German Mittelstand expands engineering and technology operations in India

Bengaluru: German mid-sized companies are expanding their engineering, technology, artificial intelligence and research operations in India, according to a report by the Indo-German Chamber of Commerce (IGCC).

More than 80 German companies operate over 150 global capability centre (GCC) units in India, employing more than 130,000 professionals, the report said. German Mittelstand GCCs in India have grown 108% in five years.

The report, titled “Reimagining Global Capability Centers (GCCs) for the German Mittelstand: India as a Strategic Value Hub”, was released ahead of the Indo-German Engineering Summit to be held in Bengaluru on October 7.


Bengaluru has emerged as a key location for these operations, with engineering talent, technology companies, universities and startups supporting companies setting up and expanding GCCs, according to the report.

German companies including Bosch, Siemens, Volkswagen Group and Daimler Truck have established engineering and R&D operations in India.

India has more than 1,700 GCCs employing more than 1.9 million people. More than half of these centres have evolved into portfolio or transformation hubs, while nearly 90% operate across multiple functions, the report said.

The report said German companies were increasingly using their Indian operations for engineering, software development, data, cloud, AI, digital platforms and product development, rather than limiting them to support functions.

Access to engineering talent is one of the factors driving this expansion. India has 2.3-2.5 million STEM graduates entering the workforce each year, while German companies continue to face shortages of skilled professionals in engineering, software and IT, the report said.

Karnataka accounts for more than half of India's GCC ecosystem, according to the report. It said the state's engineering talent and technology ecosystem had helped make Bengaluru a major location for German companies looking to expand engineering and R&D operations.

The report also said 57% of German GCCs in India partner with universities and startups.

For German companies, retaining control over intellectual property, proprietary engineering knowledge and customer-specific expertise remains important, the report said. It recommended that companies define the functions to be established in India and expand their operations as capabilities develop.

The report also said companies should consider talent availability, universities, startups, infrastructure and regulatory conditions, in addition to costs, when choosing locations for GCCs.

The Indo-German Engineering Summit will discuss the expansion of German Mittelstand companies in India, GCCs, manufacturing, startups and co-development.

More than 2,000 German companies are active in India, while 13,347 German companies export to India, according to European Commission data.