German chancellor on business mission to India

German Chancellor Angela Merkel scatters rose petals at the Mahatma Gandhi memorial in India (Reuters)
German Chancellor Angela Merkel scatters rose petals at the Mahatma Gandhi memorial in India (Reuters)

By Bhuvan Bagga

Angela Merkel has begun a mission to clear the path for German companies keen to do business in India, as Prime Minister Narendra Modi looks to the European powerhouse to help revive its economy.

Briefly leaving behind a refugee crisis in Europe, the German chancellor landed in New Delhi for a three-day visit focused on boosting defence, renewable energy, and other bilateral trade.

Merkel, flanked by a large business delegation, will meet Modi and trade officials on her first trip to India since the right-wing premier stormed to power last May promising to reform and revive Asia's third largest economy.

"We are co-operating in areas such as economy, agriculture, internal security matters, development issues, defence matters and also in financial relations," Merkel said after a ceremonial welcome at Delhi's presidential palace.

The chancellor said their talks would also focus on climate change, ahead of a critical UN-led meet in Paris on cutting greenhouse gas emissions.

Germany is already India's most important trading partner in Europe and both Modi and Merkel have said they are keen to boost two-way trade.

But German Foreign Minister Frank-Walter Steinmeier said German companies were concerned about "too much red tape, infrastructure hurdles, corruption, lack of skilled labour [and] tax disputes" in India.

"A reliable legal and administrative framework is indispensable for German companies in India," he said in an interview with the Hindustan Times, while applauding Modi's government for moving in the right direction.

Foreign companies have long despaired at India's levels of taxation, corruption and other hurdles to doing business. But many have welcomed Modi's efforts on economic reforms aimed at making India a more reliable and transparent place to invest.

The two nations exchanged nearly €16 billion in trade in 2014 – mostly chemicals, machine tools, electrical goods and textiles.

The leaders met in April on Modi's first official visit to Germany, where the Indian premier sought more investment as he ramps up his drive to make India a manufacturing hub.

Merkel's delegation this week includes Steinmeier, several other cabinet ministers and German business leaders, who will also travel to the southern technology hub of Bangalore.