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German water firms looking for partners in India

Hamburg : Prime Minister Narendra Modi Government's ambitious Ganga River rejuvenation scheme has caught the fancy of several countries, with many of them expressing interest in participating in the various projects being envisaged for the clean-up exercise, besides supplying key technical and management inputs for other water projects in the country.

Germany, one of India’s strong trading partners, too has expressed readiness to help in cleaning up the river, showcasing successful rejuvenation projects for rivers like the Rhine. The European country also announced it would provide 3 million Euro to support the Ganga rejuvenation plan.

One of the options being explored was extending co-operation for Ganga rejuvenation on the lines of Indo-German Energy Forum - a dedicated platform to support India's energy needs through various measures including Government-private partnership.

In the water sector, through the German Water Partnership (GWP), Germany has been active in India. A joint initiative of the German private and public sectors, combining commercial enterprises, government and non-government organisations, scientific institutions and water-related associations, GWP has so far organized two editions of the Indian-GWP day in Kochi.

To be held in October this year, the Indian-GWP day in Kochi will be the third such event.

India Water Review's Puja Doshi spoke to GWP’s Head of India Section Dr Michael Kuhn on the growing partnership between India and Germany in water sector.

Kuhn, also the managing director of family-owned Kuhn GmbH Technische Anlagen, a company engaged in water and wastewater treatment projects, felt that India has the potential to become a huge market in coming years. Germany could play a key role in India’s water sector and offer technical expertise in many areas like water supply and management, wastewater treatment and river restoration, he adds.

What new initiatives are being planned to bolster business cooperation and bilateral engagements between Indian and German companies?

The Intention to do so does exists on different levels. German companies are quite active in India and certainly some are looking for Indian partners. For instance, my company Kuhn has a proper partner in India and not just an affiliate company and we ensure that a portion of the net product/added value stays in India itself.

On the level of cities too, there are partnerships such as between Mumbai and Stuttgart or Pune, which is a partner city of Karlsruhe.

There are several memorandum of understandings (MoUs) between Maharasthra and the German Ministry for Environment and Nature Conservation. The German ministry is strongly engaged in enhancing this bond.

In the past, India did slip a bit out of the focus. This is because, in my experience, doing business in India was not so easy. For example, the idea of Ganga rehabilitation exists since last 25 years but not much has happened over this period.

Now, with Prime Minister Modi is taking active steps towards rejuvenating Ganga, a lot of German companies are coming to India or are keen to come here. PM Modi has taken up the cause to create jobs and engage in environmental protection.

India’s rivers are very polluted and this pollution can cause epidemics on large-scale. PM Modi knows about it this and, therefore, he is taking active steps from top to down. But, bottom-up efforts, especially in the country’s large administration, are needed too.

I believe that every activity is positive. Also, the implementation of some new policies has a positive impact since policies signal a common goal and create awareness.

For instance, in Switzerland, every child knows what a sewage plant is but in India, there is no such awareness about why water should be treated.

PM Modi does not need to create new laws, but needs to enforce the existing ones. Overall, however, we feel there are recent positive developments.

Which areas, like water supply, irrigation, water quality, have been specifically identified as potential business areas for German companies in India? Germany had certainly expressed a desire to help India in rejuvenation of Ganga, for which several projects are being planned.

India has big problems with water in many areas. And, Germany can offer a lot of technical expertise in almost all fields.

Many of the drinking water pipe lines have been laid by the British before 1948. So, say, in a city like Bangalore, there is 50 per cent water-loss. With proper leakage management or laying new piping-systems, twice as many people could be supplied. But, unfortunately, the water just trickles away.

Usually, consumers pay for water in Germany, whereas in India, this is often not possible everywhere. The state, therefore, has to subsidize in order to cover the costs. But, as they say, India is rich country with poor people. India has industry and labour.

The question is: where does the money go?

In Germany 97 per cent of the population is connected to sewage treatment plants, but in India maybe only three per cent of the population is connected.

In Germany, we have a hundred years of experience regarding the application of water supply and treatment systems. In this field, we are certainly more advanced.

In science, India is as advanced as Germany, but since there are not many wastewater treatment plants, there is not the same level of understanding about these things. The decisive difference is the system of vocational training which takes, let’s say, three years for operating water works. This sort of training doesn’t exist in India so far.

But, there are very interesting projects being taken up in Gujarat and Kerala. Here, women are being trained for water works because, traditionally, women are responsible for providing water.

Now, women make sure that the water work plants function well. In Kochi, Kerala, there is a university that educates water engineers where the female- students in the Masters programme are the majority.

