Indo –German Trade and Economic Relations:
Partners for Growth and Development in the 21st Century
Background:
India, the new economic powerhouse in Asia has emerged as one the most credible partners for bilateral economic and trade cooperation. The increasing clout of a nation which brands itself as the World’s largest free market democracy have indeed attracted countries from Europe , America and Asia pacific to forge strategic and long term bilateral cooperation with India. With an impressive GDP (Gross Domestic Product) growth rate of 9.2 % in 2006-07, India is the world’s second fastest growing major economy. Since the economic reforms which started in 1991, India has come a long way. The value of International trade has become more broad based with US, UK, EU, China and Japan emerging as the leading trade partners of India. With the advent of the digital age and with an Educated and young population affluent in English, India has emerged as an important back office destination for Global and Fortune 500 companies.
Over the years, the Indo- German Trade and Economic relations have evolved into a strategic partnership with a common outlook and with a consensus on tackling some of the pressing Global issues. Today, Germany is India’s 4th largest partner. The visit of the Prime Minister Dr. Manmohan Singh to Germany on the eve of the Hannover Messe, 2006 has reaffirmed the strategic partnership between India and Germany based on shared democratic values and shared common interests. Trade, Investment, Technological and Scientific collaboration in areas of Infrastructure, Energy and high technology (including space research) form the core of this strategic partnership. The relations is not only confined to Economic, Trade and political cooperation but also into development cooperation on wide ranging areas including Energy, Environmental Policy, Sustainable Economic Development, Health and Vocational Training. During Dr. Manmohan Singh’s interaction with Angela Merkel, Chancellor of Germany in 2006 the areas identified for strengthening Indo-German cooperation included Telecom, Engineering, Environmental Technology, Chemicals, Pharmaceuticals, Food Processing and Renewable Energy. And also many Trade analysts and Government officials from both the countries admit that one of the foundations of this enhanced economic cooperation would be the cooperation of Small and Medium Enterprises (SME’s) from both countries. SME’s in Germany are particularly strong in areas of Auto components, machine and hand tools, toys and pharmaceuticals and they can find cooperation with Indian companies operating in the mentioned domain. There is a strong felling within India among the Business class tof the high regards that Germany. The scope of Indo-German trade is immense especially as Infrastructure continues to improve and the reform agenda is furthered. Sectors such as software Development, Biotechnology and Entertainment hold immense potential for collaboration between the two countries.
Why German Companies should look at India as an Investment Destination.
India over the years has emerged as the Knowledge capital of the world with proven capabilities in the Information Technology, Financial Services, emerging manufacturing sector and most importantly highly skilled and resourceful workforce. With the economic reforms happening in India as a faster pace it makes economic and business sense for companies to look at India as the dominant player in the International arena.
India – a large and a growing market:
India is one of the world’s fastest expanding markets with proven capabilities in Research and development. Many German companies chose to enter India as they perceived it to be a large and high potential growth market. Size of the economy and its rapid growth has been major considerations for German companies to invest in India. The other key considerations for prospective German companies to enter India are
§ Huge Growth Market
§ Cost advantage
§ Be closer to Customer
§ Government Policies
§ People Advantage
India is an economy with strong fundamentals and many of the foreign investors are attracted by the stability of the economy. The other good reason for Investors to look at India is that Indian Economy would be growing at a staggering rate in the next 30 years and by 2050 India would be the only country to clock an annual growth rate above 3%.
