India - Germany Economic and Commercial Relations

Trade

Germany is India's fourth largest trading partner (after US, UK and Japan) accounting for about 5% of our global trade with two way trade of 4.94 billion Euro. India accounts for just about 0.45% of total German trade and ranks 7th among Asian countries exporting to Germany.

2. Bilateral trade is at US $ 5 billion. This is about 1/6th of German-China trade. There is an untapped and unrealised potential in Indo-German trade relations. There are prospects of buying into German companies, which would help to tap into German & EU markets.

3. Bilateral trade during the period January to September 2003 amounted to € 3.75 billion (0.81%), exports reached € 1.96 billion (+2.71%) and imports to € 1.79 billion (-1.21%). In 2002, bilateral trade increased by 2.82% with two way trade touching € 4.94 billion despite economic downturn in Germany and reduced imports. German exports went up by 4.92% to € 2.42 billion; Indian exports reached € 2.52 billion, rising by 0.87%. The major items of exports to Germany are engineering goods, textiles and leather goods and major items of imports are machinery and chemicals & pharmaceuticals.

4. India's exports of top 15 thrust items to Germany have increased in 2002 by 0.62% compared to the same period in 2001. Engineering goods valued at Euro 280 million constitute the largest item constituting 12% of Indian exports to Germany. More than 20% of engineering goods to the EU from India are destined for Germany.

(in Euro billion)

5. IT, Biotech, Entertainment, Medium range engineering goods, fresh fruits & processed food stuffs, floriculture, value addition & diversification in cotton, silk, leather, sports goods, toys and Christmas decorations are areas for growth. Apart from traditional sectors, knowledge-driven sectors hold tremendous potential for collaboration between our two countries. There is, for instance, scope for considerable co-operation in the field of software development, chemicals, pharmaceuticals, human and animal health products, agriculture biotechnology, industrial and other biotech products, bio-informatics and in the entertainment industry.

6. During 2003 some Indian exports to Germany have been hampered by EU anti-dumping and other punitive actions and by denial of market access. For example, the concern about the increasing number of anti-dumping cases instituted against India by the EU in the recent years despite low share of India in total EU imports eg. on polyester textured filament yarn. Absence of appropriate lead-time for Indian agri/marine exporters to restructure their industry according to changing requirements of importers in Europe, stringent and slow inspection and certification process for Indian units for exports to Germany and difficulties for Indian exporters in accessing market access requirements leading to procedural complications. The main difficulties faced by investors from India continue to be visa regulations and work permits, employment and labour laws, taxation regulations and special regulations. India has won the case in WTO by a 2 to 1 majority against the EU for its Generalised System of Preferences (GSP) maintaining that EU's concessions to Pakistan to sell goods such as clothings and textiles in the European Union had caused India's exporters a loss of Euro 300 million annually.

Investment & Technology

7. In 2003 during January-September German investments abroad amounted to € 9.4 billion. If the slowdown were to continue, FDI from Germany could decline further. German investments abroad have declined in 2002 to € 22 billion from € 43 billion in 2001.

8. German investment in India, which was about 200 million Euros annually in the nineties, has now declined to about 50 million Euros a year. Germany accounts for around 4% of total FDI approvals and 5.2 % of total inflows in rupee terms. Approvals from Germany from January to September 2003 amounted to US $ 27.2 million. There was a sharp decline in approvals from Germany in 2002 amounting to US $ 52.2 million as against US $ 85.34 million in 2001. The top sectors attracting German investment into India from 1991-2001 are electrical equipment and metallurgical industry. The top sectors attracting technology transfer during the same period are industrial machinery and electrical equipment. In terms of approved investments during 1991- 2002, Germany ranked sixth with cumulative FDI approvals amounting to US $ 1.89 billion.

9. There is an increasing trend of Indian investments in Germany in 2003. To cite a few examples: In November 2003 Bharat Forge (BFL) has acquired M/s Carl Dan Peddighaus GmbH (CDP), a German forging company and a major supplier of critical chassis components to leading automakers thereby making BFL as the second largest forging company in the world. Ranbaxy's company in Germany acquired the German generic business of Bayer. M/s Basics GmbH is one of Ranbaxy's subsidiaries engaged in generic product portfolio. Ranbaxy has also acquired the Veratide Brand from Procter & Gamble. Samtel Electron Devices GmbH in Ulm is a subsidiary of the Samtel Group manufacturing high technology, high resolution, professional Cathode Ray Tubes (CRTs) for demanding applications for the Avionics, Defence, Medical and Industrial sectors. Hexaware GmbH is a subsidiary of Hexaware Technologies. NIIT has also a subsidiary in Germany. Moser Baer is planning to invest €150 million in Thuringia.

