‘Consumption space, airports or buildings, we can deploy our technologies’
Dr. Roland Busch, COO, CTO and Managing Board member of Siemens AG, was in India recently to attend Siemens Innovations Day. In an interview with The Hindu, Mr. Busch spoke about restructuring of businesses, increasing digital focus on India and funding Indian start-ups. Edited excerpts.
Siemens planned to tap $1.5 trillion opportunity in India and to make India among its top 5 global markets. Where are you now?
I think we are executing that plan and well on track. Indiacould be among the five largest markets after the U.S. China and Germany. We see a high growth rate, which was a little bit lagging, but we believe that this is picking up. We believe in the strengths of the Indian markets. We will stick to our strategy and its a positive outcome from our side.
But there were no major government projects were awarded in the last 5 years…
True, the downside I see that there could have been more government orders in particular in the infrastructure, mobility, energy and in renewable space. The hope is that in the second tenure of the government, there will be another kick of infrastructure projects that the country needs.
Siemens AG has decided to spin off its power and gas vertical. What kind of impact will it have on Siemens Ltd., given that Indian arm was quite bullish on bagging orders in the power sector?
We will see. I mean this is just announced. What we are doing is, we hold discussion in our global board, as also with Siemens Ltd. board, before we go for any kind of conclusion of what’s happening here with respect to spin off of our business. What I can assure you is that we will take care of the interests of our customers, stakeholders and employees. That’s very important. Customers don’t need to have any concern because we keep our commitments in terms of delivery, in terms of financing.
There are talks that Siemens will lay off 20,000 employees globally. Your comments.
This is about how we focus on growth business. We have some businesses which are not growing. The gas and power business, for example, is a market that’s shrinking while others are still okay. In a shrinking market, you have to adapt your capabilities and that’s what we do.
Is digitisation taking away jobs?
There is a demand for maintaining or increasing our growth rate, and this can be done only if you drive productivity. Growth rate in the last 50 years was driven 50% by technology and 50% by increasing labour, according to a study by Mackenzie. On a global scale, you will see 50% more labour shrinking basically to zero. India is still growing in the labour market, while the Chinese labour market has peaked already. So, we have an ageing society which means we have to compensate for 1.5-1.8% of growth with technology to maintain the growth momentum. This is where digitisation kicks in. There is sheer need to do that to maintain our growth momentum. Economies which still have growing population have lesser of problem as they can compensate by adding more and more people. I do not see it as a problem, but if the education and training don’t keep up the speed, then there will be a problem because you need different skills in the shop-floor, when you compare digitised to non-digitised environment. That’s the biggest challenge. So, I would wonder less about jobs and more about skills.
Your plan to merge the mobility division of Siemens with Alstom failed. What’s plan B?
True. This is a very strong business. If you talk about the growth rate, in the first half year, it was very impressive. It’s a growing business. It’s a profitable business. Its terms of profitability , we are the market leader. It has a very high cash conversation rate. It’s a accretive ROC contribution from that business. So, from that perspective, it’s a very stable and profitable business. This means that we don’t need to rush. We are looking at all options.
Is it a set back for Siemens given that you were working since the last two years to close the deal?
Last two years, we were focussing on our plan to merge it. We were fighting for it very hard. Didn’t go through, it’s a long story. Not really [a setback]. While we were talking we were making sure that we were still competitors. We were fighting very hard for each and every job. We kept focussing on the business over the last two years, so we didn’t lose any ground. Still we were focusing on getting the deal done. For reasons we can debate, it’s not going through. For me it’s over.
After spin off of power vertical, what would be your major thrust areas in India?
Power is one thing. We are looking at any kind of smart infrastructure, smart cities where we have very strong foothold, particularly the mid-size cities. We are talking about infrastructure in terms of mobility solutions, industrial space. If India wants to push its share of GDP coming from industries, there is strong need to drive for activity and we have a strong offering. Consumption space, airports, buildings… we will be able to deploy our technologies for the India market. I am quite confident about that.
You are quite bullish on digital space in India. Why?
We already have 120 customers, whom we are working our digital offerings with in one way or the other. We have a strong foothold in India regarding the competencies not only because we are deployed in India, but also since we have lot of development. Our IOT unit is providing consultancy, integration solutions, prototyping and has strong foothold too.
Your plans to tap the Indian start-up space?
Next-47 is our venture capital arm. We are going to increase our footprint here. We want to create more visibility in the start-up space. We want to deploy more capital in the Indian start-up space. It’s $1 billion funds over five years. There is no break up country-wise. Next 47 will play more of a catalyst role than that of capital role.
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