Q&A with global CEO of TUV SUD

In the last 18 years Germany based TUV SUD has come a long way in India from being a management certification to a full-fledged technical testing and inspection company. The company recently opened its 11th testing lab in Gurgaon with an investment of 5 million euros. In conversation with Ruchika Chitravanshi, Axel Stepken, global CEO of TUV SUD said that the  retail sector boom will be a key growth driver in India. Excerpts:

How have you seen the Indian market evolve in terms of quality standards during your long presence in India?

India has been one of the success stories for our group. One of the key factors for our success is the awareness of the Indian middle class for quality. This has changed over the years and will continue to evolve. The young middle class person is a global traveller. There is no reason why he would not expect good quality which he has experienced in UK, US here as well.

How does the Indian market compare with its global counterparts where you operate?

I would say the standard are exactly the same. Implementation, however, is a different matter. I do not have to tell you how long some of the processes take here. There are loop holes; people just try to evade. Few months ago we opened a car inspection here. Right now the law says that the trucks and buses have to undergo these tests.

This has to be expanded to passenger cars. We are market leaders in providing these services in Italy, Spain etc. And in India this will only work if a law is there and also the means to check if people really go for this inspection. And thirdly and most importantly that people really do it.

In a globalized world how competitive are Indian products and services on the quality benchmark?

When you take the benchmark of a high developed country like Germany then of course you have a huge gap. But what we have observed is that the gap is getting smaller. Of course there is still a huge gap. For instance for Indian companies who are active in the global market and want to sell products to Walmart and the Metros of the world they have to have the exact same quality standards as everybody else in the world. When it comes to infrastructure, there might be a larger gap. But this would also change and this also gives us an opportunity in India.

Can you share any example of an Indian company which has seen this transformation?

Unilever, for instance, has decided to move a certain part of its research and development to India. They do this work for products sold at the Indian market but also the rest of the world market. 15 years ago I worked in Indonesia and we would never have used an Indonesian washing powder in our washing machines because after that you could have thrown away your machine. Today it is different.

Companies in India have become quality conscious because of internal demand not external. Indian middle class buys international good, Samsung, Electrolux, Sony TV which might be produced for the Indian market but there isn’t much difference.

You have been conducting inspections in areas like food safety, chemicals etc. What are the new sectors that you are exploring in India?

Retail is going to be one of the biggest growth areas for us. We have invested 8 million euros in the last 2-3 years in India. Now it is time for payback. Textile is an important area, mostly for international retailers. Besides, the big retailers like Walmart, Ikea are our clients already in India. With new FDI law coming we expect that this part of our business would increase as we will see new players coming to India.

What is your long term vision for India?

Our intention is to grow the business by a factor of seven in the next seven years. Total in group we have 17,000 people of which 1,200 are in India. Sale per employee is much higher in Germany and other countries. Over the next years India will pick up. It will take generations for salaries to be equal to salaries in Germany.