India, Germany to discuss euro zone crisis, Afghanistan

ejazr

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India, Germany to discuss euro zone crisis, Afghanistan - International News - livemint.com

New Delhi: The euro zone crisis, the future of Afghanistan and bilateral ties will be on the agenda of discussions between India and Germany during German foreign minister Guido Westerwelle's day-long visit to India this week.

Trade and investment are also expected to figure prominently in the discussions between Asia's third largest economy and Europe's economic powerhouse.

Westerwelle, who arrives in Bangalore on Friday—on his third visit to India—will hold talks with his Indian counterpart S.M. Krishna, besides inaugurating events related to the Year of Germany and India to mark six decades of diplomatic ties between the two countries.

Both sides will have wide-ranging talks on "the recent developments in the euro zone, the evolving situation against the backdrop of the recently concluded Afghan summit and India's ever-increasing strategic role in Asia's security architecture," a statement from the German embassy said Thursday.

The talks will also focus "on enhancing bilateral trade, strengthening cooperation in the fields of green technologies, environmental protection, as well as higher education, IT (information technology) sector and the recently launched Blue Card scheme of the German government" that's aimed at making the immigration process easier for skilled non-European Union workers, the embassy said.

India, whose economy has slowed, was nervously watching the outcome of the Sunday elections in Greece—one of the earliest countries to fall prey to Europe's debt crisis.

Greece has received two bailout packages from the European Union (EU) in the past two-and-a-half years but the crisis is far from over. Sunday's polls brought to power a pro-bailout coalition government. A good showing by the radical-left Syriza party—opposed to austerity measures accompanying the bailout package for Greece—could have resulted in the exit of Greece from the euro zone and putting a question mark on its future.

The EU as an economic bloc is India's largest trade partner. India and the EU have been in talks to conclude an ambitious free-trade pact since 2007 but discussions have stalled over contentious issues such as tariffs and government procurement.

Germany, the euro zone's biggest economy, is one of Greece's main creditors. India this week pledged $10 billion to the global firewall—created under the International Monetary Fund—aimed at containing the financial contagion emerging out of the euro zone debt crisis.

On Afghanistan, India and Germany share similar views on the need to stabilize the insurgency affected country. German troops are part of the US-led international forces fighting a resurgent Taliban.

India and Germany also agree on the need for reforms to the UN Security Council with both the countries hoping for seats in a revamped body.

"Germany is an important trade partner for India in Europe, with steadily rising bilateral trade. Trade has almost doubled from €10 billion in 2006 and is expected to cross €20 billion in 2012," the Indian foreign ministry said in a statement. "The strategic partnership established between India and Germany in 2001 has been steadily supplemented with institutional arrangements."

According to Westerwelle, "Germany and India share a valuable partnership. Over the years we have developed a close dialogue on strategic issues—bilateral, regional and global. As this visit is taking place while celebrating 60 years of diplomatic relations between two countries, we should work hard to further deepen our relations," the minister was quoted as saying by the German embassy in its statement.
 

ejazr

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India is an 'important strategic partner' | Asia | DW.DE | 21.06.2012

German Foreign Minister Guido Westerwelle is making his first-ever visit to Bangladesh, but he began his three-day trip to South Asia with a stopover in India.

The foreign minister is traveling to India and Bangladesh from June 21-24 with a large business delegation. India, as Asia's third largest economy, is an important growth market for the future, and the German export industry is paying a lot more attention to the region in light of Europe's debt crisis and faltering growth prospects.

But for Germany, the role of India is not just restricted to markets and business. Foreign Minister Westerwelle underscored that point before heading to the region.

"India is an important strategic partner and emerging political force, whose influence will only grow in future. India's contribution to security and Asia's developing affluence will play an important role in global stability and development," he said.

Germanyand India have been working closely together for quite some time to reform the UN Security Council. Berlin and New Delhi both are seeking a permanent seat on the body.

Repercussions of the global crisis

Since the start of India's reform efforts two decades ago, the country has remained mostly outside the reach of the international financial crisis. That was due mainly to the robust growth of its domestic market and the growing purchasing power of the middle class. Its promising market and huge reservoir of highly qualified workers have also attracted foreign companies.

Compared to China, India's exports have remained modest, but the economy is not dependent on foreign investment. Major Indian companies have been investing domestically rather than going abroad to try their luck.

Even so, the current European debt crisis and other international crises have not left India unaffected. Rajesh Nath, director of the Indian liaison office to the German Engineering Federation (VDMA), admits that the Indian economy is experiencing a downturn at the moment, but this situation, he says, is the result of several factors.

"For one thing, there is no investment in India at the moment. Not long ago, the state announced plans for major investments in infrastructure, but these measures will likely only help temporarily," Nath explains.

"High interest rates at the banks are another problem for industry. And the Indian rupee's exchange rate in recent weeks has been heading south, so that importing equipment and technology has become a lot more expensive."

German exports hardly affected

Nearly all branches of industry with ties to international markets are feeling the effects of the euro crisis. The negative impact, however, has still not been all that bad, according to Nath. In 2011 alone, the export of German machines and equipment to India rose nearly 18 percent. German firms are still working on fulfilling existing contracts. If the downturn in India lasts longer, then, of course, it will affect the German export business, he warns.

Economic and financial crises are not the only problems India faces at the moment. The decision-making process in the world's largest democracy is rather arduous, compared to neighboring China with its one-party system. Tenuous governing coalitions with highly populist regional parties are now routine in Indian politics. Courageous reform decisions tend to be postponed or not made at all for tactical reasons.

Nevertheless, India's free market economy allows companies to pursue their business plans and resolve problems on their own, despite the political standstill. Lokesh Bopanna, from Hawe Hydraulics, an Indian subsidiary of a German manufacturer of pumps, cylinders and other hydraulic components, differentiates between the political and economic situation.

"The costs for financing are one thing; the standstill in the government is another. Many of my customers are in financial straits. But even if they had enough orders on the books, they couldn't make much because they don't have the money," he notes. For this problem, however, the government couldn't really be blamed, he added.

First stop: Bangalore

Minister Westerwelle is traveling to Bangalore in southern India at an economically difficult time. More than 150 German businesses have offices in the city. In 2008, Germany opened a consulate there - the first country to do so. The aim of this trip, according to the foreign ministry, is to "expand the consulate in one of the world's most important IT centers, to advertise Germany and to advance Indo-German economic relations."
 

KS

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Not to sound pesssimistic - but our own story needs discussion and very urgently.
 

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