Indian R&D division worth gold to NXP Semiconductors

Chip producer from Brabant, NXP, has grown into one of the largest chip producers in the world with a turnover of 11.1 billion dollars. “NXP’s operation in India plays a big part in that”, says Vice President of NXP, Sanjay Gupta. “We have 650 patents to our name.” 

Sanjay Gupta (in blue) during the NXP India Mentorship Program

Largest R&D hub 

NXP has 4 R&D offices in India. More than 3000 people work there in total. The various locations focus on specific markets. In Noida, near capital Delhi, they design hardware and software used in the next generation of microcontrollers and microprocessors for the automotive and edge computing industries, in Bengaluru they focus on the IoT and security markets, in Pune on connectivity solutions and in Hyderabad on software solutions for the communications and infrastructure market. "India is NXP's largest R&D hub," Gupta says. "And is also considered one of the most innovative hubs. We have so far been able to add more than 650 patents from India to NXP's already impressive list of patent families." This, according to Gupta, once again underlines the quality of Indian engineers.

Business culture in India

Gupta himself was an engineer from a leading university in India. "Twenty-six years ago, as a recent graduate, I was offered a job with this great organisation. I was fortunate to have multiple opportunities to grow and excel within this global company and was guided and supported by the management of NXP every step of the way, from one challenging role to another. In 2016, I was given the most challenging opportunity to lead NXP India, while the company merged with US semiconductor maker Freescale. Examples like my career within NXP are a huge motivator for our people: they know that truly everyone has the opportunity to develop within the company." 

NXP's Senior Leadership Team is actively working to create a family culture across all sites. "This is also good for the business," says Gupta. "Despite the fact that our teams in India are literally miles apart and focus on different products and markets, we encourage collaboration between departments as much as possible. We find that when we bring different disciplines together, they learn incredibly well from each other and often come up with new ideas or solutions for their own segment."

Ease of doing business

According to the India vice-president, companies who are still unsure whether India is the right location for their R&D department should make a move now. "There is a lot of talent in India and you don't have to worry as a company about the quality they can deliver. Moreover, doing business in India is becoming easier; just look at the enormous leap India has made in the past five years on the World Bank's Ease of Doing Business list. In addition, the government is investing heavily in the development of industries such as manufacturing and the chip industry. No wonder India is becoming increasingly popular with foreign investors."

Read more about the benefits of outsourcing your R&D to India and why now is the right time:

Tax benefits

The Indian government has announced in the 2022 budget to extend the tax benefits applicable to international companies setting up a manufacturing plant in India. In addition, major investments will be made in the chip industry, the automotive industry and infrastructure. According to Gupta, this offers interesting opportunities for European companies. "If you want to successfully enter the market in India, you need a long-term vision. Therefore, you should not only consider setting up your R&D here, but also explore the production possibilities. That way you can take advantage of the current incentives and be agile and prepared to respond to the rapid developments in Indian society."

Competition increases

Gupta is not worried about the potential competition for NXP now coming to India due to the favourable business environment. "First of all, I think competition is healthy for any company because it makes you more focused and efficient. In addition, we at NXP are so versatile, we work with talented people and the markets in which we operate are developing so rapidly that I expect us to increase our sales significantly in the next five years. Take for example the automotive industry, one of our key markets. We are currently working on exciting innovations and solutions for electric vehicles, infotainment & connected cars and autonomous vehicles, with a focus on improving the customer experience. This sector will continue to evolve in the coming years."

India is at a turning point

The MD admits that these advanced technologies may not yet be 100 per cent suited to the current needs of the Indian consumer. "But make no mistake, India has a population of over 1.4 billion, half of whom are under 35 years of age. This rapidly developing country has a growing middle class and rising income levels, creating huge business opportunities for international companies if they dare to seize the chance to invest in India and be part of this journey. India is known for embracing new technologies and solutions at an exponential rate, once they are at an affordable level. For instance, India is the largest two-wheeler country in the world. Every year, more than 20 million motorbikes and scooters are produced for the Indian market. The number of Internet users is also a good example. It has increased by 800 per cent in 10 years. Paying or shopping online was very unusual just a few years ago and now it has become commonplace. India is at an interesting turning point that companies should take advantage of." 

Market entry workshop

To become truly successful in India and take advantage of the opportunities described by Sanjay Gupta, a solid market entry strategy is required. India is a market that requires a long view and a good understanding of local needs and preferences. To make sure you start with the right strategy, IndiaConnected has set up a special Market Entry Workshop.

