Indo-German Bilateral Relations

Germany is the most populated country in Europe and contributes to 23 % of the EU budget. It is India’s biggest trading partner in Continental Europe and second biggest, after UK, within the EU. India was amongst the first countries to recognize Federal Republic of Germany after the Second World War. The relationship, based on common values of democracy and peaceful coexistence, intensified after the German unification in 1990. There has been a rapid growth in the field of trade and economics, science and technology.  Both countries upgraded the relationship to a strategic partnership in 2001. Germany is also amongst our important partners in various international forums including the UN, the G 4 and the G 20.  

2. Bilateral visits: Bilateral exchanges, including at the highest level, are a regular feature of the relationship. Former President of the Federal Republic of Germany, H E Dr Horst Koehler visited India on a state visit from February 1-7, 2010. President Johannes Rau had earlier visited India in 2003. Chancellor Merkel paid a state visit to India from October 29-November 1, 2007 at the invitation of Prime Minister Dr. Manmohan Singh. Prime Minister Dr. Manmohan Singh had visited Germany earlier from April 22-25, 2006 and had jointly inaugurated the Hannover Trade Fair with German Chancellor Dr. Angela Merkel on April 23, 2006, in which India was the Partner Country. Former German Foreign Minister Frank- Walter Steinmeier visited India in November 2008. Shri. Pranab Mukherjee, former External Affairs Minister visited Germany in May 2007. Interactions are also extensive at the level of the German Landers and the states in the Indian Union. Mr Christian Wulff, Minister-President of Lower Saxony (October 7-10, 2008), Mr. Kurt Beck, Minister-President of Rhineland Palatinate (March 11-16, 2009) Mr. Guenther Oettinger, Minister-President of Baden Wuerttemberg (November 15-20, 2009), Mr. Phillip Roesler, Minister of Economics from Lower Saxony (April 25- May 2, 2009), Ms Emilia Mueller, Bavarian Minister for European and International Affairs (July 22-26, 2009) Dr. Wolfgang Heubisch, Bavarian State Minister for Science & Research (February 10-15, 2010), Dr. Roland Koch, Minister-President of Hessen (March 5-7, 2010) and Ms Christa Thoben, Minister of Economic Affairs, SME and Energy of North Rhine Westphalia visited India in the last few years.

3. Strategic partnership: In keeping with a 'strategic partnership' agreed to during Chancellor Gerhard Schroeder’s visit to India in 2001 both sides have institutionalized arrangements like a NSA level Strategic Dialogue, Foreign Office Consultations and a Joint Working Group on Counter-Terrorism to discuss various bilateral and global issues of interest.

4. Economic Cooperation: Indo-German cooperation in the field of trade and economics is one of the most dynamic facets of the bilateral partnership. The Joint Commission on Industrial and Economic Cooperation led by the Finance Minister from the Indian side and the Economics Minister from the German side meets every two years. In addition, there are five Joint Working Groups on agriculture, automobile, infrastructure, coal and vocational education which focus on furthering collaboration in specific sectors. There is also an Indo-German Energy Forum, which last met in November 2009 in Berlin, to discuss important aspects for cooperation in the filed of energy including renewable energy, energy efficient technologies, power sector, alternative fuels and CDMs.

5. Bilateral Trade: During the visit of German Chancellor Merkel to India in October 2007, both sides set a new trade target of Euro 20 billion to be achieved by 2012. Bilateral trade grew by 11% in calendar year 2008 to reach a level of Euro 13 billion (see chart below). Despite, the global financial crisis, which led to some deceleration our growing bilateral trade, we are on track to reach the target of €20 billion by 2012.

