Doing business in India is like running a marathon: German Inc delegate

At the 5th Indo-German Consultations, Merkel, who came to India with a business delegation, said there was clear indication that the conditions for investment in India had improved, but room for more

“Doing business in India is like running a marathon,” said Peter Kern, representative of the German Central Bank in India. He added, “India needs fundamental reforms of the land laws, speeding up of the legal processes, and the labour market.” Renewed investment protection was another top priority of many entrepreneurs.

At the fifth Indo-German Consultations, Merkel, who came to India with a business delegation, said there was clear indication that the conditions for investment in India had improved, but there was also room for more. Besides the €1 billion that Germany has promised to pump into green urban mobility projects in the country, European Union (EU) is looking towards a free-trade agreement with India, said Merkel. 

For Merkel, economic ties were the focus of the visit, but German business people had insights into how the two countries could improve business ties.

“About 1,800 German companies are currently active in India. This means that 520,000 people are employed in India directly and indirectly by Germans,” said Bernhard Steinrücke, director general of the Indo-German Chamber of Commerce (IGCC).

But German companies manufacture mostly for the local market in India because of high taxes on imported components. This could be one of the hurdles for greater cooperation, said a businessperson who did not want to be named.

Last year, the trade volume between the two countries was €21.4 billion, making Germany India’s largest trading partner in the EU.

Kern said representatives for foreign companies had told him they came to the country to stay, and short-term fluctuations did not affect them much.

But, India’s economic potential is still attractive for many German businesses.

Peter Born, chief representative of Commerzbank AG, said India was recovering from disruptions such as demonetisation and the introduction of the goods and services tax. “Both these we were very good steps,” he added.

Kern, Born, and several other business persons attended the   the annual general meeting of the IGCC in New Delhi.

Addressing it, Merkel said at present there were about 20,000 Indian students in Germany, but there could be more. There was also a deficit in the labour force in Germany that skilled labourers from India could fill.

Also, she said the German Embassy in New Delhi had started a fast-track system to facilitate hassle-free regulatory clearances for German companies. German Federal Minister for Food, Agriculture and Consumer Protection Julia Kloeckner said, “Our long-term goal is to make greater use of digitised and mechanised agriculture in India, to reduce water consumption for farming.”

The writer is an independent journalist who divides her time between Mumbai and Berlin