India –An Emerging Global Manufacturing Hub
India's Development in the manufacturing sector and the advantages it offers as a source for manufactured goods has been recognized by German companies operating in the country. India's manufacturing sector grew at an average annual rate of 6 percent per year in the 14 years between 1990-91 and 2003-04. Currently the rate is at 11.2%. Further Indian manufactured products are now gaining acceptance in world markets. India already exports about US$ 50 billion a year in manufactured goods and this is increasing at a rate of 20 per cent a year. A study by CII on the manufacturing sector in India estimates that Indian manufacturing export has the potential to touch US $300 billion by 2015.The factors driving the entire manufacturing sector in India
a. Availability of quality manpower at low costs
b. Availability of raw material
c. Enhanced productivity
Many of the foreign firms setting up manufacturing plants in India have already identified the availability of skilled manpower as one of the driving factors for setting shops. India has a well developed designing and machining capabilities and ranks second to Germany in terms of the designing and engineering capabilities. The combination of availability of qualified engineers and designing capabilities give India a distinct competitive advantage
India - A Services Hub
India has long enjoyed a reputation as a destination for IT and business process outsourcing. Now, the country is fast emerging as a major center for cutting-edge research and development (R&D) projects for global multinationals. More and more companies in industries ranging from IT and telecommunications through pharmaceuticals and biotech are setting up ambitious R&D projects, in part to serve the Indian market, but also with an eye to delivering new generations of products faster to the global market.
Many of the global companies have set up their Research shops in India as India offers technically skilled manpower at lower cost compared to many of the developed countries. Most of the German companies operating in India are planning to either start or invest more on Research and Development facilities in India. German companies in India have successfully leveraged the advantages that India offers to set up R&D facilities and Business Process Outsourcing (BPO) operations.
According to a survey done by Economic Intelligence Unit (EIU) getting research done from India would offer 30% to 50% cost savings for a company and the survey added that the cost of innovation in India is 1/5th or 1/7th of what it will be in any other industarlised part of the world. In a study conducted by the Wharton School of business and published by the school magazine, it was found that the technology sector -- IT and telecom has the best results to show in outsourced R&D. India's leading technology companies -- Tata Consultancy Services, Wipro, Infosys, HCL Technologies -- and emerging companies like Ittiam and Sasken are beginning to build sustainable contract R&D businesses. This basically shows the emergence of India as an Ideal Services destination.
German companies in India have been leveraging India's advantages in services in a number of ways that include
a. Setting up R&D centers
b. Setting up BPO operations
c. Leveraging Indian manpower to provide consultancy services
For example, Indian capabilities in the high tech research influenced Carl Zeiss' decision to start operations in India. Baerlocher's globally integrated R& center in India was set up to leverage the skilled technical and engineering talent available
Partners for Growth and Development in the 21st Century
Background:
India, the new economic powerhouse in Asia has emerged as one the most credible partners for bilateral economic and trade cooperation. The increasing clout of a nation which brands itself as the World’s largest free market democracy have indeed attracted countries from Europe , America and Asia pacific to forge strategic and long term bilateral cooperation with India. With an impressive GDP (Gross Domestic Product) growth rate of 9.2 % in 2006-07, India is the world’s second fastest growing major economy. Since the economic reforms which started in 1991, India has come a long way. The value of International trade has become more broad based with US, UK, EU, China and Japan emerging as the leading trade partners of India. With the advent of the digital age and with an Educated and young population affluent in English, India has emerged as an important back office destination for Global and Fortune 500 companies.
Over the years, the Indo- German Trade and Economic relations have evolved into a strategic partnership with a common outlook and with a consensus on tackling some of the pressing Global issues. Today, Germany is India’s 4th largest partner. The visit of the Prime Minister Dr. Manmohan Singh to Germany on the eve of the Hannover Messe, 2006 has reaffirmed the strategic partnership between India and Germany based on shared democratic values and shared common interests. Trade, Investment, Technological and Scientific collaboration in areas of Infrastructure, Energy and high technology (including space research) form the core of this strategic partnership. The relations is not only confined to Economic, Trade and political cooperation but also into development cooperation on wide ranging areas including Energy, Environmental Policy, Sustainable Economic Development, Health and Vocational Training. During Dr. Manmohan Singh’s interaction with Angela Merkel, Chancellor of Germany in 2006 the areas identified for strengthening Indo-German cooperation included Telecom, Engineering, Environmental Technology, Chemicals, Pharmaceuticals, Food Processing and Renewable Energy. And also many Trade analysts and Government officials from both the countries admit that one of the foundations of this enhanced economic cooperation would be the cooperation of Small and Medium Enterprises (SME’s) from both countries. SME’s in Germany are particularly strong in areas of Auto components, machine and hand tools, toys and pharmaceuticals and they can find cooperation with Indian companies operating in the mentioned domain. There is a strong felling within India among the Business class tof the high regards that Germany. The scope of Indo-German trade is immense especially as Infrastructure continues to improve and the reform agenda is furthered. Sectors such as software Development, Biotechnology and Entertainment hold immense potential for collaboration between the two countries.
