‘Namaste Chancellor’ Prime Minister Narendra Modi tweeted on October 4, Sunday night, as Angela Merkel touched down in New Delhi for an official three-day visit. Accompanied by a high profile entourage of cabinet ministers and business representatives, Merkel’s arrival in India follows Finance Minister Wolfgang Schäuble’s visit in January 2015, Defence Minister von der Leyen’s visit in May, and Modi’s own trip to Germany in April to open the Hannover trade fair.
This flurry of ministerial and official interactions had fuelled speculations that Merkel’s visit would not only cement ties but also take the relationship, already institutionalised at summit-level Inter-Governmental Consultations, to a higher trajectory.
The senior ministers in Merkel’s cabinet who visited India along with her included Foreign Minister Frank-Walter Steinmeier and a number of corporate honchos such as Siemens head Joe Kaeser, Airbus chief executive Thomas Enders, and Deutsche Bank’s Jürgen Fitschen. The powerhouse delegation of 20 is the largest to have come from Germany and emphasises the predominant economic orientation of the visit and the influential business interests behind it.
Economics is at the heart of this bilateral relationship and both sides have proclaimed each other a “natural partner.” On various occasions during Merkel’s visit, the leaders pointed to parallels and complementarities. At the ‘Indo-German Summit 2015: Digitising Tomorrow Together’, Merkel noted that “German engineering and India’s IT expertise are fused here in Bengaluru.” India needs high-skilled jobs, Germany requires high-skilled labour, or, as Modi put it, “It is the software of India that will move the hardware of the world.”
Five B2B (business-to-business) agreements were exchanged at the event and to emphasise the importance of technology, training and talent, Merkel and Modi visited Bosch’s Vocational Centre in Bengaluru, and attended a special lunch, hosted by the prime minister with leading Indian chief executives, organised by the National Association of Software and Services Companies (Nasscom) in collaboration with the German Fraunhofer Institute (a key entity in German scientific research).
Opportunities and constraints
At a press conference on October 1, Martin Ney, the German ambassador to India, pointed out that the Indo-German Chamber of Commerce is the biggest German bi-national chamber outside his country. “It has more than 7,000 German and Indian member companies across many sectors, and roughly 1,700 German companies that are doing business in India [1].”
India offers immense opportunities for German companies in the areas of agriculture, climate change, infrastructure, technology, and defence. The development sector is in itself is a business and India is amongst the largest recipients of German economic assistance: for 2014, the German government committed loans worth around $ 1.3 billion [2].
As India’s most important trading partner in Europe (in 2014, trade between the two countries was valued at about $17.9 billion) [3,4]. Germany and its companies are keen to gain further access to the Indian market and to be part of Modi’s many high-tech and high profile initiatives. Siemens, for example, wants to be involved in the building of India’s smart cities. In addition, collaboration is expected to intensify in the solar energy sector, and in the manufacturing of semi-conductors and radio communications.
During Merkel’s visit, a long-term ‘Climate and Renewable Alliance’ was announced with Berlin committing a lump-sum of $2.25 billion [5] for developing a clean energy corridor and solar projects, ahead of the Paris climate change meet in December.
As this indicates, the economy can offer numerous opportunities for mutually beneficial collaboration, but this potential can be realised only after overcoming political hurdles. For German companies the main concerns continues to be ease of doing business, the need to reduce red tape, and streamline the process of setting up companies. Modi spoke of each of these concerns during Merkel’s visit, but the oft-repeated gripe in business is that it has to be seen how quickly and effectively reforms are implemented—for example, the much-awaited Goods and Services Tax Bill, which is expected to further unify the vast Indian market and rationalise the taxation system, remains to be passed by Parliament.
Strategic interests and shared values
But beyond the economic bonhomie, is a closer strategic relationship set to emerge between the two countries? India and Germany have a strategic partnership since 2001, and have been engaged in discussions on common areas of concern, including security in the Indian Ocean, counter-terrorism, cyber terror, and Afghanistan. Furthermore, as part of the G4, India and Germany have reportedly been working together to push for permanent seats at the United Nations Security Council. Germany could also be of greater help to India in driving forward the stalled free trade agreement talks with the European Union.
Germany and India also share political values of democracy, press freedom, and federalism. Both appreciate the importance of national unity, Germany having just celebrated 25 years of unifying the East and West. And both countries know the tragedy and challenges of mass migrations. In fact, some German media outlets have questioned the timing and necessity of Merkel’s visit to India, given the refugee crisis that has been developing at home. This even raised speculation about whether the last minute decision of Economy Minister Sigmar Gabriel (from the rival political party within the governing coalition) not to travel with the chancellor to India was a political decision, aimed at a domestic audience.
Merkel’s visit nonetheless, at a time which she has described as critical for Europe, shows even more strongly the importance attached to the future of India-Germany relations.
Jivanta Schöttli is a lecturer in the department of political science, South Asia Institute, Heidelberg University, Germany.
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References
[1] – Ney, Martin, ‘Press Conference on 3rd Indo-German Intergovernmental Consultations and the visit of Chancellor Dr. Angela Merkel to India’, 1 October 2015. <http://www.india.diplo.de/contentblob/4629624/Daten/5856048/Amb_PC_0110.pdf>
[2] – Federal Ministry for Economic Cooperation and Development, Government of Germany, ‘What we do, India’. <https://www.bmz.de/en/what_we_do/countries_regions/asien/indien/index.html>
[3] – Foreign Relations, Deutsche Welle, ‘Merkel, German delegation catch lift on military jet to India’, 4 October 2015. <http://www.dw.com/en/merkel-german-delegation-catch-lift-on-military-jet-to-india/a-18760327>
[4] – Federal Foreign Office, Government of Germany, ‘Bilateral relations: India’, October 2015, <http://www.auswaertiges-amt.de/EN/Aussenpolitik/Laender/Laenderinfos/01-Nodes/Indien_node.html>
[5] – Chaudhury, Dipanjan R., ‘Germany extends $2.25 billion support to India for clean energy corridor, solar projects’, Economic Times, 6 October 2015, <http://economictimes.indiatimes.com/news/politics-and-nation/germany-extends-2-25-billion-support-to-india-for-clean-energy-corridor-solar-projects/articleshow/49236058.cms>