Wednesday, September 20, 2017

Trade Zone

INDO-GERMAN TRADE ENGAGEMENT

 

Surging ahead

 

 

Engagement between India and Germany has come a long way since its origins five hundred years ago when Jakob Fugger, a merchant banker from Augsburg financed the voyage of the first German ships to Goa, thus throwing open a trade route between the two countries. Soon thereafter other firms from Germany followed – the most notable one being in the nineteenth century when Siemens built the first telegraph connection between Kolkata and London, via Berlin. Economic and social links have since then been strengthened into what is now being touted as a ‘strategic partnership’ which finds reflection in enhanced bilateral trade. Indo-German bilateral trade picked up huge momentum in the post-liberalisation era with trade volumes increasing almost six times since 1991 – while exports to Germany increased five times, imports from Germany to India increased almost seven times. A new milestone was achieved in 2006, when the total volume of trade crossed the €10 billion threshold, three years before the figures were expected to fall into place. The bilateral trade numbers continued on an upward swing through 2007 and 2008, with volume of trade reaching €12.07 billion and €13.41 billion respectively. However the global economic recession affected bilateral trade in 2009, but only marginally, with figures declining to €13.10 billion. In 2010 though, Indo-German trade relations achieved a new high, with trade volume crossing the €15 billion mark. In the first 5 months of 2011 there was an outstanding growth of 28 per cent in total volumes and both Berlin and New Delhi were looking at a bilateral annual trade target of €20 billion by 2012…

 

Despite the recent debilitating impact of the economic slowdown, Indo German engagement has stayed on course. German firms are increasingly discovering new investment opportunities in India as are Indian firms in Germany. The German missions in India are working hard to build on the strong foundation and to further deepen the dynamic Indo-German partnership on global issues.

 

Their current engagement in this field with India focuses on providing solutions in areas like business, trade, agriculture, energy, environment, sustainable development, higher education, vocational training, science and technology. Assuredly the future of the partnership looks bright.

 

 

Advantage German

 

During the 23 years, since its reunification, the new federal states of Germany have developed into an economically thriving region at the heart of a united Europe. This also opens up excellent opportunities for Indian investors to gain a foothold on the large European market and participate in the developments of the region.  Investors can expect to find unique advantages such as modern and efficient infrastructure, a well-trained workforce, generous financial assistance schemes and a broad-based research landscape that is open to collaborative ventures. This is particularly true in emerging sectors such as microelectronics, information and communications technology and the large renewable energy market particularly solar power. Germany is home to companies that produce solar cells and systems and to research establishments and users, i.e. electricity producers and providers. Industrial clusters have reduced the distances between producers and customers and enhanced the economic efficiency of a location. In addition, there are numerous science clusters focusing on specific industries such as aerospace, automotive, biotechnology, chemical, electronics, nanotechnology, optics, and renewable energies. Every year more and more foreign companies are discovering Germany as a secure and rewarding investment location. In the last ten years alone, Germany's FDI stocks nearly doubled to reach an amount of more than EUR 550 billion in 2012. Close to 55,000 foreign companies are already operating in Germany, employing almost three million people.  German expertise is mainly centred in areas such as energy and  environmental technologies, chemicals and materials, machinery and equipment industry, electronics and microtechnology, life sciences, logistics, mobility, information technology, digital economy and corporate services. SR 

 

 

 

German companies in India are optimistic about the country’s business environment

 

 

The IGCC is a leading bilateral business organisation for business between Germany and India. Besides its head office in Mumbai, the Indo-German Chamber of Commerce has branch offices in Delhi, Kolkata, Chennai, Bangalore, Pune and a liaison office in Düsseldorf. In addition to this, IGCC has established 9 India-desks in various bi-national Chambers of Commerce abroad, 18 different Chambers of Commerce & Industry in Germany and has one representative in Brussels. To facilitate better business contacts in India, it has appointed 17 honorary representatives in other towns and cities of the subcontinent. The Indo German Chambers of Commerce has played a key role in facilitating the setting up of business by German companies related to sectors such as construction/infrastructure/power/equipment/technologies/automotive/manufacturing sector in various parts of India. ZUBIN KABRAJI, REGIONAL DIRECTOR-PUNE, INDO- GERMAN CHAMBER OF COMMERCE responded to SHRIKANT RAO’S queries

 

 

 

What is the view obtaining from Berlin of India as an investment destination?

