Seeding The Trade Clouds

IT’S easier to work in India than in China. You can get a well experienced management team and trained employees, English is spoken and therefore language is not a problem. We also understand your laws." This was how Peter K. Ostertag, a Bavarian government official in Munich, described the experience of German industry investing in Asia. This, despite the fact that German investment in China is many times larger than that in India, the Chinese market is bigger and the Chinese economy started opening up long before India’s. The main complaints against India: bureaucratic delays, infrastructural deficiencies and the difficulties with the banking system.

As if in affirmation of growing Indo-German ties, a hectic calendar of diplomatic and business activity between India and Germany will begin on October 23 with the first ever visit by German Defence Minister Volker Ruhe to New Delhi.

A week later, over 300 German businessmen will descend on New Delhi under the aegis of the Asia Pacific Conference of German Trade and Industry. They will review the existing trade and investment scenario in Asia and means of enlarging Germany’s economic links with the Asian countries. This meeting will be inaugurated by German Economics Minister Gunter Rexrodt. After the meeting, about 100 German delegates will visit Mumbai on November 3, to participate in the 40th anniversary celebrations of the Indo-German Chamber of Commerce. The fact that the biennial Asia Pacific Conference, sixth in a series, has come to India is significant. Top German industrialists and businessmen will participate in this two-day meeting, starting on October 31. The President and CEO of Siemens, Dr Hein-rich v. Pierer, will chair the conference, where representatives from giants like ABB, BMW, Mercedes Benz and Porsche will be present, apart from key officials from Indonesia, Korea, China and other Asia Pacific countries. China, which has a head-start over India when it comes to trade with Germany, will host the 1998 meet.

According to the figures of Deutsche Bundesbank, the net German investment abroad in 1995 amounted to DM 50 billion. India got only DM 152 million of this. Higher than the 1994 figure of DM 81 million, yet it was quite low compared to the German investment in China (DM 632 million), Japan (DM 267 million) and Singapore (DM 205 million).

On the trade side, the bilateral trade between India and Germany exceeded DM 8 billion in 1995 with a trade imbalance of DM .97 billion against India. The 1993 and 1994 balance of trade was in India’s favour after many years. While cold figures show that India’s share of total imports to Germany is about 0.6 per cent and only 0.5 per cent of German exports go to India, the German exports to India have shot up by 37 per cent in the last year, firm evidence of the greater market opportunities following the liberalisation in India.

The major exports from India to Germany include cotton garments and fabrics (DM 840 million), leather and leather goods (DM 745 million), silk fabrics and garments (DM 340 million), carpets, rugs and woollen garments (DM 280 million), gems and jewellery (DM 121 million). The German exports to India are dominated by machinery, chemicals and pharmaceuticals, iron and steel, vehicles and electronics and precision instruments.

However, the Indian business is disturbed by the sluggish growth of exports to Germany. An Indian leather exporter, travelling to Dusseldorf to meet his German dealer, said his orders from Germany had gone down steadily. A manufacturer of horse saddles, he was planning to travel to some other European countries and the US to look for new dealers for his goods. According to him, the Indian leather industry as a whole was suffering because of declining orders.

But what is of even greater worry to Indian business are what many term the "non-tariff barriers". Use of child labour in India and some other Asian countries receives a great deal of attention from the media and the public in Germany. While Indian industry feels that campaigns against use of child labour ignore the socio-economic conditions in India, the German groups actively opposing it feel there could be no justification for exploitation of child labour. While carpet exports using child labour from India are increasingly coming under pressure, the T-shirts of Tirupur have also not escaped attention. It is a matter of time before exports of T-shirts are also affected.

Nearly 1,300 Indian companies participated in international trade fairs in Germany in 1995. Of late, they have been upset by the attempts of some of the fair authorities to allocate space along regional lines, which the Indian participants feel deprives them of equal opportunities. Another area of concern for Indian industry is the emphasis on health and environmental measures. Indian officials give the example of the Azo dyes in clothes. They say the provisional testing methods became available in February-March this year and the ban on the use of these dyes in clothes was imposed from April 1. Besides, despite persistent requests, certain points in these regulations are still to be clarified.

However, there is nothing to be pessimistic about. As Indian Ambassador to Germany, S.K. Lambah, says: "Germany is India’s largest trading partner in Europe and bilateral trade this year is expected to exceed DM 10 billion". Besides, despite the low level of German investment in India, German companies have done well in terms of total number of collaborations with Indian companies. Over 1,200 Indo-German agreements are in operation, including 400 joint ventures, many of which involve the German Mittelstand (medium-sized) companies.

It is often pointed out that German investments in India are low, but then it has not been very high around the world for some time. The sluggish German economy, the pressure of the European economic monetary union and the investments in former East Germany have contributed to reduced German investments abroad.

The economic relationship is the bedrock of Indo-German ties. Politically the relationship is quite stable, though the two countries differ on nuclear and non-proliferation issues. As a German Foreign Ministry official said: "We understand India’s arguments (on not signing the Comprehensive Test Ban Treaty). India’s own security perceptions and given the security situation in the region, India finds it hard to accept the CTBT. But we see it differently. We have renounced the nuclear option and we feel the longer the nuclear option is kept open, the more insecure the world becomes". On October 15 and 16, the first meeting of the newly formed Indo-German Committee on Science and Technology in Bonn and reviewed the various bilateral programmes in these areas and looked into areas of further joint research.

바카라 웹사이트In fact, if there is an issue that still generates heat in Germany it is the hostage crisis in Kashmir. Of the four foreigners taken hostage by Al-Faran in July ’95, one is a German. The German media and politicians continue to focus on it. As the German Foreign Ministry official said: "There isn’t much of a movement in this field, but our MPs and media keep asking about it and travelling to Kashmir". The Germans make use of anyone who may have the "slimmest chance of meeting someone, who knows someone" to help get the hostages out. Germany has been in close touch with Islamabad too and feels that Al-Faran and Harkat-ul-Ansar are the same organisation, but this is an "assessment that Harkat has never accepted". Bonn has "unmistakably told Premier Benazir Bhutto the names of those involved but till today there has been no real tangible result."

Ruhe will be the first German defence minister to visit India. While India and Germany have been having regular discussions on disarmament issues, Ruhe’s visit will be marked by a broad exchange of views on international and security issues. Both Indian and German officials are trying to play down the significance of this visit and emphasising that Ruhe will be involved in general discussions. But with the Indian Defence Minister, Mulayam Singh Yadav, busy with his own political battles in Uttar Pradesh, it is to be seen how useful these discussions turn out to be. Officials on both sides feel that with the widely different defence and security perceptions and situations of the two countries (Germany is an important member of the NATO, which itself is undergoing changes in the post-Cold War era), the discussions should be useful.