From building India’s first integrated steel plant to designing its fighter plane Marut, Germany has played a big role in industrialisation and the development of manufacturing sector in India. The relationship between the two countries goes beyond trade and has a deeper meaning in areas such as education, culture, international order, sustainable development, etc., says Bernhard Steinruecke, Director General, Indo-German Chamber of Commerce (IGCC). To understand the impact of this relationship more clearly and what it means for the two countries, Rakesh Rao spoke to Steinruecke.

 

India and Germany have enjoyed a ‘strategic partnership’ since 2001. How has Indo-German trade evolved over the years? 

 

The trade (import & export) between India and Germany has witnessed a manifold jump since 2000. While the trade volume between the two countries was Euro 4.512 billion in calendar year (CY) 2000, it reached Euro 19.149 billion in 2017 (CY). In 2017 alone, trade volume saw a jump of 9.82% compared to 2016 (Euro 17.436 billion).

 

More importantly, the partnership between the two countries goes way beyond just the trade. The fourth Inter-Governmental Consultations (IGC), held between India and Germany in Berlin in May last year, reiterated the importance of the strategic partnership between the two countries and discussed a wide range of topics such as security, free trade, a rule-based international order, etc.

 

What are the factors contributing to the success of Indo-German trade relationship? How has this relationship benefited both the countries?

 

Relation between India and Germany is many centuries old. More than 300 hundred years ago, Germany was the first country to undertake research on Indian languages such as Tamil, Telugu, Malayalam, etc. Economic relationship started 150 years ago, when Siemens built the first telegraphic line in India from Kolkata to London. There are many other German companies like Bayer, Merck, etc. who have been present in India for more than 100 years. 

 

After India’s independence, Germany was one of the countries that extended complete support to India’s industrialisation programme and helped it become a leader in science and technology. In 1955, Germany helped in building the country’s first integrated steel plant in Rourkela (the largest in the world at that time), which is considered to be the mother of the Indian steel industry. Germany also played an instrumental role in establishing IIT Madras, the leading technical institute in the country.

 

In 1954, Tata Group launched the first truck in India, after Mercedes-Benz granted a license for automobile production to the Tata Group. This was the start of the modern Indian automotive industry. These are just a few examples where German companies have helped India to build its manufacturing sector. The relationship between both the countries has grown stronger over these years.

 

Germany is one of India's most important trade partners. What are the differences and similarities between Indian and German manufacturing industries?

 

Many of the manufacturing units in India are using state-of-the-art technologies (much like companies in Germany) to help them compete globally. However, scale of production in Germany (especially in automotive industry) is much larger than in India.

 

India is emerging as one of the leading manufacturers of automotives in the world (which are mostly for domestic market). On the other hand, exports account for a large share in German’s auto industry.

 

SMEs have been key contributor to Germany's growth. Do you see SMEs in India doing the same?

 

SMEs should play a bigger role in India’s economic growth. However, these companies operate at a very small scale in India.

 

In Germany, more than 95% of the registered companies are of mid-size and many of these are already global players. Their focus is on technology, R&D, innovation and exports. These attributes are key differentiators between them and SMEs in India, where small companies are too small to compete globally.

 

Number of patents filed by Germany is one of the largest in the world. Many of the German companies are known as hidden champions - who may not be known globally, but have more than 50% market share in the segment that they operate in. Their revenues may not be large, but the impact of their technologies and niche products on the global businesses is huge. If one looks globally, half of the hidden champions are based out of Germany. 

 

In addition to SMEs, family owned businesses have played a big role in the development of German industries. Just like Germany, there are many family-owned companies in India which have left a big mark on the Indian industry.

 

What are challenges before global economy today? How can Germany and India work together to offer balanced and sustainable solutions to these challenges?

 

The major challenges faced by the world today are increasing protectionism and instability in many regions of the world like Middle East, Russia, Latin America, etc.

 

As per IGC agreement in 2017, India and Germany are jointly working in multiple directions of education, technology, security, stability, connectivity, sustainable development, rule-based international order, etc. There are 10 Joint Working Groups that are working on vocational training, automotives, digitalisation, etc. The leaders of both the countries have also expressed their interest in exploring the possibilities to cooperate in their assistance to African countries and encourage their respective businesses to explore collaborative activities to promote trade and development in Africa. 

 

Kindly share with us initiatives taken by IGCC for skill training in India.

 

For last more than 25 years, we have been conducting vocational training in India in line with Germany’s dual-education system – according to which, the theory part of the training are conducted in Indo-German Training Centres and the practical sessions are held at the facilities of German companies. At present, we have three training centres in Mumbai, Chennai and Bengaluru. Together with German companies, IGCC also provides technical training to help youngsters develop their technical skills.

 

Sustainable development is the buzz word globally. How can India gain from the tie-up with Germany, a pioneer in developing sustainable technologies & processes, to achieve its sustainability goals?

 

Germany is actively supporting the Clean Ganga mission. To support the Smart Cities programme of the Government of India, Germany has adopted three cities Bhubaneswar, Coimbatore and Cochin.

 

We have the experience of turning East Germany, after reunification, from black (highly polluted) cities into green cities. Today, after 27 years of reunification, East Germany has emerged as the most modern part of Europe.

 

German companies manufacture quality products using latest, energy-efficient technologies and adhering to highest environment norms. German companies follow the same production standards in India and some companies even use renewables to fulfill their energy needs. For example, firms like Bosch, Siemens, etc., have state-of-the-art production centres in India and are using rooftop solar panels for their energy requirements. 

 

What are key challenges faced by German firms in India? 

 

There are many challenges faced by German companies such as lack of infrastructure, bureaucracy, etc. At the same time, India offers huge growth potential for German firms with its burgeoning economic and increasing middle-class population. Thus, opportunities far outweigh the challenges.  

 

Which are the sectors/areas in India that offer high growth potential to German firms? 

 

Automotive, services, ITES, chemicals, etc. offer high growth potential to German firms. India, with its IT talent, is also helping German firms to meet global needs. For example, leading German engineering companies have huge IT development centers in India for their global IT requirements. 

 

Aerospace is another sector of interest for Germany, which is a very strong player in aviation.  AirBus, though a French firm,has a strong German presence. In fact, most of the AirBus A320 passenger jet airliners are made in Germany. Germany can also be considered as the pioneer of Indian aviation industry as the first Indian fighter plane Marut was designed by ?Kurt Tank, a German aviation expert who was working with Hindustan Aeronautics Limited (HAL).

 

As the leading voice of German business community, what are the priorities of IGCC? How IGCC plans to nurture Indo-Germany trade potential and take it to the next level?

 

Our priority is to put India stronger on the map in Germany. Though Germany is by far the leading trading partner of India from Europe, there is huge scope of expanding this partnership. Hence, promoting India as an attractive destination for investment is one of the top priorities for us. Another focus area is vocational training, as there is a dire need for skilling in India. And with our dual-education system, we are better prepared in imparting technical skills required to fulfill the needs of new India.