As German Chancellor Angela Merkel lands in India, strategic ties between India and Germany are poised for a qualitative shift and substantive changes.
A lot has changed in India since Merkel’s last visit in 2011, which augurs well for a deeper connect. India is on a vigorous path of growth and development, with GDP projected to grow by over 7%, making India, according to the IMF, a bright spot among economies. The economic landscape is dotted with initiatives for turning India into a manufacturing powerhouse, creating an enviable pool of skillsets, ushering in a digital economy and triggering infrastructure development. Indian economy is opening up as never before, with significant relaxation in caps on FDI in key sectors and there is a determined focus on enhanced global engagement with strategic trade and investor partners.
The good news is that Germany is seen as a vital part of this construct, as these developments coincide with a spurt in our economic engagement, with India’s partner country status in the Hannover Trade Fair signalling a mutual desire to take it further. With $21 billion worth of trade, Germany is India’s largest trading partner in the European Union and sixth-largest trading partner globally. Investments, too, are going strong, with Germany holding firmly as India’s seventh-largest investor with cumulative FDI inflows of $8.2 billion from April 2000 to June 2015. Today, there are around 1,700 German firms present in India, creating 4 lakh jobs.
Not surprisingly, the Merkel visit comes power-packed with expectations.
Among the key deliverables industry is keen on is enhancement of partnerships in India in the manufacturing sector. The view on both sides is that ‘Make in India’ offers huge potential, especially with the Indian government driving hard on the ease of doing business. It is noteworthy that German companies that already make in India have brought along their global business networks, advanced technology and know-how to help sharpen India’s industrial and competitive edge. We would like to see German manufacturers expand their supply base in India and increase localisation.
Another area to look at is the tremendous interest in Germany over helping India with vocational education and training (VET). Germany has identified the scope to collaborate with India on the German dual system of training the semi-skilled and unskilled manpower. German expertise can contribute to the modernisation of the apprenticeship system and curricula, and in supporting small and medium enterprises to participate in the development of VET. It may be worthwhile to mention that the Ficci Skill Development Forum (SDF), as part of its international collaboration strand, is steering the Indo-German partnership on skills.
Renewable energy is emerging as a big-ticket investment prospect with focus on development of solar power. India intends to add 175 GW of renewable energy during the next seven years and Germany sees an opportunity to partner in the development of solar power on rooftops in cities in India, develop a scheme on energy transmission from renewable sources and improve waste management systems. German cooperation on manufacturing of equipment for clean and renewable energy in India would be an asset.
There are also good opportunities for working together on infrastructure projects. With mega infrastructure projects such as the DMIC, DFC, Smart Cities and high-speed railways taking shape, German capital and technical expertise can be of utmost importance. German experts should look at Indian cities that have been identified under the Smart Cities initiative. There is also room for closer cooperation between Indian Railways and German companies like Siemens who have been present in India for decades. Deutsche Bahn with its expertise and international experience could be an excellent partner in developing high-speed corridors.
The clean Ganga project is also an opportunity with the Germans keen on bringing to the table their expertise of having cleaned up the Rhine river which was clogged many years ago.
The vigour and anticipation in Indo-German ties is captured well in the joint statement issued during Prime Minister Modi’s visit to Germany. The statement mentions, “Our strategic partnership is entering a new and more intensive phase.” There are no apparent fullstops in this growth story as India’s economic ambitions find a match in Germany’s need and desire to reach out to one of the fastest growing economies of the world.
The author is president, Ficci