The survey conducted by the Indo-German Chamber of Commerce (IGCC), among 175 German companies operating in India,  revealed that “a vast majority (85 per cent) of all managers felt that recent scams had sullied” the global image of India.

About one third (30 percent) of the managers believe that the damage caused by the series of scams was ‘high’, while 40 percent see it as ‘medium’. For an equal number (85 percent), policy issues weigh on reputation of India. “Asked if political deadlock, lack of reforms or regulatory uncertainty hurt image of India, 17 percent of managers of German companies confirmed ‘high damage’, while 47 per cent note ‘medium’ and 22 per cent ‘low damage’,” read the IGCC report on the survey.

The Indo-German trade was worth more than $ 21.39 billion in 2010. The bilateral trade volume increased by 17.1 per cent after global recession caused a drop in 2009.

8th largest investor

Germany was the eighth largest investor in India in 2009 with Foreign Direct Investment (FDI) inflows of  $ 599.93 million. Between April and August, 2010, Germany continued on the same rank, cumulatively with FDI inflows of $ 2868 million. Germany and India have set a bilateral trade target of $ 28.5 billion to be achieved by 2012.

The IGCC, however, stated that negative effects on the image of India had not yet started to cloud German companies’ overall assessment about the country as an investment destination.

“Future investment decisions may be scrutinized more carefully should India fail to tackle these issues,” comments IGCC Director General Bernhard Steinruecke. “Despite tremendous optimism and general goodwill, investors clearly expect India’s government to curb corruption and revive reforms in order to ensure robust long term economic growth.”

Bullish on India

The survey revealed that the German investors were quite bullish on India.
Eighty per cent of the managers quizzed by the IGCC expected India’s growth rate to match or exceed China’s within a decade. Among them, about half forecast the economic expansion rates in Asia’s two giants to converge within the next five years.

Economic relation between Germany and India will be one of the focus areas, when Merkel will join Prime Minister Manmohan Singh to lead the first Indo-German government consultations next Tuesday.

The German Chancellor is being accompanied by Foreign Minister Guido Westerwelle and three other cabinet ministers of her Government. Westerwelle will meet External Affairs Minister S M Krishna on Monday.

“The consultations will cover the full range of bilateral relations, from trade, vocational training, education and research, infrastructure, sustainable energy and environment technologies to security and defence policy. It will also address current regional and global issues, including reform of the United Nations Security Council (UNSC), fight against terrorism, global financial reforms, as well as the work of the G-20,” read a statement from the German Embassy in New Delhi.

Merkel will receive the prestigious Jawaharlal Nehru Award for International Understanding during her visit to New Delhi.

German envoy to India, Thomas Matussek, said that Berlin had already amended its export control rules on request from New Delhi in order to facilitate high-technology trade between the two countries.