German industry complains about India's opaque reforms
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German industry complains about India's opaque reforms

Wednesday, 28 May 2003, 07:00 Hrs
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Lack of transparency about India's economic reforms and excessive bureaucratic hurdles are major impediments in increased German investment in India, the Confederation of Indian Industry (CII) has said.


BERLIN: This was one of the major reasons Germany's standing in India as a source of foreign investment has slipped from number four to seven, behind Netherlands, France and Japan, CII said Tuesday.

As Prime Minister Atal Bihari Vajpayee began the second day of his three-day visit to Germany to boost bilateral relations and business ties, the CII also released the findings of an exhaustive study it conducted among German businessmen and industrialists,

The CII said in a statement: "Another concern is the lack of perception of India within Germany that needs to be addressed through a concerted effort from both sides."

An 18-member high-level CII delegation, led by its president, Anand Mahindra,
is visiting Germany.

"From the Indian side, a greater emphasis on developing a cohesive nation branding and marketing strategy in Germany is required," the statement said.

The business chamber said its study revealed that Indian industrialists had their own share of complaints about Germany.

These included sticky German labour laws, high taxes and social security contributions. Problems of raising credit and financial facilities were also major concerns.

"The German banking system does not accept bank guarantees from even major Indian banks, limiting access to easy capital for Indian businesses.

"It has been suggested that a partial remedy could be the institution of a fund to assist Indian companies with their financing requirements at the time of acquiring or setting up business in Germany," the organisation stated.

CII said another major area of concern was the issuance of work permits to Indians and the movement of Indian workers that affected productivity and growth, particularly in the IT sector.

The organisation has suggested that all registration forms in Germany should also be in English. Moreover, processing time of relevant documents should come down from the present two to three months to just two weeks to improve business productivity and efficiency.

It said the main objectives of its mission were to highlight the strong performance of the Indian economy and to impress upon German industry and policy makers India's attractiveness as a competitive investment destination.

"The visit will also give a renewed thrust to the strong partnership between the German and Indian industries and deepen the existing cooperation in key areas of IT and engineering and manufacturing."

India is among Germany's leading markets for machinery and project exports.

Vajpayee will address a business meet in Munich Thursday. The meeting has been organised by the Asia Pacific Committee of German Business.

The gathering will see an interactive session that will be addressed by External Affairs Minister Yashwant Sinha and Commerce Minister Arun Jaitley, who accompanied Vajpayee from New Delhi.

The delegation will meet German Economic and Labour Minister Wolfgang Clement, who is also due to have discussions with Vajpayee.

CII officials said despite falling investment, Germany's importance as a trading and technology partner for India was significant.

A total of 156 new Indo-German collaborations were approved in 2001, down from 201 the previous year. However, while German investments have slowed down, bilateral trade has picked up.

Germany is India's third largest trading partner in the European Union after Britain and Belgium. Bilateral trade grew at 2.82 percent in 2002.

Germany accounts for six percent of India's total global trade. Bilateral trade, which had registered a slowdown, has picked up and was in the range of 4.8 billion Euro in 2001-02.

German investment, however, has not registered a similar increase. Post liberalisation figures show that only 39.2 percent of the cumulative foreign direct investment, approved by the Indian government, has translated into actual foreign investment.

According to CII, Germany's investment and interest in India compared unfavourably with its presence in China.

Besides Mahindra and Das, the CII delegation includes Udayan Bose (chairman, Lazard India), Aruna Kashinath (managing partner, Polaris Software Lab Ltd), Ajay Khanna (CEO, India Brand Equity Fund), N. Kumar (vice-chairman, Sanmar Group), Kamal Meattle (CEO, Paharpur Business Centre), Kashi N. Memani (chairman, Ernst & Young), S.N. Mishra (president, Bharat Fritz Werner Ltd) and Prochie Mukherji (Chief of Staff, Mahindra and Mahindra).
Source: IANS

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