Indo-German economic relationship can have real global clout
Europe’s increasing strain with the US represents a golden opportunity for India, one the latter can use to offer an alternative a Chinese-led new world order
Indian Prime Minister Narendra Modi’s visit to Berlin on Monday could not have come at a more opportune moment, with German Chancellor Angela Merkel having clearly outlined her intention to cultivate new allies in the east in the wake of America signaling its intent to withdraw from the world.
Europe’s increasing strain with the US represents a golden opportunity for India, which boasts a rapidly growing economy and a robust democratic political system.
According to Dr. Siegfried O. Wolf, a senior researcher at Heidelberg University’s South Asia Institute and a former consultant with the German Federal Ministry for Economic Cooperation and Development, Modi’s Germany trip can “usher a new frontier in European Union-Asia relations based on democratic values, which will help stabilize the Eurasian region.”
Wolf believes China’s efforts to create a new world order conducive to its own strategic interests create substantial common ground for New Delhi and Berlin to build a solid framework for economic and political cooperation. Indian Premier Narendra Modi has echoed that sentiment, endorsing an EU-centric world vision in which Indo-German ties truly count.
“At a time when protectionist tendencies are rising globally, the affirmation by our two leaders of openness, greater trade, investments and exchange of technology for mutual growth provides businesses on both sides with much needed confidence,” says Dr. Alwyn Didar Singh, Secretary General of the Federation of Indian Chambers of Commerce and Industry (FICCI).
Indo-German co-operation is enshrined in a framework adopted in May 2000: the Agenda for German-Indian Partnership in the 21st Century. However there is a feeling that more can be done strengthen bilateral relations on a strategic level.
After all, Germany is a key ally of India, and one that facilitated the lifting of global sanctions imposed on New Delhi after its 1998 atomic tests. It is also the country’s largest trading partner in the European Union and one of its leading sources of foreign direct investment, contributing US$2 billion in the last two years alone. Trade between the countries currently stands at US$18.73 billion.
“At a time when protectionist tendencies are rising globally, the affirmation by our two leaders of openness, greater trade, investments and exchange of technology for mutual growth provides businesses on both sides with much needed confidence”
The two currently have no formal bilateral trade agreement, however. An India-Germany Bilateral Investment Treaty lapsed in March this year and negotiations over a fresh trade agreement with the Europe Union have been creeping along at snail’s pace since 2007.
Meanwhile, the Germans have complained about obstacles to their entrepreneurial efforts, although Singh contends that some of those difficulties have been remedied with the implementation of the 2015 “fast track agreement” to facilitate German companies investing in India.
Modi’s Berlin trip is likely to enhance Germany’s contribution in making India a global design and manufacturing hub, and India’s FICCI is well positioned to play the role of facilitator. Crucially, a concentrated “Make in India” thrust and a business-friendly policy realignment from New Delhi are making India a key destination for global capital seeking profitable returns. Singh believes efforts to attract German SMEs will help to mitigate India’s unemployment problem significantly.
Former Indian Ambassador to Germany Kishan S Rana asserts: “Germany is not only the locomotive of the European Union but also a bastion of technology and innovation – the reason why it remains a vital partner for Indian growth ambitions.” Given India’s well-chronicled weaknesses in delivering on promises, Rana advocates a time-bound program of concrete aims be established.
Seema Sengupta is a Calcutta based journalist and columnist