Germany: Indias gateway to the EU
One of the European Union's (EU) leading economies sets out what makes it the right gateway to Europe for Indian companies. Prime Minister Narendra Modi was only in Berlin for 24 hours on May 30, but the wake of his visit has left little doubt as to how important India is to Germany and the EU. German Chancellor Angela Merkel used a joint appearance in front of a business audience to emphasise that agreeing an EU-India free trade agreement (FTA) would be a priority. Talks on such a deal broke down six years ago, with differences over agriculture, generic drugs and freedom of worker movement all standing in the way. But business leaders in Germany have been lobbying for Europe's strongest economy to lead the EU back into discussions, particularly in the wake of Brexit. The German Ifo Institute recently published a study which showed that a free trade agreement with India could double exports from the EU to India within a decade, while increasing imports going in the other direction by 87 per cent. As a trading partner for India, Germany is the top EU country (rank number six). Both countries rank in the top five attractive markets for investors in terms of quantity of new investment projects (for activities excluding M&A). There were 415 Indian companies in Germany at the end of 2016, employing 23,085 employees. The largest proportion of Indian FDI projects in Germany since 2010 have been in the ICT industry, while Germany primarily imports textiles, chemicals and machinery from India.
Yet this only scratches the surface of the opportunities the two countries represent to each other. This year alone, delegations will visit from India to Germany to look at industries such as bioenergy and cleaning management services, while German delegations will visit India to look at energy efficiency and sustainable waste management. As the two countries seek to pioneer innovations in their respective regions, the opportunities for synergies will only grow. Memorandum of Understanding (MoU) agreements were signed on a range of industrial fields during Prime Minister Modi's visit, including digitalisation, cyber policy, vocational education and skill development, health and sustainable urban development. These lay the foundation for significant future mutual investment and cooperation between the countries, built on, as the two leaders agreed, a basis of shared values such as respect for human rights and fundamental freedoms, democratic governance, equality, the rule of law, and multilateral cooperation. Germany is the world's fourth largest economy and Europe's largest market. It is the world's third largest exporting nation. Many international studies, including the recent EY attractiveness study, attest Germany to be Europe's most attractive country for foreign investors, lauding infrastructure, the workforce, our stable socio-economic climate, the size of the German market and the R&D landscape. Industrial production still accounts for 22 per cent of Germany's gross value added, making it a crucial global industrial nation. The continued importance of the industrial sector is attributed to the high degree of diversification and specialisation in the German economy. German companies large and small have always been key players within the global economy. However, competitive pressures created by increased globalisation have led to structural changes. Mass production of labour-intensive products has been eschewed for specialisation in research-intensive technological high-end products. This has created a unique national industrial landscape. Many German industrial companies are world leaders in their respective industry. They are often referred to as “Hidden Champions” - leaders of niche industries which rarely attract public attention. These companies' competitiveness relies on steady investments in R&D. No other European country spends as much resources into R&D as Germany does. More than 70 per cent of internal R&D expenditures are invested in traditional sectors in which Germany is known to play an important role worldwide. These sectors include: the automotive industry, the electronics industry, the machinery & equipment industry, the chemical and pharmaceutical industry. But as well as the classic industrial sectors for which Germany is renowned, we are also pioneering in more modern sectors. Berlin and Munich are two of Europe's biggest tech start-up hubs. Germany remains a stable social, political and economic society. The workforce is one of the best-educated in the world. Our academic and vocational education systems make sure that academics and workers alike can achieve both a good educational foundation and freedom to work towards their specific qualifications - much of the substance of Chancellor Merkel's and Prime Minister Modi's talks centred around a sharing of these skills and systems between the countries Yes. A multitude of supporting government funds exist for foreign investors, particularly for R&D projects. Indeed, the one of the primary functions of Germany Trade & Invest is to help investors from abroad identify and access the correct funds to ease their path into Germany. An investment in Germany is an investment in a country that strives to create and explore opportunities within even the smallest niches. When you invest in Germany, you acquire the skilled labour with which to take advantage of opportunities which will eventually arise. You acquire existing opportunities and solutions. And you can acquire and develop unique existing solutions for your company which cannot be found anywhere else. In Germany, you can create, grow, and consolidate. All strategies can be implemented there. For all countries, regardless of nationality, Germany Trade & Invest is the primary partner for the investment process, helping them with information and proactive consulting on their initial steps into Germany as the new business location. Investing companies can further benefit from our outstanding and comprehensive in-depth knowledge about the German industry ecosystem and the tax, regulatory and legal frameworks. Our experts are sought after when it comes to identifying financing options, including European and German incentives. Together with associations for banking, private equity and venture capital Germany Trade & Invest also offers insights into alternative forms of investment. Our service offering starts with conceptual and strategic support with a business plan, a market analysis, a financing concept and a project plan including all tax, legal and regulatory steps. Eventually, this leads to support for the client on the operational requirements and demands. This may include workforce qualifications, industry specific salary data, energy prices, logistics, size and stability of buildings, office prices by square meter and other aspects. All these services are free of charge. Germany has an economy where risk is minimised, and where the opportunities to add value are many. We have created a good location for Indian entrepreneurs and businessmen to invest in. Dr Benno Bunse is the CEO of Germany Trade & Invest (GTAI), the economic development agency of the Federal Republic of Germany.