German Mittelstand and Indian Scale: Building Manufacturing Capability
German and Indian industry leaders discuss what it takes to build manufacturing capability in India – featuring Rajesh Nath, Rahul Oza, Kiran Acharya, Christoph Böhnisch and Anupal Banerjee
India’s manufacturing ambition is clear. What remains unresolved is execution.
On the occasion of the inauguration ceremony for the PILLER production facility, the conversation convened a unique mix of perspectives in one room: cross-border trade and investment, global industrial operations, finance, legal enforcement, and people systems.
Where do decisions stall?
Where does capital hesitate?
Why do well-intended policies fail when they meet reality?
What emerged was not criticism, but diagnosis.
Land exists, but cannot be used easily.
Laws exist, but take too long to enforce.
Sustainability goals are clear, but poorly sequenced.
MSMEs drive growth, but lack support systems.
This article distils the core insights from that conversation and what they mean for leaders building long-term industrial capability in India.
Insight 1
India’s Manufacturing Opportunity Is Real, and Structurally Uneven
From a trade and investment perspective, Rajesh Nath highlighted a clear shift: mid-sized, family-owned European manufacturers, especially German Mittelstand firms, are now entering India with long-term intent. These are disciplined operators looking to build durable operating bases, not short-term bets.
India’s domestic market is the main attraction. Unlike export-led manufacturing models, companies can build scale locally before expanding globally.
But access to this opportunity is uneven. Large multinationals can absorb delays and complexity. Mid-sized firms cannot. Their capital is tighter, their tolerance for uncertainty lower, and their need for predictability higher.
Implication: If India wants depth in manufacturing, not just headline investments, systems must work for mid-sized operators, not only for the largest ones.
Insight 2
Land Is a Coordination Failure.
Across perspectives, land emerged as a persistent execution bottleneck.
Both Rajesh Nath and Rahul Oza converged on the same point:
most mid-sized manufacturers need three to five acres, while industrial development systems are designed for parcels many times larger. This mismatch pushes companies into private land acquisition, where unclear titles, long timelines, and higher risk slow everything down.
The problem is predictability as compared to availability.
Some states are experimenting with facilitation models, but these are still exceptions rather than standard practice.
Implication: Land should be treated as basic industrial infrastructure. Aggregation, clear titles, and mid-scale industrial clusters matter more than isolated incentives.
Insight 3
Sustainability Starts With Reducing Energy Use
Christoph Böhnisch reframed sustainability from an operational standpoint.
Decarbonisation often starts with changing energy sources. In manufacturing, this usually fails. The first step should be reducing energy consumption itself.
Process industries consume a large share of industrial energy. Cutting energy intensity by 30–60% significantly lowers costs, reduces emissions, and makes renewable transitions feasible.
In India, this applies directly to sectors such as sugar and bioethanol, industrial wastewater, chemicals, and food processing.
Implication: Sustainability is not a purchasing decision. It is an engineering problem. Leaders who reduce before they replace move faster and at lower cost.
Insight 4
Enforcement Speed Shapes Investment Confidence
From a legal perspective, Rahul Oza articulated a widely shared reality.
India’s laws are broadly comparable to global standards. The challenge lies in how long enforcement takes. Disputes that resolve in a few years in Europe can take decades in India.
This affects how companies behave. Contracts become defensive. Arbitration is preferred. Capital becomes more cautious. Risk is not avoided, it is priced higher.
This constraint is now openly acknowledged, even by senior judicial leadership.
Implication: Faster dispute resolution would unlock more confidence than incremental regulatory changes.
Insight 5
Manufacturing Scale Will Be Decided by MSMEs
Kiran Acharya reframed the scale debate around MSMEs.
A large share of India’s exports and employment comes from MSMEs, not large corporates. Yet MSMEs are the least prepared for capital-intensive transformation.
A generational shift is underway. Second-generation leaders are more open to partnerships, technology adoption, and institutional governance. What they lack is support: patient capital, right-sized land, and regulatory simplicity that does not overwhelm small leadership teams.
Implication: Manufacturing resilience is built in the middle. Without MSME support, scale will remain shallow.
This discussion reinforces a simple truth: manufacturing leadership today is about system design, not ambition statements.
Land, law, energy, capital, and talent are interconnected. Weakness in one slows progress everywhere else. Leaders who recognise these interdependencies, and act on them deliberately, are the ones who will turn intent into capability.
The full conversation offers grounded, experience-led insight into these trade-offs, directly from operators dealing with them in practice.
