Germany’s Merkel Arrives in India

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Jun. 2 – German Chancellor Angela Merkel arrived in India on Tuesday May 31 for a two day visit, accompanied by four cabinet ministers, several high-ranking officials, members of parliament, and representatives of German businesses, educational institutions and training organizations.

Merkel’s visit to India is to fortify ties between India and German and look forward to greater common cooperation in the fields of environment, energy, security, infrastructure, vocational skills and high tech areas of defense for which agreements are likely to be signed during her visit.

The German Chancellor will start the first inter-governmental discussion with Prime Minister Manmohan Singh and induct the celebrations to mark the 60th anniversary of establishment of diplomatic relations between the two countries. The inter-governmental consultations will envelop a wide range of mutual relations, from trade, sustainable energy, environment technologies, security and defense policy to education and research, vocational training, and infrastructure. There will be two vital topics that are expected to attribute during the discussions — the selection of a new managing director for the International Monetary Fund and the deal for a new fighter aircraft for the Indian Air Force.

French Finance Minister Christine Lagarde is the foremost applicant for the IMF post and as Germany is decided on a European candidate, India opposes the principle of nationality for choosing the IMF chief. The Indian point is in line with its views on restructuring the international financial institutions and it has been working for a consensus among the developing countries on the subject of the new IMF chief.

The background of the high profile visit is the large receipt item that could change the bilateral relations, the US$10 billion deal for the Medium Multi-role Combat Aircraft that the Indian Air Force plans to buy. Struggles over the agreement intensified last month after the IAF’s trials shortlisted the Germany-led four nation group, EADS’s Euro fighter Typhoon and the French-owned Dassault Aviation’s Rafale aircraft. Thrusting for fighter jets deal: India plans to obtain 126 MMRCA. The deal, if done, may give US$11 billion worth of business to the European group. Germany, which is a major stake holder in the group, is expecting this could swell to another 80 more fighter aircraft (total 200) translating the total deal to US$18 billion, going by India’s trend of procuring Hawk, Sukhoi and MI-17.

Apart from the defense deal, India and Germany signed four pacts to develop their cooperation in the fields of education and research in high-tech areas like nuclear physics as the two countries determined for reforms of the United Nations Security Council. The deals were signed after talks between Prime Minister Singh and German Chancellor Merkel that integrated discussions on the intensification of trade and investment, nuclear energy cooperation and the UN reforms. Since the year 2000, Germany and India have maintained a strategic partnership.

German investments in India
German industry, from the start, was always more than a supplier of goods to India. Periods of high exports were always accompanied by large flows of investment and technology. Among foreign investors in India, Germany ranks eighth with total investment of US$3.5 billion since August 1991.

Since April 2000, a growing figure of US$2.80 billion has been invested by German firms into India. Despite the decline, German investors sustained to demonstrate great interest in India during 2008-2009, when they invested an all-time high amount of US$629 million, showing an increase of 32 percent over 2007-20008. In 2009-2010, the dollar figure fell to US$626 million, even as the investment into India grew slightly. But this is forecasted to develop.

According to the Business Monitor survey, conducted on behalf of the Indo-German Chamber of Commerce (IGCC), German investors in India take a constructive long-term vision of the Indian market and maintain to put in in their operations to tap expansion opportunities. Roughly 27 percent of all surveyed managers indicated plans to strongly increase their investment activity in India during the next three years. Some 46 percent plan a reasonable further increase while only 28 percent want to keep their investment movement at a constant level. None of the respondents plan to reduce investments in India or to withdraw from this market.

Approximately 28,180 overseas collaborations were permitted by India since liberalization, of which 2,709 collaborations were approved for Germany. Germany, therefore, accounts for close to 10 percent of total overseas collaborations accepted in India. With Germany having an iron grip on mechanical and engineering products, technology cases for industrial machinery have received utmost approvals followed by electrical equipment, chemicals, other mechanical and engineering and transportation industry. According to the file on registered German companies with the IGCC, there are 1,280 German companies in India, out of which 57 are liaison offices, 365 joint ventures, 702 subsidiaries and others and 156 technical collaborations. There are about 24 Indo-German companies listed in the Indian stock markets. The share price performance of these companies has recorded a notable performance.

Germany ranks second on overseas technology transfer approvals with 1,110 technical collaboration approvals which are about 13.33 percent of India’s total technology approvals. The sectors of importance to Germany are machinery and parts followed by heavy vehicles, chemicals, technical consultancy services, computers, electrical appliances etc. The main sectors attracting German investment into India are electrical equipment and metallurgical industry. The sectors attracting technology transfer are industrial machinery and electrical equipment.

Major German investors in India are:

  • Robert Bosch
  • Daimler Chrysler
  • Bayer
  • Siemens
  • Allianz
  • BASF
  • SAP
  • ThyssenKrupp

Huge German organizations are promoting their investments, as new companies are incoming Indian markets and several German companies are also reinvesting their profits made in India. India and Germany have granted to amplify their rendezvous in a number of solution areas, including climate change initiatives and cooperation in the fields of posts, intellectual property rights and social security.