Calling Germany India: Investors Urgently Needed

The South Asian country is changing at a rapid pace and it wants to attract German investors.
India infrastructure needs investment.

German companies are too timid, at least according to the Indian ambassador. Gurjit Singh has been living in Berlin for a year. He has traveled all over Germany and has met with many officials from small and mid-sized companies to major corporations. Wherever he goes, he wants to know why many German companies sell their products in India and yet rarely invest in the country.

According to Mr. Singh, there is plenty of work in India for German companies. Bridges, roads and tunnels need to be built. Rapid transit systems, subways and even entire cities are gradually being developed. Mumbai, for example, has only recently built a network of highways. "We invite all companies to come to our country," said Mr. Singh. So far, however, very few German companies have taken up the offer.

Timidity is the culprit, at least according to Mr. Singh. It isn't a characteristic that goes down well in India, which is more of a "loud democracy." But perhaps this isn't the only barrier. At the Handelsblatt “Asia Business Insights” conference, which took place on Tuesday in Düsseldorf, an attendee said that his German company was having serious problems exporting to India.

Video: What India needs now, according to the country's ambassador to Germany.

This is because every new customer a company gains must be registered in a complicated procedure. Sometimes it takes months for individual cases to be approved, said the conference attendee. "Give me your business card later, and we'll solve your problem," Mr. Singh promised, reverting to his efforts to promote his country.

India is one of the world's largest growth markets. Oxford Economics expects a 7.5 percent increase in economic growth in the last quarter of 2017 over the fourth quarter of 2016. In the fourth quarter of 2016, the Indian economy grew by about 6 percent.

 

It is only a matter of time before India becomes an industrialized nation. Mohan Murti, Managing Director Europe, Reliance

Even though the two countries are often compared to one another, India is determined not to become the next China. Of course, it would like to have a better infrastructure, said Ambassador Singh. And, of course, it would be wonderful if his country’s economy could grow as quickly as China’s. "But we are completely different," he stressed. "First, we are a democracy, and second, our economy does not rely on exports but is oriented toward the domestic market."

Nevertheless, the country still needs foreign investment, and not just in infrastructure. India's biggest trump card is its young and well-educated population, with 600 million people younger than 35. Mr. Singh hopes that more German companies will also cooperate with his country when it comes to training, and will share their know-how with young Indians. Indian companies need support from Germany, especially in the green energy field. India aims to become a market leader in renewable energy in the coming years.

Gurjit Singh, Indian ambassador to Germany.

The country also has ambitious goals in the automobile sector. One is to produce 10 million vehicles a year by 2026, compared with the latest figure of only 2.6 million automobiles. "If we reach this goal, it will translate into $300 billion in value added," said Günter Butschek, the German head of Tata Motors, India's largest automaker. The Indian market accounts for 85 percent of the company's revenues.

Mr. Butschek believes that many Europeans still look at India from a very European perspective. But that doesn't work, he explained. "Here in India, you can’t just sell products that do well in other countries," he said. Instead, technologies need to be brought into the country and then "Indian-ized."

The Indian economy will change significantly in the coming years, said Mohan Murti, managing director for Europe at Reliance. The conglomerate operates refineries and manufactures plastics, and it also owns one of the country's largest telecommunications providers. "Societies like South Korea and Japan will be getting older and older in the coming years. Industrial production there will increasingly give way to the service industry, especially in healthcare and nursing care," said Mr. Murti. "This is India's great opportunity to fill the gap. It is only a matter of time before India becomes an industrialized nation."

In November, it became evident just how changeable the country is. To fight corruption, Indian Prime Minister Narendra Modi announced overnight that 500 and 1,000 rupee notes would no longer be valid. Suddenly 86 percent of the cash in circulation was worthless. Despite critical voices, especially among the rural population, many Indians now take a positive view of the move. In only a few months, the country has become digitalized. In many places, credit cards can even be used at roadside vegetable stands.

Andreas Sennheiser, head of the eponymous company, is also paying attention to this bold willingness to take radical steps. According to Mr. Sennheiser, Indian television stations that have hardly even owned outside-broadcast units until now are suddenly providing their reporters with mobile devices.

India now sees itself as more than just a regional power.  Speaking in Düsseldorf, Ambassador Singh also underscored his country's claim to leadership. "The challenges today are not dictatorships or war, but international terrorism and cybersecurity," Mr. Singh explained. These are areas in which India plans to play a key role in the future, not just in its own backyard but also in close collaboration with Europe and the United Nations. "We need global solutions for global problems," said Mr. Singh.

Christian Wermke is a Handelsblatt reporter based in Düsseldorf.  To contact him: [email protected]