Indian companies have invested close to USD two billion in Hungary over the past three decades, making the Asian country one of the most prolific sources of capital from the East. Diplomacy&Trade takes a look at the most significant corporate investments that hail from the subcontinent.
The 2014 announcement of India’s Apollo Tyres, the world’s 7th biggest tire manufacturer, that it would establish a manufacturing unit in Hungary at a cost of EUR 475 million sent flurries of excitement across the Hungarian business community. It was one of the largest greenfield investments in the country’s history and one of the most prominent commitments to Hungary by an Indian company. Apollo’s decision propelled India to the top rank among the largest greenfield investors in Hungary in 2014 and the continued inflow of investment from the subcontinent secured India the third place in the same category in 2015.
Following the end of the Communist regime in Hungary in 1990, the influx of Indian investments to Hungary increased significantly. Indian companies active in the fields of information technology, pharmaceuticals, electrical machinery, food processing and auto-components have chosen Hungary as an investment destination. Nearly three decades later, the total amount of Indian foreign direct investment is close to USD two billion and Indian companies offer employment to almost 10,000 Hungarians. Internationally recognized brands such as Tata Consultancy Services, Cognizant, Tech Mahendra, SMR Automotive, Sun Pharmaceuticals, Orion Electronics and Cosmos are among the Indian companies that are active in the country, some of them choosing Hungary to establish their first presence outside of India.
The Asian country is the 9th largest foreign investor in Hungary and bilateral trade has also benefited from the influx of investments, Minister of Foreign Affairs and Trade Péter Szijjártó said in November 2018. The volume of bilateral trade amounted to USD 665 million in 2017, according to data from the Central Statistics Office.
Automotive industry in focus
Indian automotive industry supplier Samvardhana Motherson Group (SMG) has an expanded presence in Hungary. As one of the 21 largest automotive suppliers worldwide, SMG operates units in Mosonszolnok, Mosonmagyaróvár, Hegyeshalom and Kecskemét. These employ more than 3,500 people and supply Porsche, Audi, Volkswagen, Suzuki, Honda, Mercedes and Peugeot, among others. The company’s molded plastics division, Motherson Automotive Technologies & Engineering (MATE) announced a HUF 5 billion expansion at its base in Túrkeve, southeastern Hungary, earlier this year, to build a 12,000 square-meter plant. Adding to the range of Indian automotive presence in Hungary, Samvardhana Motherson Reflectec (SMR), which develops and manufactures rear view mirror systems and intelligent camera technologies for the automotive industry, set up a number of units in Hungary.
The company is a member of the Samvardhana Motherson Group. With three manufacturing plants and a logistics center, SMR Hungary has become one of the largest rear-view mirror manufacturers in the world, supplying more than eight million sets of external mirrors a year to car companies such as Audi, BMW, Mercedes-Benz, Opel, Porsche, Kia, Ford, and Jaguar Land Rover.
Attracting added value
In addition to attracting labor-intensive industrial investors, the Hungarian government has stated its objective of mixing the portfolio of foreign investments, tipping the balance in favor of more complex and value-added investments. The investment of Tata Consultancy Services fits this strategy perfectly. One of the pioneers of Indian investors in Hungary, Tata Consultancy Services opened its first service center in Budapest in 2001. This was the company’s first Global Delivery Center outside of India, employing engineers, economists, information experts and developers with multilingual capabilities and university educations. India’s largest software developer and the country’s first outsourcing company expanded its Budapest-based global service center in 2017, creating 500 new jobs and boosting the total number of employees to 1,800.
Following in the footsteps of Tata Consultancy Services, several other Indian companies involved in information technology have moved operations to Hungary. Genpact Hungary was established in 2002 when it started Business Process Outsourcing in the region. The company currently employs people from 29 countries serving customers across Europe in 15 languages. Cognizant opened a delivery center in Hungary 2008. The Budapest office is the latest addition to their global network of delivery centers and supports a range of Cognizant services, covering application development, application maintenance, business process outsourcing, consulting and technology infrastructure services.
Gateway to the West
Hungary’s strategic location in the heart of Europe greatly adds to the county’s allure as an investment destination, especially for companies from outside the European Union. Indian businesses active in Hungary use their presence here as a gateway to reach the EU market with over 500 million consumers. “With this inauguration today of our Hungarian greenfield facility, we have crossed another milestone in our global growth journey. This facility will help us further increase our presence and market share in Europe. From being a replacement market focused company in Europe, we will soon be starting supplies of our tires to all the leading OEMs in Europe,” Onkar S Kanwar, chairman of Apollo Tyres said at the opening of the Hungarian factory in 2017. Apollo’s Hungarian facility will complement the company’s existing unit in the Netherlands, and will produce both Apollo and Vredestein brand of tires for the European market. The Hungarian plant started production in 2017 and has a capacity to produce 5.5 million passenger car & light truck tires and 675,000 heavy commercial vehicle tires per year. Prime Minister Orbán remarked at the same event that many people voiced their suspicion of the government’s policy of Eastern Opening, saying it was a hopeless endeavor. However, countries “to the East of us increasingly dominate the world economy. India is a prime example of that,” the premier said.