Haritha's Musings: Indo-German Bonhomie

Prime Minister Narendra Modi fresh from the recent warmth incumbent of the recently concluded G-4 summit at New York welcomed German Chancellor Angela Dorothea Merkel on her three day visit to India. Merkel accompanied by six of her cabinet ministers was in India to attend third India-Germany Intergovernmental Consultations (IGCs) which comprehensively reviews the areas of cooperation between the two countries and prepares guidelines for deepening bilateral engagement (1). Germany is the largest trading partner of India in the EU with bilateral trade valued at Euro 15.96 billion. It is eighth largest foreign investor in India. India- Germany strategic relationship started off in 2001 was further strengthened by the IGC. Merkel visited India in 2007 and again in 2011 to attend the first IGC, a second round of it was held in 2013 at Berlin. Modi was in Germany in April 2015 to flag off India’s participation as a partner country at the Industrial Exhibition at Hannover Messe. The current visit of Angela Merkel marks the third meeting between the leaders of both countries in the past six months. Germany is the only country with which India hold biannual joint cabinet meetings.

Both countries have setup several institutionalized agreements to discuss issues of bilateral and global concern like Strategic Dialogue, Foreign Office Consultations, Joint Commission on Industrial and Economic Cooperation, High Technology Partnership Group, High Defence Committee, Joint Working Group on Counter- terrorism, Indo-German Energy Forum, Indo-German Environmental Forum, Indo-German Consultative Group (2). Besides both countries are working closely in pushing ahead the reforms for an expansive UN Security Council.

Indo-German relations are presently the strongest with no remnants of the past hovering over the relationship. West Germany a staunch ally of US has always viewed India with suspicion for its closeness with the Soviet Union. But with collapse of the Soviet Union and integration of both Germany the logistics have largely changed. Further just like Post war Japan, Germany preferred to stay away from the geopolitical strategies. The reemergence of these nations after establishing themselves as economic powers in their respective regions aptly coincides with India’s rejuvenated interests to pursue its developmental agenda.

India and Germany having realized their mutual complementarities bolstered cooperation in areas ranging from technology, economic investment, agriculture, education, science and technology for the past 15 years. While Germany has surplus capital, modern technology and ageing population India has deficit capital, meagre technology and bustling with demographic dividend. Merkel during her visit has returned a stolen 10^th century idol of Goddess Durga spotted in the Museum at Stuttgart. Merkel’s candid discussions with centered around deepening bilateral engagement in defence, security, renewable energy, education, trade and investment. The meetings between the leaders New Delhi and Bengaluru, (fondly described as Asia’s Silicon Valley by Merkel) concluded on a positive note with as many as 18 MoU’s and agreements inked.

These predominantly include cooperation on skill development. Germany vocational education system is highly valued and lessons from it can kick start Skill India initiative. Another significant area of cooperation is renewable energy. In the aftermath of the Fukushima Nuclear reactor explosion Germany has ordered for closure of Nuclear reactors in its country. Subsequently it dependence on fossil fuels has escalated which drew ire from environmentalists Worldwide. Following the hue and cry Germany shifted its focus on renewable energy sources and developed reliable technologies even. Other areas of cooperation include- security, disaster management, science and technology, declaration on protection of plant products, railways, manufacturing, promotion of Germany as foreign language in India, setting food safety standards and supporting participation of Indian young scientists in Natural sciences for the Lindau Nobel Laureate Meetings.

During candid discussions German industrial contingent expressed disappointment with Indian investment climate. India has announced setting up of Fast- Track System for German companies in India to expedite regulatory clearances including security and environmental clearances (3).

The most significant outcome has been Merkel’s assurance of providing $2.5 billion as assistance to India’s clean energy corridor and solar projects. This comes at a time when India reiterated its commitment to UN Frame Work Convention on Climate Change to increase its renewable energy capacity four fold to 175 GW. India is also third largest emitter of carbon and has recently pledged to cut down emissions by 35% by 2030 compared with 2005 level. Previously in 2014 Germany committed a financial assistance of $1.5 billion to India towards mitigation of carbon emissions.

There are over 1600 Indo-German collaboration and 600 Indo-German joint ventures providing jobs to 400,000 Indian employees. The Indo-German Chamber of Commerce is the largest foreign bi-national chamber abroad. India investments in Germany are valued at $ 6 billion against Germany’s $8.25 billion. It is also largest chamber of Commerce of India with over 7000 Indian and German member companies. While the potential for bilateral trade between countries can reach up to Euro 20 billion riddled by several asymmetries it is hovering around Euro 16 billion for the past few years.

Emphasizing tremendous business potential of India as a lucrative and growing market Modi enthused prospective German industrialists. In the meanwhile Chancellor commended Modi for the pace of reforms in the last 15 months. Liberal doses of positive encomiums for Modi at a time when first phase of Bihar polls is just days away is a good news for the BJP camp. Further Modi has enunciated 11 reforms to improve ease of making business in India during his tour to the Bosch Vocational Facility at Bengaluru with Merkel. He promised to conduct transparent auction and allocation of spectrum, fast track clearances and licenses for industries to provide a level playing field. He also listed opportunities for investments for foreign investors in terms of building 50 million houses, setting up 100 smart cities, modernization of railways, construction of national high ways, bridges, metro rails, setting up of railway corridors and in generation of renewable energy. Modi informed that India is targeting at inflows of 20,000 crores annually through a professionally managed India Investment and Infrastructure Fund. He indicated government’s intention of protecting the Intellectual Property Rights of the innovators and investors in India and mentioned about finalization of a comprehensive national IPR policy (4). Further the much-hyped up issue of termination of teaching German language in the Kendriya Vidyalay was also deftly handled by making study of German optional under the modern language category in schools. Both countries have agreed revive the stalled negotiations on India and EU free trade pact. The much anticipated formalization of the free trade agreement that topped the agenda during Modi’s visit to Germany earlier in April were stalled as EU imposed ban on 700 Indian generic medicines.

India and Germany has agreed to strengthen collaboration to thwart the global menace of terrorism and intensify cooperation on counter terrorism. Germany has in turn welcomed India’s engagement in Nuclear Suppliers Group, Missile Technology Control Regime, Australia Group and Wassenaar Agreement. In the joint statement issued by both leaders, countries voiced their concerns about situations Afghanistan, Iraq, Syria and Ukraine. In an indirect reference to the assertiveness of China in South China Sea countries underlined importance of freedom of navigation in accordance with international law.

A coercive engagement with Germany at a time when it asserted itself as economic leader of Europe will be highly valuable for India. Indeed Angela Merkel too is riding high on the popularity charts currently for her sterling role during Greek Financial crisis and benevolence lavished on the deluge of the refugees that flooded Europe. Media analysts believe that she might be a contender for the Nobel Peace Prize. At a time when smaller European nations are increasingly pulled towards China’s hegemon a strong relationship between a strong Germany in Europe and an emerging power like India in Asia can effectively checkmate the unbridled assertiveness of China. To sum up, Angela Merkel’s visit to India has not only rejuvenated India’s economic interests but strengthened its strategic aspirations.

Haritha's Musings

Saturday, 10 October 2015

Indo-German Bonhomie

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