India can be a global manufacturing hub, must adopt the newest technologies to be competitive: Siemens

German engineering and technology major Siemens AG has unveiled an artificial assistant for industry to help increase productivity and improve efficiency at the ‘Hannover Messe 2024’ trade fair. While AI seemed to be the buzzword at the trade fair, Siemens is looking at India as not just a potential market but also as a source of talent.

Cedrik Neike, member of the managing board of Siemens AG and the Chief Executive Officer of the company’s Digital Industries division, shares the company’s plans to expand its digital and AI offerings for the industry and his perspective on how India can adopt the newer technologies in an interview with Moneycontrol.

Sunil Mathur, Managing Director and Chief Executive Officer of the listed Indian subsidiary, shares how the company is engaging with the industry to implement these technologies. Edited excerpts:

Siemens introduced its first generative AI product for engineering in industries, Siemens Industrial Co-pilot. What exactly is this initiative and give us a sense of how this ties into your whole exercise of combining industry, AI and digital, and bringing it on the same page? 

Cedrik Neike: We have amazing engineering tools and when you want to build a factory, you need these tools. What we have done is that we have added to these tools this Industrial Co-pilot, making it much simpler for people to use them. The idea is to make our tools easier, so more people can use them. This question of automation, but we also use CAD systems, etc. So the initiative is to work on how AI can make things faster.

Siemens’ global CEO spoke about opportunities in India and how the company is ready to take off. What exactly are you doing to tap that opportunity? 

Neike: We have been in India for more than 157 years…the key thing is that India is the IT (information technology) hub of the world and can very soon also be a manufacturing hub of the world. Hannover Messe fair is all about IT and OT (operational technology) this year and how to bring this together; India is the perfect place to do so.

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What we need for that is an educated young workforce, that is absolutely a tick. The second one is that the infrastructure is in place, that’s happening in India pretty fast at the moment. If we combine those and then really see the investment in semiconductors, electronics, etc, India can be and will be the place to be.

When I spoke to you before COVID, when you were expanding the digital business, you had said that you were looking to make in India for the world. Now with your AI initiatives, do you see an opportunity in tapping Indian talent?

Neike: Some of the largest numbers of our software developers are in India; our biggest software development environment is in Pune. We have all of the different elements – electronics, PLM (product lifecycle management), CAD (computer-aided designs) system – all of our products sitting together.

Seeing how AI is going to be used, it's going to make products for the world. Not only physical products but also software products. I see that India can be used to do that. As we build new manufacturing environments…we will have to invest quite a bit in AI and the right place to do this is in India to make sure that this gets adopted.

India is a price sensitive market and right now the private sector still seems a little jittery about going ahead with big capex commitments. Given this environment, how keen do they seem to adopt new technologies?

Neike: India has always been very open to technology, but India is very broad. It's not a country, it's a continent and it is extremely advanced. Some of them are very careful about how to move forward. And what we need to do is to find how we can make it less capex intensive and how can we make it easier for the SME (small and medium enterprises) market. While the big companies are rushing for it, the small ones need to adopt the concept.

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Sunil Mathur: Indians are natural and digital natives. Digitalisation comes naturally to us. It will take some time for industries to realise the benefits of it. But the moment they see the potential, they will adopt. I think it will happen faster than we actually expected it to.

The private sector capacity utilisation has gone up to 80 per cent plus. They also see consistency coming ahead, stability coming ahead. So I think the private capex will now kick in. In the next couple of months, a couple of years, it will start kicking in. But it takes time as when they start looking at capex, they start designing their products and systems. That's when they start talking to us. And they want to know how we can help them. We are having those conversations with many of them; these are serious conversations.

Your CEO also spoke about the opportunity in the SME space in India for the adoption of new technologies. How are you hand holding them to help them adopt AI and digital offerings?

Mathur: It starts with the supply chain; it is in my interest to start working with my supply chain to make it more efficient and sustainable. If I can help my suppliers be more flexible in their manufacturing, I can become more efficient because my cycle times for predicting demand reduce. We go and talk to our customers to find their biggest pain points; then we go and tackle that problem.

Which sectors are the early adopters?

Neike: The first to adopt will be the ones which have big capex plans; they are using it. I mean, this is semiconductors, this is electronics, this is big pharma and chemicals. But I see others like food and beverages, cement and other industries, which are dependent on being efficient, also follow from a sustainability point of view.

Mathur: The building space is looking at energy efficiency very carefully. Food and beverage, pharmaceuticals, chemicals, steel and cement are the other industries that are really looking at it.

What is the investment plan for digital and AI going ahead? 

Neike: We invest, in general, more than euro 6 billion on R&D in Siemens, and a large part is being moved forward. We've been continuously investing, for example, also in India.

When you look at India, do you see any talent gap when we talk about newer technologies like AI?

Neike: The good thing about India is because it's such a learning-oriented culture, they pick up the skills, and India picks up the skills very fast. What is important for us, and we've been investing for years now, is base training.

Mathur: We have a big advantage – we have the global pool of talent sitting in India and we can tap that pool to address my customers in India as well.

When you look at an emerging and fast-growing market like India, what are the challenges? 

Neike: Like always, when you go fast, you need to make sure you are putting the right bets. I think the one thing India has to make sure is that it leaps across technologies. So instead of copying what has been done in the past, adopt the newest technologies in order to be really competitive in the world.

What would be your advice for the government of India for policy and regulatory framework to create an enabling environment for Indian companies to adopt digital and AI? 

Neike: I am not going to talk about consumers because we're mainly on the business side of things. The more we can actually exchange industrial data, infrastructure data, and be able to train the AI models on it, the better. So anything which enables us to basically learn from what is hidden as treasures within all of this manufacturing and infrastructure environment. And if any government, not only the Indian government, can help us unlock this potential, I think that would be great.

Mathur: I don't think there are any policy gaps. I think the policymakers are evolving also. They're seeing as the industry picks up, as the issues come to the table, the policymakers are open to it. They are listening to the industry and supporting it. Cyber security is a critical concern because manufacturers are concerned about data; the government is addressing that. Standards and regulations is another complex issue; none of them can be seen in isolation only for India.

(The reporter is at Hannover Messe 2024 upon the invitation of Siemens.)