In the 16th century, Jacob Fugger “The Rich”, a merchant and banker from Augsburg, financed the first voyage of German ships to the port of Goa. Little did he know that he was opening a trade route between India and Germany that would define their economic relations in the 21st century.
Between the 16th and the 18th century, German companies established themselves in India as well as other East Asian countries as primary trading partners. In the 19th century, the first telegraph connection was built between Kolkata and London via Berlin. Any guesses on which company financed and executed this project? Siemens Pvt. Ltd. is one of the oldest members of the Indo-German Chamber of Commerce!
The trade history shared between India and Germany has built a strong foundation for economic cooperation to flourish between the two countries. In 2001, India and Germany entered a strategic partnership agreement to strengthen their economic relations. Thereafter, in 2011, the countries entered into cabinet-level Inter-Governmental Consultations (IGC), allowing the two governments to coordinate on a broader spectrum of bilateral issues. Moreover, under Angela Merkel, the former Chancellor of Germany, the economic relations grew to encompass more than just trade and investment between the two countries.
Over the years, German companies have discovered investment opportunities in India and so have Indian companies in Germany. Germany is India’s largest trading partner in Europe and is among India’s top 10 global trade partners. Approximately 1700 German companies are operating in India, and 200 Indian companies are operating in Germany.
Additionally, over 1600 Indo-German collaborations are in place, and more than 600 Indo-German Joint Ventures are in operation between India and Germany. In 2019, bilateral trade between the countries was valued at over EUR 21.3 billion.
Nevertheless, we all have witnessed that change in governments can change circumstances and make us question the future of such bilateral relations. So, when the new coalition government came into power in December 2021, there was a light undercurrent of anticipation on where India stood for Germany. However, the treaty released by the coalition government headed by Olaf Scholz as the Chancellor mentioned India very prominently, accentuating the importance that India has as a trade partner for Germany and German foreign policy.
According to a statement released by the German embassy in 2021, Germany views India as the primary partner for solving the world’s biggest challenges: energy, climate change, food, and international peace. Since then, several developments have taken place that supports this statement.
Prime Minister Narendra Modi and Chancellor Olaf Scholz co-chaired the 6th India-Germany Inter-Governmental Consultations (IGC). Thereafter, on 2nd May 2022, India and Germany signed a Joint Declaration of Intent to strengthen their partnership, specifically in areas such as climate change and sustainable development. The Joint Declaration of Intent commemorated 70 years of collaboration between India and Germany.
A day after PM Narendra Modi’s visit to Berlin, Foreign Secretary Vinay Kwatra confirmed that Germany would be investing EUR 10 billion in India for climate change-related projects over eight years, i.e., until 2030. In addition, a task force will be deployed to India to establish a green hydrogen hub. This decision comes in line with both countries’ unanimous effort to achieve the Sustainable Development Goals Agenda by 2030. Germany has been investing significantly in “green” projects; therefore, this particular investment does not come as a surprise to analysts.
Additionally, the German Federal Ministry for Economic Cooperation and Development commissioned a program called “Indo-German Energy Programme – Green Energy Corridors (IGEN-GEC)” to bring more renewable energy (RE) to the electricity network since India has abundant RE sources available. The influx of more RE into the electricity network would significantly contribute to reducing CO2 emissions. The Deutsche Gesellschaft fur Internationale Zusammerabeit (GIZ) GmbH is responsible for implementing the IGEN-GEC in India on behalf of the German Federal Ministry.
Germany has a strong manufacturing unit supported by both Indian labour and markets. India can provide low-cost labour to run manufacturing units and serve as a potential market, owing to the growth in the middle class’s purchasing power. Moreover, the influx of German investments and companies can benefit India on many levels: strengthening the competitiveness of India’s industries in global markets, thriving technological ecosystems, and increasing the prominence of sustainability.
Thus, India and Germany show promising signs of long-lasting trade relations, which may even define the trade in the European Union and neighbouring regions.
Read the Joint declarationhttps://bit.ly/3yZQsNJ
