RSTV: THE BIG PICTURE- INDO-GERMAN ECONOMIC TIES
Introduction:
India and Germany signed multiple pacts and joint declarations of intent and exchanged agreements after bilateral talks between Prime Minister Narendra Modi and German Chancellor Angela Merkel in New Delhi. The agreements were inked for cooperation in fields such as space, civil aviation, maritime technology, artificial intelligence, digital technology, medicine, defence, cyber security and education. Prime Minister said the expertise of economic power houses like Germany could help in his government’s aim to build a “new India” by 2022. He invited Germany to also take advantage of opportunities in defence production in dedicated corridors in Uttar Pradesh and Tamil Nadu. Germany is India’s largest trading partner in Europe and more than 1,700 German companies operate in the country. Merkel said she was accompanied by a big German business delegation including small and medium enterprises (SMEs), who wanted to engage in business with India.
Bilateral relations between India and Germany are founded on common democratic principles and are marked by a high degree of trust and mutual respect. India was one of the first nations to recognise the young Federal Republic of Germany in 1951. Today, Germany is amongst India’s most important partners both bilaterally and in the global context.
Political relations
- India was one of the first countries to establish diplomatic relations with the Federal Republic of Germany.
- Today, India regards Germany as an important partner in its quest for a new political role in the region and the world for its ambitious economic reform programmes and for the development of the country’s industrial sector.
- Cooperation takes place in areas such as energy, business, vocational training, culture and science, security and agriculture.
- Germany and India share a common interest in maintaining the rules-based international order, particularly in the maritime domain.
- The joint fight against global terrorism is becoming more and more important.
- Cyber security is an area in which Germany and India frequently hold similar views. Tried and tested forms of cooperation have developed in the United Nations and other multilateral forums.
- Due to its population size and its very rapid economic growth, India sees itself not only as a regional power but also increasingly as a global Player.
Economic relations:
- Germany is India’s most important trading partner in the EU.
- Since India embarked on a course of reform and opened up its economy in 1991, the volume of trade between the two countries has increased rapidly.
- There is strong Indian demand for German goods, especially capital goods (machinery,electrical engineering products, metal goods, chemical products, motor vehicles and vehicle parts).
- Indian exports to Germany focus on the textile sector, followed by chemical products, electrical engineering products, metal and leather goods and foodstuffs.
- There is a discussion in Germany’s parliament to expand their relations in Asia and not limit to China.
Direct investment
- For decades, Germany has been among the ten principal foreign direct investors in India.
- In December 2018, German direct investment totalled 11.4 billion US dollars.
- Investments have focused on the transport, electrical and metal sectors.
- Over the past years, the service sector (in particular insurance) has headed the field
Development cooperation
- Germany’s development cooperation with India is a major component of bilateral relations.
- India is a Global Development Partner, playing a key role in global development issues, the protection of global public goods, the attainment of sustainable development goals (SDG) as well as in international processes (G20, WTO Doha Round, climate negotiations, Habitat III).
- India has the largest number of people worldwide living in absolute poverty.
- Germany is the second largest bilateral donor, after Japan, and uses nearly all the instruments available in implementing its development cooperation policy. Bilateral development cooperation focuses on the following areas:
- Energy: energy efficiency, renewables and access to energy to reduce poverty
- Sustainable urban development: improving urban and industrial environmental protection and urban infrastructure, climate change adaptation and emissions reduction, improving living conditions for the poor Population
- Environmental protection and the conservation of natural resources: strengthening climate change adaptation capacities and increasing productivity and income in rural areas
- Supports the economic participation of women and the setting up of a practice-oriented (dual) vocational training system and provides stimulus for innovative approaches, e.g. in social policy or promoting start-ups.
Education and culture
- Around 20,000 Indian students are pursuing various courses in Germany.
- Around 1000 German students are studying or doing internships in India.
- The Goethe-Institut has for years also cooperated with the national chain of schools operated by Kendriya Vidyalaya Sangathan (KVS).
- At the intergovernmental consultations in October 2015, a joint declaration of intent was signed to promote the teaching of German as a foreign language in India and instruction in modern Indian languages in Germany.
Science and technology
- Scientific and technological cooperation with India goes back to the late 1950s.
- The countries enjoy long-established and intensive scientific cooperation in many different fields.
- The German House of Research and Innovation (DWIH) was officially opened in New Delhi in October 2012.
- Together with India, Germany supports a bilateral research promotion centre – a unique model for Germany.
- The Indo-German Science and Technology Centre (IGSTC) in Gurgaon near New Delhi has been co-funded by Germany and India since 2008, each country initially contributing an annual sum of 2 million euros.
- India has a major stake in several large research institutions in Germany.
- Germany is India’s second most important research partner worldwide, after the United States.
Environment
- India faces huge challenges in terms of urban and industrial environmental protection.
- The fight against air pollution, water protection, long-term, sustainable soil conservation, noise reduction and biodiversity preservation are crucial to safeguarding health and quality of life in the country.
- India and Germany are working together bilaterally and in international organisations to achieve internationally agreed environmental goals and to learn from one another.
- To meet these environmental and climate-related challenges, Germany is seeking to step up political dialogue with India.
- Future priorities for cooperation in the area of environmental protection include the fight against marine waste, implementation of the Strategic Development Goals (SDGs) and National Determined Contributions (NDCs), forestry and renewables.
Commonalities between the two Countries:
- Both share common values and constitutional principles, and our relationship has always been based on great mutual respect and understanding.
- Today, India is one of the biggest and fastest-growing economies, and Germany is the biggest economy in Europe.
- Both are natural partners making a joint effort for prosperity, while ensuring that they safeguard the environment etc.
- India is Germany’s biggest development partner with a proven track record of success.
- Now, the areas of focus are renewable energy and energy efficiency, sustainable urban development, environment protection and resource management.
Way Forward:
- Germany is looking for skilled manpower from outside and India should take advantage of it.
- We need to work towards further strengthening the bilateral relations between the two nations.
- With increasing environmental degradation and adverse effects of global warming, we need to actively protect our habitat and cooperate closely on this matter internationally.
- Both countries must work as equal partners to tackle global development challenges.
- Germany has technological capacity to cater to the needs of the huge Indian market.
- Germany must continue to create innovative solutions with India for the future, for the benefit of both of our societies and the world at large.
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