Q&A: Michael Pfeiffer, German Trade & Invest

Germany and India should weather the current economic turmoil, explains Michael Pfeiffer, chief executive of German Trade & Invest, an economic development agency of that country’s government, in a talk with Sanjay Jog. Edited excerpts:

How serious is the euro zone crisis for Indo-German trade? 
The current crisis in Europe in undoubtedly a dampener for economic development. If it ends in recession, the situation will be critical. However, both Germany and India had come out stronger from the 2008 crisis and they will do it again, due to the strong fundamentals. Germany is and remains one of the world's strongest economies, in terms of GDP, fourth largest in the world behind the US, Japan and China, respectively. Germany is Europe's leading economy, with a fifth of European total GPD generated by Germany alone.

Similarly, India's economy is vibrant. India has a huge market and the entrepreneurship of its people and companies and competitiveness will help the country to continue to grow. I am confident India will stand up to all these challenges and the relationship with Germany become stronger.

What is the present state of bilateral trade? 
It crossed ¤15 billion in calender year 2010 and both are keen to increase to ¤20 bn during calendar year 2012. One in three Indian businesses in Germany is active in infromation technology. Renewable energy is increasingly drawing Indian investors. German machinery is in demand worldwide, but is even more critical in India. For India, machines made up a third of all imports from Germany last year. Besides, chemicals, pharmacuiticals and automobile tools are other sectors where both countries can explore investment opportunities. 

While high-quality German machinery continues to make a major contribution to India's rapid modernisation, Indian IT and software companies thrive in Germany on the foundation of a cutting-edge communications infrastructure, consistently one of the highest ranked in the world.

With the German government's decision not to pursue nuclear capacity additions, there are ample opportunities for Indian companies to invest in renewables in Germany. Suzlon and its 100 per cent German subsidiary, REpower, is a key example. More companies can come and invest in Germany in renewables.

Your comments on India's decision on FDI in retail?
The decision is in line with the international regime and expected to attract more investments in India. 

Do you recommend further opening of India's banking and financial sector?
Yes, India needs to further open its vibrant banking and financial sector, as global companies are keen to be part of the India story. With strong fundamentals and the competitive nature of Indian companies, they should welcome global players in this sector.