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| Edited By: Rajiv Ranjan Singh |Source: DNA |Updated: Dec 03, 2011, 10:56 PM IST
East Germany could soon become a business heaven for Indian companies and entrepreneurs, said Michael Pfeiffer, chief executive, Germany Trade and Investment, he tells Rajiv Ranjan Singh. Excerpts from an interview:
What benefits can Indian entrepreneurs get by investing in Germany?
Incentives and sops are available only if foreign companies invest in Eastern Germany. For small scale Indian industry, incentives for setting shops in Eastern Germany can go up to 50 per cent of the total investment. It can be in the form of sops for R&D, training local staff and incentive for investment. For large companies it depends on employment creation and other factors which are decided on case to case basis. Maximum incentive can go up to 25 per cent of the total investment. As per EU rules no sops will be provided for investment in Western Germany.
Why should Indian businesses open shop in Germany when much cheaper labour is available in eastern Europe?
‘Made in Germany’ is a big branding advantage. Export has always been a backbone and growth engine of Germany. Suzlon has used Germany as a base to spread itself in other European markets. Similarly, China is also using Germany as a base to reach other European markets.
How is the growth path of Germany is different from other developed countries?
When the UK and the US were fuelling their growth by riding on the back of exotic financial products, Germany was enhancing its capacities in industrial sector. Our highest priorities were to build factories than to develop toxic and high leverage derivative products. This strategy paid up when financial markets started tumbling and focus shifted towards real economy from financial economy.
What are the areas where you see synergy between Indian and German
companies?
Automotive component manufacturing is a big area where Indian companies are contributing to German automakers in a big way. In fact, 20-25% of auto components for BMW and Audi are being made by Indian companies such as Bharat Forge. Renewable energy is another sector where a big partnership could be developed, considering India’s huge demand for clean energy and strong presence of German companies in renewable energy market. India’s biggest foreign investment in Germany came from Suzlon when it acquired RE Power for $2 billion.
A lucrative sector is engineering, where young engineers from India can contribute immensely since German giants like Siemens are finding it very hard to source manpower from ageing German populace.