Indo-German Trade (€ Billion)

India ranks at the 24th position amongst trading partners for Germany worldwide. India accounts for 0.7% of total German trade and ranks 5th among Asian exporters to Germany. Germany is also the 8th most important destination for Indian exports  While major items of exports from India to Germany are cotton and textile products, leather and leather products, chemicals & pharmaceuticals, metal products and automobile components, the key imports in India from Germany include machinery, electro-technical goods, aircrafts, metal goods, chemicals, measurement and control systems, synthetic materials etc. Cooperation in the field of Information Technology, biotechnology, auto components, renewable energy and the entertainment industry is also increasing. German investments in India have shown an increase in the past three years. In terms of FDI inflows during 2009, Germany was the eighth largest investor in India with FDI inflows of US $ 599.93 million.  For the period January 2000 to March 2010, Germany was the eighth largest investor cumulatively with FDI inflows of US $ 2.81 billion. As per Indo-German Chamber of Commerce, US $ 6 billion (Euro 4.1 million) worth of investments from German companies are in the pipeline.  Germany's leading news magazine Der Spiegel has cited India as the No.1 destination for offshore development by German software companies.

Indian investment in Germany has also increased in recent years. According to the Bundesbank, Indian FDI flows - measured in terms of equity capital - into Germany between 2004 and 2008 increased from EUR 3 million to EUR 33 million. The IT sector continues to be the best represented in terms of foreign direct investment. According to fDi Markets, India has initiated 40 projects in Germany since 2003, 20 of which are in the software and IT sectors. In 2004, India's Reliance Group purchased the former Hoechst subsidiary Trevira. Another major development came in 2007, when the Indian wind-power giant Suzlon purchased a controlling stake in REpower Systems AG, a Hamburg-based wind energy plant manufacturer. Indian companies either acquiring firms or starting their own subsidiaries in Germany include Ranbaxy, Samtel, NIIT, Wockhardt, Graphite India Limited, Megasoft, Torrent Pharmaceutical, Dr. Reddy's Laboratories, Tata Auto Component Systems, and Mahindra & Mahindra. EADS has recently announced plans to establish a joint venture with Larsen & Toubro to tap into India’s defence procurements.  EADS will invest upto 26% in the joint venture, which will have a total initial investment of US$ 20 billion (Euro 14 billion). Although Indian companies are spread throughout Germany, they are mainly clustered in the states of North Rhine-Westphalia, Hessen, Bavaria and Baden-Württemberg. Taken together, Indian companies in Germany employ nearly 12,000 people, most of whom are German nationals, thereby adding to the job opportunities in Germany.

6. Cooperation Science & Technology: S&T cooperation has always been a strong focus area in the relationship. The Indo-German Joint Working Group on S&T offers a framework to discuss various aspects of our bilateral partnership. The Indo-German Dialogue for Sustainability and the meeting of the Working Group on Dialogue for Sustainability took place in New Delhi in February 2010.  There are presently more than 150 joint S&T research projects and 70 direct partnerships between the universities. The jointly funded Indo-German Science & Technology Centre was inaugurated in September 2008 at New Delhi with an annual contribution of Euro 1 Million. Cooperation between India and Germany in the Space segment has, in recent years, included the launch of two German research satellites by ISRO. India’s moon mission, Chandrayaan, carried an experimental payload from Germany and German experts were present at the launch. German President Dr. Horst Koehler inaugurated the Indo-German Max Planck Centre for Computer Sciences at IIT Delhi on February 3, 2010. As per latest estimates around 4500 Indian students are pursuing various courses in Germany, while around 800 German students are studying or doing their internships in India. Many Indian students are opting for Engineering and Management courses in German universities on a self-financed basis. Some German companies like Siemens and Bosch offer scholarships for Indian students to undertake post-graduate courses in German universities under the DAAD programmes. Thus, there is a scope for further cooperation in this sector.