Exchange of Delegations

10. The President of Germany, Mr. Johannes Rau visited India from March 2 - 7. During this visit, the German President also participated in a Business Meeting, jointly organized by CII and FICCI in New Delhi. Dr. Rau's presence reflects the importance and the significance that both Germany and India attach to closer economic and commercial ties and the need to find solutions to the tremendous developmental challenges that the developing economies face in a rapidly globalizing world. The President also visited the hi-tech city, Hyderabad Köln Messe exhibition ground and the National Space Research Agency during his stay in Hyderabad and also attended a function hosted by the Indo-German Chamber of Commerce in Hyderabad on 5th March. During his visit, a Memorandum of Understanding was signed in Hyderabad between India and Germany regarding the Indo German Institute of Advanced Technology (IGIAT), to be established soon in Vishakapatnam, designed as a comprehensive centre to foster Industry in Andhra Pradesh and beyond in advanced technology areas.
11. The details of important bilateral visits are at Annexure-I. The 15th Meeting of the Indo-German Working Group on Coal was held in Berlin (12 - 14 February 2003); the delegation also visited Leipzig & Bochum. An IT CEOs delegation led by Shri Narayana Murthy, Chairman, Infosys visited Germany (February 2003) and had business meetings in Munich, Frankfurt and Düsseldorf. Shri K.K. Jaswal, Secretary, IT visited the IFA fair in Berlin (31 - 3rd August 2003). The 12th meeting of the Indo-German Consultative Group was held in Goa from 20 - 23 November 2003. A biotech delegation is expected to visit Germany in February 2004.

12. Visit of Prime Minister of India to Germany (28 - 30 May 2003): During the visit, the Prime Minister called on President Johannes Rau and held talks with Chancellor Gerhard Schroeder on 28th May. The focus of the visit was to strengthen bilateral political consultations, to impart fresh momentum in areas of ongoing economic cooperation, and to explore new areas for collaboration. PM discussed with Chancellor major international political issues like terrorism and the building of a cooperative multipolar world order. In his discussions with Chancellor, PM also discussed aspects of bilateral and multilateral economic relations. Both sides agreed to further intensify collaboration in Information Technology, biotechnology and space, and identified a number of new areas of focus like renewable energy sources, technical education, cooperation in research and development and a partnership programme on research facilities. Commerce Minister Shri Arun Jaitley met Minister of Economics and Labour, Mr. Wolfgang Clement on 28th May. The Indian business delegation also met Mr. Clement and discussed various bilateral economic issues. In Munich, PM met Minister-President of Bavaria Dr. Edmund Stoiber on 29th May and exchanged views on strengthening links between Bavaria and India. In particular, institutional partnerships in IT and e-governance were discussed. PM invited Minister-President Stoiber to visit India to see for himself the opportunities for enhancement of the India-Germany partnership. PM's interaction in Munich with German business representatives on 29th May enabled him to underline to them the vast untapped economic potential in India-Germany economic relations.

13. Asia-Pacific Weeks (APW) in Berlin from 15 - 27 September 2003: India was the focus country in the biennial Asia-Pacific Weeks (APW) organised by the Senate of Berlin from 15 - 27 September 2003. Business Conferences and Sectoral Workshops on Infrastructure and Engineering, Financial Services, Biotechnology, Information & Communication Technology were held during the APW. This was a well attended event with participation from about 300 companies. The Minister was accompanied by a high level delegation from India. A workshop "Indian IT meets German Business" was organised by DaimlerChrysler AG on 17th September 2003. Several other economic workshops on India were also held during the APW. For example, an SME Forum on India organised by GTZ on 17th September, Conference on Urban Infrastructure organised by the Berlin Senate for Urban Development on 17th Sept, Seminar on Eco Industrial Parks in India- Possibilites for Development of Infrastructure and Technology Transfer organised by GTZ on 16th Sept., Seminar on Clean Development Mechanism - Business Opportunities in Asia with focus on India organised by GTZ on 18th Sept., Seminar on Energy, Climate Change and Sustainable Development-Options for Handling Conflicting Goals organised by KfW on 19th Sept.

Source : Indian High Commission, Germany