Often women are more likely to pursue a Master's degree since men have to earn money. So, they bring better education and feel more responsible for water due to their traditional role – in short, there is potential for great success stories.

Germany does not have just the technical expertise but can also offer know-how about how to deal with other states and governments.

For example, we have an expertise in trans-boundary river rehabilitation. We have a special working group in the Government dealing with the cleaning of the river Rhine, Danube and Elbe, which are all transboundary.

The Danube flows through 10 different countries. In Europe, we have learned to collaborate on this issue, and I think this expertise will be very useful in India and its neighbouring countries.

How do you assess the scope for German companies in the water sector in India considering that hundreds of projects are being undertaken or planned across states now?

German companies already produce pumps and electronic parts in India. Most companies consider the entire pan-India market but due to geographic reasons some companies focus on a few states.

Most likely companies will go there where everything works smooth and efficiently, e.g. Gujarat but some also go to those places where funding is granted. For example, if the KFW (a German Government-owned development bank) funds a certain region, the companies are likely to go there.

Networking and cooperation plays an important role for accessing funding and loans.

According to me, India has the potential to become huge market but currently, it is not. But, there are political signs that India will certainly develop in this direction. India is certainly a future market.

The German water market is quite saturated. All water works and wastewater treatment plants are built, there are only replacement investments to be done and the market volume has shrunk considerably compared to the 1990s. In Germany, a new market can only emerge, if, say, a fourth step will be added to wastewater treatment (which means an additional purification phase).

My company has been participating in the international market since last 15 years and other German companies now compete with British, French and Japanese ones. In terms of technological advancement, Germany is quite ahead.

England used to be technologically quite advanced, but ever since Prime Minister Thatcher decided to privatize the water sector in the 1970s, there has been personnel cuts and less investments. As a result, London has water loss up to 50 per cent compared to Germany with only seven per cent.

I think it is a great opportunity for German companies to establish in an opening market like India. Many German firms have already formed partnerships, joint-ventures, subsidiary companies and bigger enterprises such as BASF have also production units in India.

What is the talk about a line of credit that Germany may extend to India to basically allow its own companies to carry out water projects here?

Getting a line of credit or subsidies is difficult since certain criteria have to be fulfilled.

Small and medium enterprises (SMEs) are more likely to get funds and subsidies, but big corporations like Siemens don’t receive any subsidies at all. The Federal Governments gives subsidy but, usually this money is granted on the condition that it serves a certain goal or purpose.

The German development bank KfW has strong rules on compliance and grants credits through tenders. So, German companies are not supported as such directly. Depending on the quality of companies from other EU or non-EU member states, which compete with German firms, the KfW supports them equally.

The German water sector is very diverse and operates in the local scale due to its historic development. Water supply is seen to be a local task.

There are no large-scale singular investments done by the German Government explicitly to support its companies like in the case of the Delhi-Mumbai corridor, where Japan has done large-scale investments.

So, there is no line of credit as such. There are five federal ministries, several semi-governmental organisations and 16 state ministries which are involved at different levels in supporting projects and companies in the water sector.

What about possible business partnerships or marketing or technology alliances between German companies and their Indian counterparts?

There are co-operations and business partnerships on level of companies, but not on an association level. There are many sales’ co-operations. But, I couldn’t specify any singular example. On university level, there already exist many co-operations between Germany and India.

What is the particular expertise that Germany can bring to India that no other country, or companies from any country, can offer?

German companies are good in component-manufacturing. But, our strength lies in establishing adaptive systems. Large companies can only offer compartmental systems and structures, but Germany has, due to its small-scale diverse structure, the advantage of establishing systems that are tailored to specific needs.

This complies also with the federal character that both the countries - India and Germany - have in common.

Any existing areas of cooperation and projects and the results that have been achieved so far from them?

A company Aqua & Waste, which is operating in India and Nepal, has developed a specialized treatment fitting to the specific needs of the Indian market, e.g. Dal Lake in Kashmir.

There are a number of individual success story. This is due to the fact that the market is still quite limited as only three per cent population is served by wastewater treatment plants. Once more plants are build, there will be higher market volume.

Some other successful examples are the TÜV project in Uttarakhand with 1500 Indian employees or the drinking water project – Hope -- in Delhi. Delegation visits to India with our Federal Minister receive a lot of interest.

How would you rate German technology in terms of costs?

It is very important to understand that highest technology and lowest price are mutually exclusive.

Investment costs make by and large only 20 per cent of utility/operation costs. High operation cost does not pay off in the long run.

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