The Indian automation industry is considered by some to resemble the rags-to-riches story of a “Slumdog Millionaire.” The country has traveled a lot to go up the value chain. It provides engineering support to multinationals and can write automation software and produce engineering marvels such as robots that can reach the moon.

That's true—Pune-based Precision Automation & Robotics India (PARI, www.parirobotics.com) , which manufactures industrial robots, was part of the Chandrayaan I project. With Chandrayaan I, India’s successful moon mission, the country’s position in engineering and automotive technology research went up many notches. It brought to the fore innovative, low-cost technology being developed by small firms.

However, the market doesn't give a clear signal on trends. To get a better picture, one may have to wait until the next general election that happens in few months time. In the national budget presented on Feb. 16, the minister in charge of the finance portfolio said that the country is the fastest growing economy in the world, with 7.1 percent gross domestic product (GDP) expansion in 2008-09.

With per capita income growing at 7.4 percent per annum, this represented the fastest-ever improvement in living standards over a four-year period. The gross domestic savings rate shot up from 29.8 percent to 37.7 percent during this period. The growth drivers for the period were agriculture, services and manufacturing, along with trade and construction.

The government, whose five-year mandate expires in May, said the economy had enjoyed a “dream run” for the past few years, with growth running at an average close to 9 percent—much faster than ever before.

$1 Billion in sales

Honeywell ( www.honeywell.com), for one, is optimistic about continued growth in the India market, and expects India annual revenue at $1 billion soon, as the diversified company expands its presence in the country. “We are optimistic about reaching $1 billion in three years’ time,” says Paolo Carmassi, president for Europe, Middle East, Africa and India for the Honeywell Aerospace unit. The U.S.-based supplier of aerospace, automation and transportation products currently posts annual sales between $500 million and $600 million in India, Carmassi adds.

In fact, winning an order for fighter deals is not just a one-off transaction for global aerospace firms, which also stand to gain long-term business with maintenance services, upgrades and spare parts.

India’s expected $10 billion purchase of 126 fighter planes, billed as the world's biggest military deal, may be hogging the attention of global engineering and automation firms. Global aerospace firms, for instance, are trying to win some of the $30 billion the country is forecast to spend by 2012 to strengthen its military muscle. “Then it is a cash generating machine over a long period (for the manufacturers),” says Ratan Shrivastava, director for aerospace and defense at researcher Frost and Sullivan.

Double-digit contraction

On the other hand, however, recent news from ABB ( www.abb.com), another major automation supplier, doesn't seem very inspiring. Internationally, ABB Ltd. had a 19 percent decline in fourth-quarter orders and said it can't predict when government stimulus packages and freer credit will help restore investment. The way it spoke about China and India at a recent analyst conference doesn't augur very well either. The company spoke about a very bad fourth quarter, “degrowth” in India and double-digit contraction across segments in India.

Also discouraging to those backing Indian economic growth is the fact that India faces stiff competition from other emerging markets such as Mexico, Brazil, Bulgaria, Poland, Egypt and Vietnam, where new capacities have been added recently.

But the firms in engineering design automation (EDA) market are still bullish about India. According to the analysts, Rolta India enjoys 90 percent market share in the Indian EDA market and 95 percent market share in providing geospatial-based operations and intelligence solutions for the Indian armed forces. The company is showing a higher growth rate (120 percent) in the e-solutions segment in the fiscal year 2008.

Another firm in the tech segment— Siemens Building Technologies ( www.buildingtechnologies.siemens.com), a subsidiary of Siemens AG—has established a graphics and engineering centre of competence (GECC) in Chennai. This is the first competence centre for the company in the Asia Pacific region.

This new GECC will provide engineering design, software configuration and graphics development services that will be delivered remotely for building automation projects of building technologies in the domestic as well as Asia Pacific markets. Andreas Schierenbeck, chief executive officer, Building Automation Business Unit, for Siemens Building Technologies says, “India emerged as ...