Investments by Germany on the wane in India

[Ulhas Joglekar]

NOV 23 1999 The
Economic Times Online
Investments by Germany on the wane in India
Manik Mehta
FRANKFURT 22 NOVEMBER
GERMAN direct investments in India are on the decline as German firms head
for more high-profile pastures, underscoring the need for New Delhi to step
up its sales pitch, analysts say. After a significant fall last year, German
investments in India are expected to stagnate or decline even further in the
current year.
``This is particularly a shame because the declining investments in India
come at a time when German companies are, in fact, investing more overseas,”
says Rolf Becker, who is a German banker with considerable experience in
Asian countries.
According to figures released by the Indo-German Chamber of Commerce,
Germany dropped to number nine, from five in 1997 and 1996, in the list of
the top 15 foreign investors in India.
German investments reached Rs 853 crore last year, just a quarter of the Rs
3,560 crore committed by investors from the top-ranked US. ``There may be a
number of reasons for this trend. First of all, German companies would
prefer to invest in neighbouring European countries for obvious geographical
reasons. Also, there are attractive sites like the US, Japan and other
countries which offer greater transparency and stability.
Added to this are apprehensions about India's bureaucracy, corruption and
hostile neighbourhood,” says a Frankfurt-based consultant whose client base
includes a number of large German firms.
Adds the German consultant: ``This is a wrong perception — that the German
government should be pushing investments to India. This is actually not the
task of the German side. In fact, investments to India should be promoted by
Indian officials in Germany, who seem to be unable to court German investors
and attract them to India.”
The general perception is that Indian diplomats need to change their mindset
and be more forthcoming. Both Indian and German businessmen feel there is
``room for improvement,” implying a lot more could have been done with fewer
resources.
``Indian diplomats need to be good salesmen with a propensity to conduct
good public relations. Unless that happens, it's going to be very difficult
for India to establish contacts with the small and medium-sized companies
which face an acute information deficit about India,” said one analyst.
In ’98 direct German investments abroad amounted to 146.4 billion DM, up
more than 100 per cent from a year earlier. Most of the investments flowed
to the US (78 billion DM) and to countries of the European Union (57.5
billion DM). China and a number of south-east Asian countries also attracted
substantial investments. —IANS

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