German machine tool units eye Indian deals

Foreign investment in the sector rising.

German machine tool manufacturers are increasingly looking at Indian companies for partnerships.

The focus is primarily on small and medium businesses.

The industries that are attracting the bulk of these partnerships fall under the fluid power, mining and infrastructure sectors.

The Verband Deutscher Mschinen- und Anlagenbau (VDMA) or German Engineering Federation, recently opened its office in Kolkata to facilitate imports and exports of machines between Germany and India.

VDMA sources said it had been approached by the German ministry of commerce with the suggestion of setting up a working group that would help in harmonising the various industry standards in both countries.

The Indian government had now allowed fully owned subsidiaries of foreign enterprises in this sector and this had managed to attract foreign direct investments in the country.

A tie-up between German fluid power tools company, Hansa Flex, and JDS Technology of India, has already resulted in the setting up of an assembly plant in India, said Rajesh Nath, director of VDMA, India.

Another German enterprise in this segment, Hunger, was in talks with the government of West Bengal for land.

It had already set up a fully owned subsidiary in India.

Mining machinery manufacturer Essar of Germany has also tied up with UT Limited of India to set up a manufacturing base in the country.

However, the number of partnerships in India would would be much lower than such partnerships in China.

Nath partly blamed the Indian tax structure for this, along with long-drawn processes of obtaining clearances for setting up operations in the country.

On the other hand, the trust and belief enjoyed by German products in India put the country one up over China, said Oliver Wack, VDMA head for south-east Asia.

They were speaking at a meeting of Indian exporters with VDMA officials organised by the Engineering Export Promotion Council.

India was being counted as one of the fastest growing markets for German engineering exports other than Russia, the Czech Republic and the Baltic states.

They were to the tune of € 1.6 billion in 2005, enjoying a 42 per cent growth over 2004.

VDMA expected this to increase to euro two billion by the end of 2006.

During the first six months of the year, the growth had been 50 per cent over last year.

Indian machine exports to Germany rose 22 per cent between 2003 and 2004 to reach €500 million.