SSB Awareness Series: A Visit by German Chancellor

Amongst the growing Refugee crisis in Europe, the visit of German Chancellor was quite important from India’s point of view as it could have impacted the investment in India from Germany. Germany is the largest trading partner of India from Europe and 2^nd most technological partner in terms of technological collaborations. However, the bilateral trade between Indian and Germany has stagnated in the last couple of years due to various domestic and international factors.

History of Trade between India and Germany:

Bilateral trade between India and Germany during 2014 was valued at Euro 15.96 billion.  While India is growing in significance as a trading partner for Germany, there is clearly a great deal of potential to be realized. There is a great potential for collaboration in IT , ITES, biotechnology, auto components, renewable energy, green technology, urban mobility and development and the entertainment industry. Most of the German companies have already entered the Indian market.

Click here to read: All you need to know about AFSPA
Read: SSB Lecturette Series on Ukrainian Crisis

German Medium Enterprises (Mittelstand), which constitutes the backbone of the German economy, is showing a great interest in India. Germany is the 8^th largest foreign direct investor in India since 2000. German FDI in India during the period 1991-Fbruary 2015, was valued at US $8.25 billion. FDI in India in 2014 was to the tune of US $ 1.15 billion. There are more than 1600 Indo-German collaborations and over 600 Indo-German joint ventures in operation. India investments in Germany have also shown remarkable increase in the last few years and have invested over US $ 6 billion in Germany.

Major issues for Foreign Sector:

The main agenda of this visit was to increase expansion of German industries in India, while India is looking forward to get the German industries to set up shop and participate in the Make-in-India Campaign. But it totally depends on the ‘ease of doing business’ environment that India needs to create. The main concerns of the German Industry are on the issues of Corruption, on the framework for investments, intellectual property rights and legal redressal of ease of doing business.

PM’s plan for German Investors:

The PM has cleared all the doubts in the minds of German investors by rolling out a plan that will be implemented in India for German companies. The PM said that the GST bill will be rolled out by 2016. Also, the taxation on corporate will not be retrospective in nature. Moreover, he said that India has recovered its full global credibility in just 15 months with the coming of his government. He also pointed out to the immense opportunities for German companies in India ranging from building 50 million houses to setting up 100 smart cities, modernization in railways, renewable energy conservation etc.

The Visit:

The visit of German Chancellor was a crucial one in terms of providing adequate support to each other in various sectors. The German chancellor has said that the German strengths have aligned itself with India’s goal of economic growth. India also had ensured Germany that it has been working on the long-pending concerns of the investors and will ensure that the government will pass some of the major bills in order to increase ‘ease of doing business’ in India. Promoting the Digital India campaign PM said that the software of India will move the hardware of the world.  The German chancellor also recognized the same and said the fusion of German engineering can be combined with India’s IT expertise to make a brilliant combination.

Click here to know Sure shot success Mantra for SSB
Read: Are we truly capable of making indigenous weapons

Moreover, India and Germany had signed 18 deals for making business stronger between the two countries. The two countries have signed deals worth $ 2.25 billion (around Rs. 14,600 crore) on German investment in developing India’s clean energy corridors and solar energy industry, ahead of the crucial UN climate change, talks to be held in Paris in December. An agreement is also signed that German will be taught in Kendriya Vidhyalayas or central schools across India as an additional subject for foreign language while Indian modern languages will also be taught in Germany. Moreover, the German chancellor has welcomed the fast track approval agreement signed on Monday, which will ensure German companies have a single point of contact with the Indian government to avoid layers of bureaucracy.

Conclusion:

The visit by German chancellor has been a success for India. With China’s market losing its ground in the earlier months the investors from the world are looking at India to provide them opportunity to grow and d business. Hence, India’s responsibility is to make sure that measures are taken for increase in ‘Ease of doing businesses in India. Moreover, this visit was important from the point of view that India already lacks in the manufacturing sector and this deal will ultimately make a strong push in manufacturing sector. Also, this visit will give a support to the India’s program to increase their share of renewable sources of energy in India. Overall, this visit has again increased the investment environment in the country.

About the Author:  Pranav Nikam is an Electrical and Electronics engineer who is working in a renowned MNC in Chennai. He likes to work out in gym, do photography and play badminton. Through his articles he wants to spread awareness among other defence aspirants.