The relationship between Germany, the financial pillar of Europe, and India, the rising Asian giant, has reached a new high with trade volumes crossing the 15-billion-euro mark. According to figures released by the German Federal Statistics Office, the total volume of bilateral trade between January and December 2010 increased by an outstanding 17.1% compared with a negative percentage in 2009.
Talking to FE after Chancellor Angela Merkel?s visit to India, the German ambassador in New Delhi, Thomas Matussek, said: ?Both Chancellor Merkel and Prime Minister Manmohan Singh have set a bilateral trade target of of ?20 billion by 2012. With the trade figures achieving a new milestone of ?15.4 billion in 2010 and both sides keen on intensifying trade relations, this target looks achievable.?
?The target is realistic and we can achieve the numbers. India has a huge potential. The EU-India FTA will give further boost to the trade. Germany has strong interest as we feel that the FTA is the way to the future. Both countries economically complement each other,? Matussek added. Even during Merkel?s recent visit to India, both the Chancellor and Prime Minister Singh had expressed cautious optimism that the agreement will be signed in the next couple of months, he said.
Bilateral trade picked up tremendous momentum in the post-liberalisation era. The trade volume has increased nearly four times since 1991 ? with exports to Germany increasing three times and imports from Germany jumping almost six times. The new century heralded even stronger growth in bilateral trade, which has grown by an average of 16% per annum since 2003. A new milestone was reached in 2006, when the total volume of trade crossed the ?10-billion threshold, three years earlier than expected.
Bilateral trade numbers continued on an upward swing in 2007 and 2008, with volume of trade reaching ?12.07 billion and ?13.47 billion, respectively. The global downturn affected the growth momentum in 2009, but only marginally, with the figures declining to ?13.19 billion.
The extent to which German companies are already involved in India is revealed in a new statistical report which states: ?Taken together, the 120 largest German companies in India currently employ 173,000 staff. Over and above, they give employment through exclusive agents, dealers, vendors, franchisees and suppliers in the range of 300,000 jobs. This means the German companies are a major employment generator in India.?
More than half of the companies expect sales to surge by over 20% in 2011-12, while about 30% of them anticipate an increase of 10-20%.
According to the envoy, the two countries complement each other: India has in abundance of what Germany needs, for example, young, highly skilled and creative IT people. Germany can provide state-of-the-art technologies and longstanding experience in providing solutions to complex problems and processes. Both countries have identified certain areas for cooperation which include post-harvest infrastructure, good quality seed and planting material, cooperation in animal science, agricultural machinery and the entire food processing sector.
In 2008, Germany and India had established a bilateral working group on agriculture, covering the whole production line from agriculture to food processing and consumer protection. ?The next meeting of the group is provisionally planned for November this year where the Indian delegation will also have an opportunity to visit ?Agritechnica 2011? the world?s largest agricultural machinery and equipment exhibition,? said Matussek.
Several interesting projects, including the Siemens railway locomotive project in India that has been deferred four times, are in the pipeline. The R1,300-crore plant, to be set up at Madhepura in Bihar, is crucial for global locomotive suppliers as it comes with a 10-year offtake assurance, giving an instant foothold to bidders in the lucrative Indian market.
Germany accounts for close to 10 % of total foreign collaborations approved in India with more and more Indian companies acquiring high-quality German technology to meet their growing needs. It is also one of the most-preferred investment destinations for Indian companies, especially in sectors like automotive, pharmaceuticals and electrical equipment. Speaking on the potential for cooperation in the infrastructure sector, the envoy said, ?Germany can help India in fulfilling its infrastructure needs.?
Maharashtra, with a 57 % share of German investments, remains the most attractive trade destination of the country in India. Pune has lately become the hotbed for investments, followed closely by Karnataka and Gujarat. Delhi and Andhra Pradesh have experienced a drop in German investments, whereas Tamil Nadu and Karnataka are gaining popularity due to the conducive investment environment.