Technology: India offers potential for research and development

When it comes to the production and development of tech products, many people immediately think of Germany, Japan, the U.S. or Taiwan. What’s often unknown is that an emerging market like India also offers great potential. After all, the country has a large number of experts and just as much technical knowledge at its disposal.

In this interview with MEDICA-tradefair.com, Murali Nair talks about the possibilities the Indian marketplace offers technology companies, explains how even smaller companies can use this to their advantage and describes why Indian technology can definitely have the edge over Western high-tech industries.

Mr. Nair, how would you characterize the economic relationships between Germany and India?

Murali Nair: India offers companies from Western countries – not just Germany- high levels of innovative capacity. Several leading companies such as BOSCH or Siemens have recognized this early. Originally – decades ago – they came to India because of its big market. Later on, they realized that India is also a great place to develop products and services, especially in the technology and software sector. At this point, both companies employ approximately 30,000 associates there. That being said, there is also great potential for SMEs in India.

What type of potential is this exactly?

Nair: Companies must not just view India as a market, but should also consider it a research and development center for products needed in emerging nations. GE has developed an ECG monitor in India for the Indian market, which only costs about one-fifth of other GE devices for example. Having said that, seen in relation to price, it delivers high performance. Ultimately, this device, which was intended for use in India was also sought after by other countries, even the U.S. German companies still underutilize this kind of frugal innovation.

Why is this potential still unused in your opinion?

Nair: On the one hand, SMEs do not have enough experience when it comes to India. On the other hand, they have far fewer resources than big companies to manage the situation and organization in India. An emerging market like India lacks many structures and institutions, making it impossible to simply transfer business models from Germany or open a research and development center. It is definitely easier to take this step with local partners and local employees. This ensures you will know how the different local cultures interact. IBM, for example, has really embraced this aspect: more than 30 percent of its employees are Indians or live in India. Having said that, unlike German companies, American businesses are also more prepared to take risks.

Why should companies develop products in India of all places?

Nair: The country has a large number of workers in technical professions. Each year, 1.5 million engineers are added to the mix. Although they are not always as skilled as German engineers, India still offers plenty of competent and digitally savvy people. Companies can quickly find specialists, especially in cities like Bangalore that take a very big lead in the IT sector.

What do companies that would like to benefit from the Indian market have to consider?

Nair: They need a great partner or consultant on their side. You might be able to acquire theoretical knowledge about India but things are always entirely different on location. India itself is more like a continent and it is difficult to compare it to just one country. There are more than 25 languages spoken in India, some even include different alphabets. And each part of India also has a different culture. That's why companies need to carefully deliberate where they want to set up in India because the levels of development differ greatly. You need to know and understand all of these local factors.

Secondly – and this is particularly hard to get used to for Germany companies – you have to face and deal with very quick changes in external circumstances, such as changes in legislation for example. One or two years ago, diesel vehicles were banned in the capital of New Delhi due to environmental pollution. This was instituted virtually overnight and would never happen like this in Germany. This was a heavy blow for German companies that sell diesel vehicles in India. Businesses need to be prepared to respond to quick changes.

What can German and Indian companies learn from each other when they enter into a partnership agreement?

Nair: I think they share complementary skills, especially as it pertains to the areas of IT and Industry 4.0: Indian software knowledge matches German engineering and technical knowledge very well.

Lots of things are also possible in the area of infrastructure. India currently builds 20 kilometers of roads daily. If Indian partners, who are familiar with the local markets and circumstances would syndicate with German technology and machinery suppliers to collaborate on infrastructure projects, it would result in great opportunities.

What does the Indian market for technology and high-tech products, for instance in medical technology, look like?

Nair: Based on my experience largely in mechanical engineering, I know that regardless of how great or highly developed the technology is, Indian consumers always pay close attention to price, irrespective of the brand. Even though German technology is highly developed and very durable, it is also quite expensive and requires a lot of maintenance given the climate of India. That is why Indian consumers often choose Indian or Chinese machines that are not as durable but cheaper. In India, we do not need a wide range of features but are more interested in things that work reliably under Indian conditions.