German industry facing taxation, investment issues: Envoy

Says matters will be taken up when German chancellor visits on Sunday

German companies have expressed concerns over India’s policy and regulatory issues on taxation and investment, according to that country’s ambassador Martin Ney.

“German industry points at the difficulties in doing business here and making investments, owing to the framework on investment, intellectual property rights (IPR)’s laws, taxation policies, and legal ramifications of investments,” Ney said in New Delhi on Thursday.

The envoy said these matters would be taken up when German chancellor Angela Merkel visits India next week. During the visit, prime minister Narendra Modi and the chancellor will be having a meeting followed by the third Indo-German Inter-Governmental Consultations.

Apart from six Cabinet ministers, Merkel will be accompanied by a business delegation comprising chief executives of Deutsche Bank AG, Bombardier Transportation, Airbus Group SE, Siemens AG, ThyssenKrupp AG, and ABB AG among others, sources told the Business Standard.

There are more than 1,700 German firms operating in India. German enterprises have more than 120 factories across the country.

Both leaders will be meeting for the fourth time next week on Monday. Modi and Merkel had last met in Germany during the Hannover Messe fair in April.

On Tuesday, Modi and Merkel will be visiting the innovation centre as well as vocational training centre of German engineering and electronic firm Bosch in Bengaluru.

Both sides are also going to try and hammer out a solution on how to resume the long-pending India-European Union (EU) free trade agreement or Bilateral Trade and Investment Agreement (BTIA), the talks for which started in 2007.

India recently decided to cancel the resumption of the negotiations following the EU’s banning of 700 drugs from Hyderabad-based GVK Biosciences. Following the ban, Modi and commerce and industry minister Nirmala Sitharaman sought explanations from the EU, which it is yet to furnish them.

“For the two to resume the talks, it will require both sides to come to the table. This is the question, who comes to the table first? It takes two to tango. The pharmaceutical issue has to be resolved in some way or the other. The talks will resume sooner than later,” Ney said.

During the visit, India and Germany will be holding their third Indo-German Inter-Governmental Consultations (IGC), which is expected to result in some large-scale investments agreements and memoranda of understandings.

Germany is the only country with which India holds such a Cabinet-level meeting.  The first India-Germany Inter-Governmental Consultations was in 2011.

“Since taking up this format of cooperation, Indo-German relations have been on a steady upswing. In some regards, you could even say steep upswing,” Ney said.

Merkel, visiting India from Sunday to Tuesday, will be accompanied by six of her Cabinet ministers – Sigmar Gabriel, vice-chancellor and federal minister of economic affairs and energy; Frank-Walter Steinmeier, federal minister of foreign affairs; Ursula von der Leyen, federal minister of defence; Christian Schmidt, federal minister of food and agriculture; Johanna wanka, federal minister of education and research; Gerd Muller, federal minister of economic cooperation and development.

Germany is India’s biggest trading partner in EU. Trade between India and Germany reached $20.3 billion in 2014-15, from $18.6 billion in 2010-2011.

According to Confederation of Indian Industry, there still remains a huge potential for German companies to invest in manufacturing, chemicals, defence and aerospace, industry machinery and metals.