In 2 hours you will discuss your strategy with our experts and the following topics will be covered:

• Get a better understanding of what is involved in your market entry in India.

• Receive valuable feedback on your current India strategy from independent experts.

• Expertise in every field: sales, manufacturing, legal, tax, finance, supply chain, recruitment, etc.

Request a quote from us now.

Seed enhancer Incotec launches India-focused product to conquer market

The innovative seed enhancer Incotec has been active in India since 1995. The big question at their market entry in India: how do we sell our solution, which is expensive by Indian standards, to the farmers there? expensive solution to the farmers there? The answer turned out to be a product specially developed for the Indian market. "It is still our top seller," says Erik-Jan Bartels, managing director of Incotec.

Managing director of Incotec Europe Erik-Jan Bartels

Incotec coated seeds

No genetic engineering

"When people think of seed improvement, they quickly think of genetic modification of the characteristics of the seed, or breeding, but that is not what Incotec does," explains Bartels. "With our technologies, we improve the seeds without altering the plant's DNA. For example, we put a special layer, a coating, on the seeds so that they become nicely rounded and can be sown more easily with a machine, without breaking." But Incotec's key technology goes one step further. "We can make sure that all the seeds germinate at the same time and the crop also comes up in one go. That can give a farmer a lot of extra income in a harvest, but it does come at a price." 

In India, you cannot have a product that is geared towards Europe 

In India, Incotec is focusing on a simpler product. "We have developed seed coatings especially for the Indian market, which not only fully meet local requirements in terms of properties and price, but can also be applied to the seed by the seed companies themselves," Bartels explains. "That is not only the first product with which we made our market entry, but it is also still one of our top sellers." Incotec arrived in India as early as 1995. The company placed an advertisement about its innovative solutions in an Indian agricultural magazine and shortly afterwards they received a fax about it. A student of Plant Breeding and Genetics at the University of Gujarat saw the potential of Incotec's products in the untapped Indian market. "This student, Manish Patel, became our first importer in India and has now been Incotec's Managing Director for 17 years. He embarked on the adventure with us from the very beginning, in the first years by trial and error," says the Dutch foreman.  

While exploring the market with Patel, Incotec immediately found that even their simplest European products were still far above the budget of Indian farmers. "Producing in India was really not an option for us at that time," says Bartels. "We wanted to prevent our techniques and recipes from leaking abroad. So we first started exporting the coating developed in the Netherlands for the Indian market. That was manageable in the first few years, because our sales came on very steadily. But as soon as Incotec became better known among the large Indian seed companies, the number of orders suddenly came flooding in, and it was time to take a closer look at the way we work.

Made in India builds trust in your product

"When you're growing so fast you want to be able to respond to customer needs easily and quickly, and that's only possible if you're close to the market," says the managing director. "So we decided to set up a production facility anyway, even though we were a bit apprehensive about whether we could protect our techniques that way." Incotec therefore starts small, mixing the coating concentrate in the Netherlands and adding Indian raw materials in India and bringing the solution to the right concentration. "That felt very safe, because in India nobody knew what was in the Dutch mixture and on the basis of the raw materials there was no possibility of reverse engineering," says Bartels. "It did make a huge difference to our sales. In India, the customer likes it when you are Made in India and for us it also meant a considerable reduction in production costs."

Intellectual property protection in India has improved tremendously

The success of the seed coatings also led to demand for other Incotec technologies. "To serve the customer in India even better, to optimize our products to the crops and cultivation techniques in India, and to achieve further cost savings, we decided to move a larger part of the production to India," Bartels says. To protect the intellectual property rights of its special technologies, Incotec did not go the traditional route of applying for patents. "Not because this is poorly regulated in India - the protection of intellectual property in India has improved enormously in recent years - but because we have developed our own system for this," explains the MD. "The secret of the blacksmith still remains within the walls of the company."

Within Incotec, very few people know exactly how the products are manufactured or the techniques applied. "We work in all our branches worldwide 'on a need to know only basis'," says Bartels. "That means that each link in the process has only the knowledge they need to do their job. So the purchasing department knows what they have to buy, but not exactly what happens to those ingredients afterwards. In the factories, our people know what they have to do and also what the possible risks are of the substances they work with, but not exactly what the final product does. We also work with internal codes, so that outsiders cannot find out exactly what is in our products. It is similar to the way popular soft drink brands work. It tastes exactly the same in every country in the world, but the exact recipe and the details of the process are only known to a few."

