Renewed trade ties between India and German will benefit textile industry too

German federal chancellor Angela Merkel, on a three-day visit to India that concluded yesterday, met prime minister Narendra Modi at the third India Germany Inter-Governmental Consultations (IGC) in New Delhi and renewed their determination to expand bilateral trade and investment.

After the IGC, both leaders issued a joint statement, noting the potential of open markets for deepening trade relations and for attracting investments and underlining their strong commitment to the EU-India Broad Based Trade and Investment Agreement and re-starting negotiations as soon as possible.

The trade volume between Germany and India was around 16 billion euros last year, consistent with previous years. In the first few months of the current year, German exports to India even increased by 18 percent.

Both leaders reaffirmed that technology-intensive manufacturing - as seen for example in the textile industry - could become a key pillar of their strategic partnership, especially in view of Germany's key competencies in high technology and India's growing needs.

Among new policies that worked, Modi and Merkel agreed that the 'Make in India' initiative has the potential to open new investment opportunities for German companies in India, while India's participation as a partner country at the Hannover Fair is doing the same for India in Germany.

Of the currently around 1,600 German companies in India, many have complained about bureaucratic hurdles. They should be happy to hear about India's decision to set up a fast track system for German companies by March 2016, which will be handled by the department of industrial policy & promotion (DIPP), which is part of the ministry of commerce & industry. To enhance bilateral trade and investments, Modi and Merkel encouraged the private sector to take advantage of these initiatives.

This should be helped by the decision to resume the negotiations for amending the existing Double Taxation Avoidance Agreement (DTAA), including the Article on Exchange of Information, to enhance the elimination of double taxation and to foster financial transparency. Simplified visa procedures for business persons, entrepreneurs and investors are also on the cards.