 

Germany has a long-standing eco-cultural relation with India. It regardus as a leading destination for outbound investment, as well as for trade and cultural relations. India and Germany are strategic partners and this fact was underlined by the German Ambassador to India Michael Steiner recently when he outlined the reasons: India at this juncture needs long-term investment, trade, vocational training, and more. India’s biggest trading partner, Europe, has all this on offer. Right now, a Free Trade and Investment Agreement between the EU and India is being negotiated. Its conclusion would be the necessary outer equivalent to the inner reforms that the Indian government is currently pursuing. It would be an economic booster. Germany plays a prima donna role in this regard. Admittedly while there is the European debt crisis, the combined Eurozone sovereign debt of 88 per cent GDP is still significantly below the debt of other developed economies such as the United States (103 per cent) or Japan (130 per cent). The Eurozone’s current account balance is positive, unlike for example in the US. Its per capita growth rate is higher, the inflation lower than in the US. A strong Europe is also in India’s interest. India needs strong partners who think alike. Going it alone is not an option any more in today’s globalised world. As the Ambassador has said the best partnership for India is the one with Germany and Europe as there are no conflicting, only common strategic interests.
 

 

 

Which are the areas of construction/infrastructure/development in which German companies are showing interest?

 

With their investments in the engineering industry in India on a firm footing, Germany now seeks to involve itself in larger infrastructure related projects – such as city-to-city corridors, airport development and large city metro projects.

 

 

 

Tell us how the German investor community views India and the investment prospects in 2014-2015?

 

As per the IGCC Business Monitor 2014, a representative survey of German investors in India, German companies and investors in India are optimistic about the country’s business environment, while maintaining a conservative approach towards growth and investments. They have reasonable growth expectations for fiscal 2014-15 and expect a stable or moderately upward trend in the medium-term growth. With the conclusion of the General Elections, investors are hoping for a more pro-business government formation that will facilitate the growth of their activities in India. Despite the sluggish revenue growth and decrease in profits in the last year, managers are hopeful of a healthy increase in both revenue and profits over the medium-to-long term period. While stabilising their foothold in the market and acclimatising to the Indian policy environment, German investors steadily continue with their investment activities in the country. Further, the results of this year’s survey reveal that managers are prepared to adapt to the existing economic scenario in India and take a sustainable approach in terms of investment opportunities, recruitment activities and salary increments. The German investor community continues to rate issues with respect to infrastructure, red-tape and corruption as the top three threats to India’s investment climate. There is a demand for more effective law enforcement mechanisms and a sound regulatory system to inculcate transparency and certainty while carrying out business transactions. Further FDI liberalisation and the need for skilled and educated workforce remains a necessity. As far as investments are concerned in 2014-2015, the German investor community is looking to enhance its revenues steadily in the current financial year, as compared to last year. Though many German business houses are currently finding the Indian business environment challenging, they are optimistic that they can turn around the situation by leveraging on their growing experience in the domestic market.

 

 

 

Tell us of the various services provided by the IGCC to German firms in India and likewise Indian firms looking at opportunities in Germany? What are the opportunities available in Germany for Indian firms?

 

DEinternational is the Services Department of the Indo-German Chamber of Commerce. It provides Single Window Business Solutions for companies planning to do business with India or Germany. The Market Entry Service is our core service and is supported by Business Advisory, Taxation and Legal services and Recruitment. Other important services include Market Research, Business Partner Search, Event Management, Property Search, PR and press amongst others. We extend complete support, tailored to the needs of small and medium-sized companies. Over the last seven years, we have supported more than 170 German companies to get established in India. India firms have good opportunities to invest in Germany, especially in areas related to information technology, engineering support services and bio-technology.

 

 

 

Could you name some of the leading German firms you have assisted in setting up base in places like Pune and Chennai and tell us the main areas of the Indian economy/infrastructure projects to which they are looking to contribute?

 

Pune is home to leading German companies such as Volkswagen, Mercedes Benz, KSB Pumps, Wirtgen, ThyssenKrupp India, Brose, INA Bearings, Saertex, Leoni, Knorr Bremse, Bajaj Allianz, Trumpf and others. Chennai, meanwhile, is a base for German firms like BMW India, Daimler India Commercial Vehicles, Babcock Borsig Softech, Schwing Stetter (India), Duerr India and others.

