NEW DELHI // German chancellor Angela Merkel arrives in India on Sunday for a three-day visit, hoping to revive stalled talks on a free-trade agreement between New Delhi and the European Union.
Ms Merkel, accompanied by six government ministers, will fly in to the capital, where she will hold meetings with prime minister Narendra Modi’s government on Monday, before heading to the southern city of Bengaluru.
The visit will mark a third round of joint cabinet meetings between the Indian and German governments, aimed at increasing cooperation between the two countries, particularly in areas of trade.
“Germany is the only country with which India shares this comprehensive format of cooperation in various areas of strategic significance,” Martin Ney, Germany’s ambassador to India, said on Thursday.
While Ms Merkel holds talks with Mr Modi, her ministers – for economic affairs and energy, foreign affairs, defence, food and agriculture, education and research, and economic cooperation and development – will consult with their counterparts.
Ms Merkel will then travel to Bengaluru in the state of Karnataka on Monday evening. The next day, she will address Indian and German business leaders and visit the factory of Bosch, a German automotive engineering firm with manufacturing plants in the city. Mr Modi will also join Ms Merkel in Bengaluru on Tuesday morning.
Ms Merkel and Mr Modi met recently on September 26 in New York, where India and Germany joined Brazil and Japan in bidding for permanent seats on the United Nations Security Council.
The India trip “might be a welcome diversion for Merkel from the twin European crises she is dealing with: refugees and Greece,” Nitin Pai, the founder of the Takshashila Institution, a Bengaluru-based think tank, told The National. Mr Pai was referring to the recent influx of Syrian refugees into Europe, and Greece’s tottering economy.
But as Mr Pai pointed out, Ms Merkel will have plenty to consider in her aim to improve economic relations between India and the EU.
Negotiations over a free-trade agreement between Europe and India were launched in 2007. The value of EU-India trade grew from €28.6 billion (Dh117.8bn) in 2003 to €72.5bn in 2014. The trade volume between Germany and India alone stands at roughly €16bn, and Germany is the seventh-largest investor in India.
But India has been reluctant to acquiesce to European demands to dismantle several barriers to trade, including a complex regulatory environment and tariffs designed to protect Indian manufacturing.
The EU, for instance, has complained that India imposes high duties on European liquor and automobiles. For its part, New Delhi has asked that Indian professionals be allowed to work more easily and in greater numbers in Europe – something that the EU has been reluctant to agree to.
Last August, India withdrew from negotiations altogether, after the EU blocked imports of 700 Indian generic pharmaceutical products. The block came after allegations surfaced that the clinical trials of these drugs had been manipulated.
But, Mr Ney said, for Ms Merkel, reviving these talks is “close to her heart”.
“I think it is high time that the suspended talk ... should be resumed,” he said. “I do think that [the agreement] is very much in India’s interest.” He also indicated that key Indian officials, including commerce minister Nirmala Sitharaman, agreed upon the importance of the free-trade agreement to their country.
The German chancellor’s last visit to India came in 2011, when Mr Modi had not yet been elected prime minister. The Indian leader made a short trip to Germany in April, during which he emphasised his “Make in India” initiative, which encourages manufacturing firms to set up production facilities in India.
Mr Ney said that German interest in India was high. Already, roughly 1,500 German firms have operations in India, with around 600 of these in the engineering and manufacturing sectors.
But India is also a difficult country to work in, the ambassador noted. In the World Bank’s index of countries ranked by the ease of doing business, India placed 142nd out of 189 countries, down two notches from the previous year.
“German companies have very high expectations from their investments in India, but they do have issues,” Mr Ney added. He pointed to “questions of corruption, questions of frameworks for investments, safety of taxation, intellectual property rights”.
“The two leaders will deliberate on these issues,” he said.
Mr Pai, however, said he doubted that Europe is fully prepared for a free-trade agreement, even if India is.
But the “business of rekindling global economic growth” is “essential,” he said.
“With China’s slowdown, global growth will depend a lot more on India and Europe,” he added. “The issue is how deep and how fast Mr Modi can reform India’s economy to be market-friendly and welcoming of business. Merkel might add Europe’s own voice to this call.”
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