German Chancellor Angela Merkel yesterday began a mission to clear the path for German companies keen to do business in India, as Indian Prime Minister Narendra Modi looks to the European powerhouse to help revive its economy.
Briefly leaving behind a refugee crisis in Europe, Merkel landed in New Delhi late on Sunday for a three-day visit focused on boosting defense, renewable energy and other bilateral trade.
Merkel, flanked by a large business delegation, is to meet Modi and trade officials on her first trip to India since right-wing Modi stormed to power in May last year, promising to reform and revive Asia’s third-largest economy.
“We are cooperating in areas such as economy, agriculture, internal security matters, development issues, defense matters and also in financial relations,” Merkel said after a ceremonial welcome at Delhi’s presidential palace.
The chancellor said their talks would also focus on climate change, ahead of a critical UN-led meeting in Paris on cutting greenhouse gas emissions.
Germany is already India’s most important trading partner in Europe and both Modi and Merkel have said they are keen to boost two-way trade.
However, German Minister of Foreign Affairs Frank-Walter Steinmeier said German companies were concerned about “too much red tape, infrastructure hurdles, corruption, lack of skilled labor [and] tax disputes” in India.
“A reliable legal and administrative framework is indispensable for German companies in India,” he said in an interview with the Hindustan Times, while applauding Modi’s government for moving in the right direction.
Foreign companies have long despaired at India’s levels of taxation, corruption and other hurdles to doing business. However, many have welcomed Modi’s efforts on economic reforms aimed at making India a more reliable and transparent place to invest.
The two nations exchanged nearly 16 billion euros (US$18 billion) in trade last year — mostly chemicals, machine tools, electrical goods and textiles.
“That obviously has growth potential,” a German official with knowledge of the trip said.
The leaders met in April on Modi’s first official visit to Germany, where the Indian prime minister sought more investment as he ramps up his drive to make India a manufacturing hub.
Germany agreed to lend India some of the vocational education expertise that has turned it into an engineering giant, with skilled workers crucial for Modi’s “Make in India” campaign.
Merkel’s delegation this week includes Steinmeier, several other Cabinet ministers and German business leaders, who are also to travel to the southern technology hub of Bangalore.
The visit comes as Modi’s relentless overseas charm offensive aimed at wooing economic powers — dubbed “Modiplomacy” — appears to possibly be paying dividends on the investment front.
India overtook China to top the table for greenfield foreign direct investment (new ventures) in the first half of this year, pulling in US$30 billion in estimated capital expenditures, according to a Financial Times analysis.
German investments in India stand at 9.7 billion euros, with about 1,600 companies in the country.
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