 

 

 

What are the other important initiatives taken up by your organisation to further Indo-German trade? Could you talk of the recent trade missions and fairs which IGCC has supported and facilitated?  

 

In the past the Indo-German Chamber of Commerce has organised several delegation visits to Germany. Of these visits there were four Fact Finding Missions related to solar energy industry, two related to water and wastewater management and one each related to energy efficiency in the manufacturing industry and in the building industry.

 

With a total of 2.2 million workers, the German construction industry is one of the largest employers. This industry is witnessing a boom – every year, about 10 per cent of the annual GDP are spent on construction projects. In 2012, this amounted to €262 billion. The construction industry includes the main construction trades and the finishing trades. About 73,000 companies, most of them small or medium-sized, are active in the main construction trades, offering shell construction and civil engineering services. In the finishing trades, 44,000 companies mainly provide finishing, interior fittings and renovation services. Against the backdrop of climate change, the German construction industry is increasingly focusing on environmental research.

 

Optimising the energy efficiency of buildings and constructing in a manner that is energy-efficient and sustainable is a major focus in research and development. The German industry offers new solutions when it comes to developing new building materials and technologies. In addition, the German construction industry offers state-of-the-art innovations in the areas of digital planning and construction, and in the integrated use of IT applications in construction. 

 

 


Tell us about the various trade fairs in Germany for which you are offering support?

 

There are various trade fairs which are supported by the IGCC. These include Messe Berlin, Hamburg Messe, Nurnberg Messe, Usetec etc. Our services for the trade fairs cover public relations for the trade fair companies, advertising in the relevant trade journals and media, acquisition of exhibitors and visitors, organisation of individual and group trips to trade fairs and events and advance sale of entry tickets for visitors in Indian currency. To exhibitors, we provide a whole range of services to make participation in a trade fair fruitful and easy. These include selection of a trade fair suitable for the exhibitor’s product, complete guidance and advice from applying for space up to the final participation, organisation of group participations, providing industry specific market information, assistance in travel and hotel bookings, organisation of delegation visits with accompanying programme, interpreter services, assistance with visa services, organisation of press conferences and providing all information pertaining to city, sightseeing, trade fair grounds etc.

 

 

 

Which are the fairs related to the construction sector which are very popular?   

 

The main construction fairs in Germany are Bauma and Bau- both held in Munich. Bauma covers Construction Machinery, Building Material Machines, Mining Machines, Construction Vehicles and Construction Equipment and is held once in three years. The next edition is scheduled for 2016. Bau, on the other hand, covers Architecture, Materials and Systems. Besides these, Nuremberg has a fair covering parts of the construction industry called fensterbau/frontale which is the International Trade Fair for Window, Door and Facade/Technologies, Components, Prefabricated Units and is held once in two years. Berlin has a fair called Bautec also held once in two years but it doesn’t get too many visitors nor exhibitors from India.

 

 

 

Pune has today the biggest cluster of German companies in India. Can you tell us about the factors that dictated the choice of the city for industrial activities?  Also tell us about the laggard areas that require to be addressed?  

 

There are already 300 plus German firms operating out of Pune which is indicative of its attractiveness. What are the qualities that attract the firms? Because of the presence of large German companies smaller firms tend to gravitate towards them. I would say the presence of a skilled workforce plus the facilities for education – the city is home to 128 colleges in various fields like medicine, engineering, management – certainly propels foreign firms to look at Pune. The other is the entrepreneur base of the city which permits absorption of high technology brought by the Germans. Pune is a great melting pot for culture. It is a friendly city and foreigners are attracted to it especially the Germans. On the requirement side infrastructure will need to be improved, especially the road linkages and the power scenario.  It has grown substantially in the past few years, but it will have to be streamlined.

 

 

 

What kind of future does Pune offer for manufacturing and for doing business?  

 

With improved infrastructure and labour reforms, Pune holds out good promise to German firms, especially in areas of research and high technology engineering. The key to greater investment is the confidence smaller German players (the Hidden Champions) have in the city and what it can offer. If the matter of an international airport can be expeditiously settled, Pune will automatically go on the world map. With a direct flight already linking Pune with Frankfurt, this linkage would be a frontrunner in bringing the city closer to Germany.

 




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