Updated: October 3, 2015 8:26:47 am
Chancellor Angela Merkel’s forthcoming visit to India to take part in intergovernmental consultations (IGCs) is an opportunity to review the achievements to date, and to set up clear guidelines to sustain them. This, as things stand, is a challenging proposition for New Delhi.
Indo-German relations are currently at their strongest. Long gone are the vestiges of the Cold War-era shunning of India by West Germany, which, as a faithful US ally, saw India as a Soviet satellite. After the disintegration of the Soviet Union and German reunification, and the steady integration of post-liberalisation India with the global political economy, the two have found common ground from where to act in tandem to develop common policies and initiatives.
The “strategic partnership” of India and Germany, started in 2001, has found an institutional basis in the mechanism of IGCs, which allow for a comprehensive review of cooperation and act as a platform to identify fresh areas of engagement. In addition to these regular sessions that bring together the top leaders of the two countries and important cabinet ministers, there have been many high-level visits.
Merkel visited India in 2007 and again in 2011 for the first IGC. Prime Minister Narendra Modi visited Germany in April 2015 to flag off India’s participation as a partner country in the Hannover Messe 2015. These and other high-level visits have focused on bilateral and global issues of interest to both countries, on skills development, agriculture, water and coal, among others, in addition to the conventional areas of trade, security and international relations.
In order to give these initiatives a regular and institutional character, both countries have set up a joint commission on industrial and economic cooperation, foreign office consultations, a high technology partnership group, energy and environment forums, and a committee on science and technology. Germany and India cooperate closely on the push for the expansion of the UN Security Council, keeping alive the Indian hope of securing a permanent seat. To this already impressive agenda, the forthcoming meeting might make new additions such as technology transfer (especially in the area of energy, infrastructure and arms manufacturing), and skills transfer through vocational training, an important German asset of great value to the prime minister’s “Make in India” initiative.
Germany is India’s largest trading partner in Europe, and has consistently been among India’s top 10 global trade partners. India was ranked 25th in Germany’s global trade during 2014, accounting for about 1 per cent of total German trade, while bilateral trade in 2014 was valued at 15.96 billion euro.
Two strategic issues are critical for the growth and sustainability of this impressive record of Indo-German economic relations. The first concerns the asymmetry in the relative positions of the two leaders. Merkel comes to Delhi at a time when her status back home is at its peak, thanks to the sterling role she has played in the two most important crises that Europe faces at the moment, namely the Greek financial crisis and the deluge of refugees knocking at Europe’s door. On both, she has balanced generosity and leadership with great dexterity. In contrast, Modi cuts an increasingly solitary figure in South Asia, and is beleaguered at home with consistent parliamentary obstructionism by the Opposition.
A corporate-friendly image is not an electoral asset in India’s fractious and noisy democracy. As such, with electoral battle lines already forming in Bihar and Uttar Pradesh, the meetings with Germany on a corporate-friendly agenda will need to be carefully stage-managed in order to generate positive traction for the Modi regime, which, in turn, will sustain the initiatives taken by the Merkel-Modi duo.
Second, there are the structural problems of the disconnect between the front office, headed by Modi, and the back office, where the absence of capable people ready to take some risk to implement the Modi agenda has now become abundantly clear. As a result, despite the PM’s indefatigable energy and the pizazz and showbiz that accompany his foreign visits, the structural problems of the Indian economy — red tape, slow pace of deregulation and an unpredictable tax regime — have emerged as the main concerns of potential investors. Coming on the heels of the US visit where financial institutions already flagged these problems, Modi’s advisors would do well to anticipate and assuage similar concerns on the part of the German visitors.
The writer is director, Institute of South Asian Studies, NUS, Singapore and emeritus professor of political science, South Asia Institute, Heidelberg University, Germany
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