Joe Kaeser, global chief executive officer of German multinational Siemens, is leading the Euro 72-billion giant at a time when oil prices are crashing, the geopolitical scenario is worsening in Eastern Europe and the euro is weakening against other currencies.
In an interview with Aneesh Phadnis & Dev Chatterjee, he says India is the most promising market among the emerging markets and Prime Minister Modi is on the right track by first focusing on basic infrastructure. Edited excerpts:
You recently said lower crude oil prices will stimulate economies of oil importing countries such as India. What is your outlook and what opportunities do you see as a result of lower crude oil price?
It is not about lower crude oil alone. The whole commodity bill is reducing. Coal is getting cheaper and so is iron ore. The reduction in crude price is going to benefit oil importing countries and there are two sorts of it, emerging economies and advanced countries. I am not sure about Germany getting a lot of benefits because of this but emerging economies which have huge oil import bills will benefit. They can now spend on infrastructure and boost their economy.
It is a big opportunity for India. Prime Minister Narendra Modi has a perfect start if he is able to combine his reform agenda, bring the country forward and take the benefit of a falling oil price. I believe 2016 can be really a strong and decisive year for India.
You met Modi last October to explore areas of partnership. The government has taken several initiatives like the Make in India campaign and has plans to develop high-speed trains. How do you rate their performance and what are the new opportunities for Siemens?
The PM asked me what we can do to promote business. I said prioritise and take one step at a time. I spoke of the need for providing reliable, efficient and sustainable energy, and developing infrastructure. When I met him in Delhi last October, the crude oil price was around $90 a barrel. It has fallen further.
If India wants to reduce inflation, especially in the agriculture sector, it will need to get rid of inefficient processes and develop logistics. This way, India could bring down inflation and not depend on RBI's actions alone. I said we can help India by building manufacturing and engineering facilities and we will also help train people. Make in India is good idea but if you need to make something, you would need skilled labour and we can help train people under the German tool apprenticeship system.
What was the response?
I have invited the PM to see our manufacturing and training centre in Germany. India is a partner country in the Hannover fair, the world's largest industrial fair. He was interested and let us see how it goes.
China has attracted a lot of foreign investment because of the ease of doing business. What improvements can India do?
In India, it gets a long time to get approvals. But this is a minor thing and can be done quickly. The other thing that will take more time is infrastructure. Build the infrastructure and industry will come. The opportunity in India is so big, no one can afford not to be here.
Later this month, the government will present its Budget. What is your wish list?
Mine will go along four imperatives on how to develop the economy. Get the energy agenda in place, build infrastructure and logistics, make it easier for companies to build factories and focus on the education system, especially industrial training and labour skills.
How is Siemens helping in India with technology and expertise?
We look at India as an attractive economy. We have engineering and software developing activity in Bengaluru. We have 23 manufacturing sites in India. It is an important market for us, and also for exports. Siemens India CEO Sunil Mathur and his predecessor, Armin Bruck, who is CEO of Siemens in Singapore, already do business together. We have a huge opportunity for export in the West Asia.
At a global level, you have set targets for 2015 which includes cost savings and investment of Euro 1 billion each.
Last year, we unveiled Vision 2020, a long-term strategy to strengthen our core business. We have built a new organisation, which helps us to become efficient. We took out layers between business and customers. We removed inefficiencies and now have a focused portfolio. By 2016, we will save €1 bn. As a next step, we will invest an additional €1 bn each year for growth.