Former Prime Minister of India - Shri Atal Bihari Vajpayee

PM's address at meeting with German business representatives

~I thank you for inviting me to be with you today. It is a special pleasure to be here in Munich. We see the dynamism, which transformed Bavaria from an agricultural economy to an industrial powerhouse in a few decades. You have also harmoniously blended industry and high technology with history and tradition.

I deeply appreciate the fact that so many of you are present here today, though it is a public holiday, marking an important religious festival. It shows your strong connections with India.

Munich is often called the Internet capital of Germany. India is proud that many of its nationals are here, contributing to your information technology sector. Many more are only a click of a mouse away, linked from their workstations in India to corporate offices in this country.

The new India is establishing such links throughout the developed world, through skills in the knowledge-based technologies. These skills, combined with our economic reforms, our expanding market, our political stability, rule of law and time-tested democratic system make India an attractive economic partner.

India is today the world’s fourth largest economy on purchasing power parity. Our annual average growth has been over 5% since 1980. It is the highest achieved over a comparable period by any democracy in the world. We have managed a growth rate of around 6%, even in the current uncertain economic environment.

Our economic fundamentals remain strong. Inflation is in the low single digit range. Our foreign exchange reserves of over 13 months of import cover are among the world’s highest. India has one of the fastest growing telecom, insurance, and financial services markets in the world. Our strengths in Information technology, biotechnology and entertainment technologies are well known. We have transparent laws and a strong tradition of an independent judiciary.

There is sometimes criticism about the pace of our reforms. A population of one billion people constitutes a huge market. But it also contains a diversity of perspectives, interests and needs. We cannot simply push through reforms as a shock therapy. What we need is the tonic of compromise and consensus, which supports a more equitable growth.

Both within Europe, and in unified Germany, you have also recognized that only a consensus approach, with participation of all the principal stakeholders, can lead to sustainable policies. You can therefore understand our perspectives.

The confidence of foreign investors in India is reflected in the highest ever inflows of foreign direct investment in the last two years. Inclusive of reinvested earnings and overseas commercial borrowings, India attracts annual Foreign Direct Investment of about 1.7 per cent of its GDP, which is a creditable performance for any developing country.

A study this year by our Federation of Chambers of Commerce and Industry shows that investor confidence in India is rising. Its 2003 survey showed that 62 per cent of foreign companies reported profits in their Indian operations. This was a sharp increase from 36 per cent last year. Again, 53 per cent of foreign companies surveyed in 2003 reported capacity utilization of over 75 per cent. In 2002, only 5 per cent had reported such a high output.

German business and industry should therefore take another close look at India. Our bilateral trade of around 5 billion Euros is growing at a very modest rate. German investment in India, which was about 200 million Euros annually in the decade of the nineties, has now declined to only about 50 million Euros a year.

There seems to be an information gap about the immense opportunities in both directions for trade and investment. In my discussions with Chancellor Schroeder and other representatives of the Federal Government, we identified a few major areas. I will today touch on only some of them.

Our business community estimates the demand of the Germany I.T. industry at a staggering 67 billion Euros. Besides your telecom, financial services and manufacturing sectors, which are big I.T. consumers, your small and medium enterprises could also benefit from India’s strengths in I.T.

Similarly, Germany is a leader in biotechnology products. India’s consumption market for these products is expected to rise to about 2.2 billion Euros in the next three years. There is also significant ongoing R & D work in India, which can be married to German technology.

I discussed with Chancellor Schroeder the possibility of India benefitting from Germany’s prowess in renewable energy sources. We in India aim to create 100,000 Megawatts of additional energy capacity in the next ten years. At least 10% of this is to be fuelled by renewable energy sources. This is an opportunity for German industry.

The quality of research and development in India for cutting edge technologies is widely acclaimed. Multinational corporations around the world source their major R & D requirement from Indian institutions. Particularly your small and medium enterprises should find this a competitive option.

The critical mass of India’s consumer market should also encourage commercialization of new technologies, which require large test markets.

About three weeks ago, India launched a satellite with a payload of over 1,800 kg into geo-synchronous orbit. We are one of only six countries in the world with this capability. We have launched two German satellites in the last four years. German companies can use Indian satellites for their remote sensing, communications and research projects.

I understand Germany will dismantle twenty thousand Megawatts of nuclear power capacity by Twenty Twenty [2020]. India has an expanding nuclear power programme. We have also conducted advanced research on decommissioning techniques. Germany can source expertise and human resources in India for decommissioning nuclear power plants at very competitive prices.

India is today creating and upgrading a network of highways connecting our major cities with each other, and with smaller towns and villages. To give you some idea of the magnitude of this task, imagine reconditioning and building afresh over thirteen thousand kilometres of highways from Helsinki to Istanbul, and from Gibraltar to Moscow.

Another project of our focus is the linking of the major rivers of India, both to optimise the use of water and for river transportation. Ports and railways are also on our infrastructure development list. As a world leader in transportation engineering, Germany is well placed to take advantages of these opportunities.

There is much more that India can offer to investors, researchers, contractors or exporters from Germany. German investors have been in India virtually since our independence. Siemens, Merck, Bayer and Mercedes Benz have all been well-known names in India for over five decades. They are aware of our strengths, and of the attractive returns on their investments in India. They are welcome in greater numbers and with a wider variety of value-added and hi-tech ventures.

India is engaged in the challenging and exciting task of steering a billion-strong population towards greater prosperity. Our experience has shown us that technology can accelerate this process. We have travelled far in recent decades and are now concentrating on chosen areas of high technology for human development.

In this effort, we value the cooperation with partners like Germany. The complementarities between India and Germany open up a vast range of possibilities for our economic, scientific and technological cooperation. A fuller awareness of the mutual advantage of collaboration can play a crucial role in transforming our relations into a vibrant strategic partnership. This is the challenge for the business communities of our two countries.

Thank you~.