Why German Companies should look at India as an Investment Destination.
India over the years has emerged as the Knowledge capital of the world with proven capabilities in the Information Technology, Financial Services, emerging manufacturing sector and most importantly highly skilled and resourceful workforce. With the economic reforms happening in India as a faster pace it makes economic and business sense for companies to look at India as the dominant player in the International arena.
India – a large and a growing market:
India is one of the world’s fastest expanding markets with proven capabilities in Research and development. Many German companies chose to enter India as they perceived it to be a large and high potential growth market. Size of the economy and its rapid growth has been major considerations for German companies to invest in India. The other key considerations for prospective German companies to enter India are
§ Huge Growth Market
§ Cost advantage
§ Be closer to Customer
§ Government Policies
§ People Advantage
India is an economy with strong fundamentals and many of the foreign investors are attracted by the stability of the economy. The other good reason for Investors to look at India is that Indian Economy would be growing at a staggering rate in the next 30 years and by 2050 India would be the only country to clock an annual growth rate above 3%.
India –An Emerging Global Manufacturing Hub
India's Development in the manufacturing sector and the advantages it offers as a source for manufactured goods has been recognized by German companies operating in the country. India's manufacturing sector grew at an average annual rate of 6 percent per year in the 14 years between 1990-91 and 2003-04. Currently the rate is at 11.2%. Further Indian manufactured products are now gaining acceptance in world markets. India already exports about US$ 50 billion a year in manufactured goods and this is increasing at a rate of 20 per cent a year. A study by CII on the manufacturing sector in India estimates that Indian manufacturing export has the potential to touch US $300 billion by 2015.The factors driving the entire manufacturing sector in India
a. Availability of quality manpower at low costs
b. Availability of raw material
c. Enhanced productivity
Many of the foreign firms setting up manufacturing plants in India have already identified the availability of skilled manpower as one of the driving factors for setting shops. India has a well developed designing and machining capabilities and ranks second to Germany in terms of the designing and engineering capabilities. The combination of availability of qualified engineers and designing capabilities give India a distinct competitive advantage
India - A Services Hub
India has long enjoyed a reputation as a destination for IT and business process outsourcing. Now, the country is fast emerging as a major center for cutting-edge research and development (R&D) projects for global multinationals. More and more companies in industries ranging from IT and telecommunications through pharmaceuticals and biotech are setting up ambitious R&D projects, in part to serve the Indian market, but also with an eye to delivering new generations of products faster to the global market.
Many of the global companies have set up their Research shops in India as India offers technically skilled manpower at lower cost compared to many of the developed countries. Most of the German companies operating in India are planning to either start or invest more on Research and Development facilities in India. German companies in India have successfully leveraged the advantages that India offers to set up R&D facilities and Business Process Outsourcing (BPO) operations.
According to a survey done by Economic Intelligence Unit (EIU) getting research done from India would offer 30% to 50% cost savings for a company and the survey added that the cost of innovation in India is 1/5th or 1/7th of what it will be in any other industarlised part of the world. In a study conducted by the Wharton School of business and published by the school magazine, it was found that the technology sector -- IT and telecom has the best results to show in outsourced R&D. India's leading technology companies -- Tata Consultancy Services, Wipro, Infosys, HCL Technologies -- and emerging companies like Ittiam and Sasken are beginning to build sustainable contract R&D businesses. This basically shows the emergence of India as an Ideal Services destination.
German companies in India have been leveraging India's advantages in services in a number of ways that include
a. Setting up R&D centers
b. Setting up BPO operations
c. Leveraging Indian manpower to provide consultancy services
For example, Indian capabilities in the high tech research influenced Carl Zeiss' decision to start operations in India. Baerlocher's globally integrated R& center in India was set up to leverage the skilled technical and engineering talent available
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