7. Cooperation in Culture & Education: In order to promote India studies, five ICCR Rotating Chairs have been set up at the Universities of Heidelberg, Mainz, Hamburg, Halle and Humboldt University during 2007-08. During 2008-09, these chairs were set up at the Universities of Wuerzburg, Mainz and Bonn during the Autumn-Winter term. The remaining 2 (two) chairs could not be established for want of identification of suitable professors. During 2009-10, five chairs were set up at the universities of Marburg, Goettingen, Koeln, Hamburg and Heidelberg. Recently, DAAD (German Academic Exchange Programme) has shown interest in rotating chairs to supplement the efforts of the Indian Government. During 2010-11, rotating chairs are proposed to be set up with the additional support of DAAD. An MOU was signed on 16th November 2009 between ICCR and Heidelberg University for setting up a long-term chair (for 2 years) at the South Asia Institute, Heidelberg University. Prof. Dhruv Raina of JNU became the first occupant of this prestigious chair in June 2010. In the beginning of February 2010, another MOU was signed between the Central Council for Research in Ayurveda and Siddha (CCRAS) under the Deptt of AYUSH, Ministry of Health and Family Welfare, Government of India and the Institute for Social Medicine, Epidemology and Health Economics, Charite`University Medical Centre, Berlin for joint research in Ayurveda, more specifically, for the Osteoarthritis of the knee. During the last visit of President Köhler to India in February 2010, both countries announced the Year of Germany in India during 2011-12 and Year of India in Germany during 2012-13.

8. Indian diaspora: There are about 68,000 Indians in Germany. Of these, about forty thousand hold Indian passports, while the rest have acquired German citizenship over the years. The Indian diaspora mainly comprises of technocrats, small time businessmen/traders and nurses. There are a number of Indian organizations and associations active on the business/cultural front, cementing ties between India and Germany at the people-to-people level.

INDO-GERMAN ECONOMIC RELATIONS

 Trade

Germany is India’s sixth largest trading partner (after US, UK, Japan, China & Belgium) and accounts for about 3.64% of our global trade. Indo-German two-way trade which had remained static at Euro 5 billion during 2001-2003, dramatically rose to Euro 6.22 billion in 2004 (up 22.5% over 2003). The principal commodities accounting for the increase were engineering goods, textiles, leather products and pharmaceuticals. In 2005, bilateral trade increased by 22% to Euro 7.6 billion, exports from India were Euro 3.4 billion (+15.8%) and imports were Euro 4.2 billion (+27.7%). Major items of exports to Germany are engineering goods, textiles and leather goods and major items of imports are machinery and chemicals & pharmaceuticals. During the visit of Federal Chancellor Gerhard Schroeder to India in October 2004, the two Heads of Government had stated that efforts would be made to double two way trade from Euro 5 billion to Euro 10 billion by 2010. As per present indications, two way trade is likely to reach Euro 10 billion by 2008. The visit of PM Dr. Manmohan Singh is for the Hannover Trade Fair in April 2006 is likely to give a further boost to trade and economic cooperation between the two countries.

Investments / technology transfer

German approved investment in India, which averaged Euro 200 million annually in the nineties, has declined in recent years as a result of the sluggish performance of the German economy, Germany’s preoccupation with the integration of East Germany and the priority attached to Eastern Europe as well Germany’s focus on China in the Asian region.. Actual investments from Germany were US $ 133.1 million in 2001, US $ 138.1 million in 2002 and US $ 78.8 million in 2003, US $ 158.2 million in 2004 and US $ 42.9 million during the first six months of 2005. The top sectors attracting German investment into India during 1991-2005 (Jan-June) were electrical equipment and metallurgical industry. The top sectors attracting technology transfer during the same period were industrial machinery and electrical equipment. There are now some signs of greater German interest in India with the big German companies stepping up their existing investments and several new players entering the Indian market. Many German companies such as Bosch, Siemens, Daimler Chrysler have had a presence in India for a long time.

A new and welcome trend is of Indian investments in Germany. Bharat Forge Limited (BFL), Ranbaxy, Samtel, Hexaware Technologies, NIIT, Wockhardt, Graphite India Limited and most, recently Dr Reddy’s laboratories, have either acquired German companies or started their own subsidiaries in Germany.

III Visit of Prime Minister Dr. Manmohan Singh (22-25 April, 2006) and the Hannover Trade Fair (24-28 April, 2006)