German Minister in India to Drive Forward Bilateral Business
August 29, 2006
Armed with a high-profile delegation and backed by a list of glowing statistics testifying to booming bilateral trade, German Economics Minister Michael Glos on Tuesday drummed up support for deeper cooperation between mid-sized German companies and their Indian counterparts in Delhi.
"The links between small and mid-sized companies have to be strengthened," Glos said, pointing out that India was also of immense interest as an outsourcing location.
Glos' visit comes amid reports of record-high growth in bilateral trade between India and Germany. German exports to India surged by 43.7 percent to 2.84 billion euros ($3.64 billion) in the first quarter of 2006 as compared to the same period last year. At the same time, Indian exports to India rose by 32.8 percent to 2.13 billion euros.
Glos said his visit was meant to contribute to breaking the psychological mark of 10 billion euros in bilateral trade -- an ambitious goal set by former German Chancellor Gerhard Schröder during a visit to Delhi two years ago.
"I'm really optimistic that this meeting today will be a milestone towards that," said Glos, who met with Indian Trade Minister Kamal Nath.
German interest in India growing
Glos' visit to Delhi, his first since being appointed economics minister last year, was meant to focus renewed attention on India and help to further break down barriers to bilateral trade and business.
Though German giants such as Siemens, Bosch and Bayer can boast of a long business presence and tradition in India, other firms have hesitated in making the leap. While the US, South Korea or Japan have all moved into India early, experts have long bemoaned that Germany has been too slow in gaining a foothold in the market there.
At the same time, there's no denying that India, with its booming economy and growing middle class, has become increasingly important for the German economy in recent years.
Experts point out that German interest in India has increased further still since the Hanover industrial fair in April where the spotlight was on India. Indian companies, too, are spreading their wings and eyeing investments in Germany, particularly in the field of pharmaceuticals.
Investments still lagging
At the same time, many say the robust growth in bilateral trade isn't reflected in the field of investments.
Dietrich Kebschull, chairman of the Indo-German Export Promotion Council told German public broadcaster NDR that India still suffered from a bad image, which he said explained the wariness on the part of German mid-sized companies.
"They're much too skeptical, too hesitant, particularly when you compare it with other countries like China, which I think Germans are too uncritical of," Kebschull said. "On the other hand, people have too many reservations about India."
Infrastructure tops the list of foreign investors complaints.
"Infrastructure is the biggest problem in India and at the same time offers huge chances," Andreas Flach from corporate consultancy Ernst & Young told NDR. "Investments in streets, bridges, ports, airports as well as the energy sector are estimated to reach more than 150 billion euros in the next six to seven years."
Other woes hobbling India's economic rise include excessive bureaucracy, high custom duties and taxes.
More chances than risks
Experts, however, remain confident that, given India's yearly growth rates of 8 percent and possibly more, the country in the long run holds more golden opportunities than risks for Germany.
"The Indian economy has developed positively and in a stable manner over the past years and there's enormous enthusiasm in the country. I'm convinced that we'll have a completely different picture in the next five to 10 years," said Flach.
That message seems to have reached some Germans investors.
On Tuesday, European Aeronautic Defense and Space Company (EADS), which is part of Glos' business delegation, said it planned to invest up to 2 billion euros in India in the next 15 years.
"India is in the process of becoming an important player in the aviation industry," EADS' co-head Thomas Enders said.