The reforms will give the Indian farmer more money for innovative solutions

Incotec is the market leader in seed enhancement not only globally, but also in India. Yet many farmers in the country do not yet have the means to invest in the company's innovative solutions. "The agricultural sector in India has grown further mechanised in the time we have been active there, but is still far from being at the European level," says Bartels. "But we are now seeing two developments. On the one hand, India has to deal with climate change, which means that the start of the monsoon is shifting and the country is faced with greater weather extremes, such as longer periods of drought, but also more heavy rainfall. Agriculture must adapt to this. Seed companies and farmers would therefore like to invest in new technologies, but these are currently too expensive. On the other hand, the Indian government is implementing major reforms in the agricultural sector. Despite the fact that the Dutch top executive does not expect the sector to start a 'double digit growth' overnight, he does think that these reforms could have a positive impact on the farmers' income. "The reforms could lead to more choice and higher returns for farmers, giving them more money for innovative solutions. If these reforms also lead to an increase in scale within agriculture, agri will certainly be a sector to keep an eye on in the coming years."

Special webinar for successful sales in India

In February, we are organising India Business Month, during which you can attend free online sessions with all kinds of experts on doing business in India. On 9 February, the session is dedicated to selling goods and services in India. Oliver Mirza, Managing Director of Dr Oetker in India, will share his experiences on how the famous food brand had to adapt its products to the Indian market to become successful.

Dutch technology to India with DHI grant

The Indian government has dubbed this decade 'The Decade of Innovation'. Interest in smart, technological solutions is high in many sectors in India. The horticultural sector is a good example of this.. To succeed in India as a company, you have to have a physical presence there. Seeing is believing' is the motto and that certainly applies to expensive technology. A difficult task for Dutch companies that want to enter the Indian market with their high-tech products and machines. The Dutch government recognises this challenge and therefore offers Dutch SMEs the opportunity to take the first steps with the support of the so-called DHI subsidy.

Dutch company SweepSmart brings technology for municipal waste management and sorting centre to India

DHI grant: stimulating internationalisation

The purpose of the DHI grant is to increase the number of Dutch companies that successfully trade abroad. That success depends on good preparation, such as investigating at an early stage whether an export or investment project is feasible, or demonstrating the applicability of a certain export product or technology. An important condition of the scheme is that the activities make a positive contribution to the sustainable, local development of the DGGF countries. These are developing countries that fall under the Dutch Good Growth Fund, India being one of them. 

The DHI scheme allows the creation of 3 types of projects, which are subject to the following conditions:

• Demonstration project: demonstrating a Dutch product, technology or service in a real-life situation to as wide a group of buyers as possible. The technology, product or service must be new on the market of the country where you want to start. It is not the intention that the technology is presented at a trade fair and exhibiting a machine, for example, does not therefore fall under the DHI regulation. Finally, the expected export within 3 years must be at least 5 times the subsidy amount. 

• Feasibility study: The initiative lies with the foreign partner with whom cooperation is to take place. The partner is interested in the technology, product or service of the Dutch company. A feasibility study investigates whether the purchase is feasible and whether the investment can be earned back within the desired period. A feasibility study may not be a market research, there is already sufficient clarity on the size of the market, the intended design of the project, location, operation, financing and local impact. 

• Investment preparation project: Based on this project, the decision is taken to actually invest in one of the DHI countries. For example, a new production or service facility is set up in the target country, or the existing facility is expanded. This may be a subsidiary or a joint venture. However, it may not be a sales office. The company must already carry out substantial activities in the Netherlands and the investment abroad must logically result from the current activities, core business and strategy. 

Four million euro available for DGGF countries

In 2020, a budget of EUR 4 million is available for activities in DGGF countries, which includes India. To participate, eligible costs per project must be at least EUR 50,000. The grant rate depends on the target country chosen; normally the grant is 50% of eligible costs. The proposal must also meet certain content requirements, which can be found here.

Take your first steps in India with confidence

So, do you want to demonstrate new technology, a machine or a service in India? Do you want to research the commercial or technical feasibility of a specific project in India? Or are you considering investing in a factory, joint venture or local office in India? Then you might be eligible for a DHI grant. We would be happy to discuss all financing options for your market entry in India with you. Then get in touch with us!