German Chancellor Angela Merkel is visiting New Delhi to participate in the 5th Biennial Indo-German Inter-governmental consultations. The visit takes place at a time when both German and Indian economies are slowing down. Global trade tensions and Brexit uncertainty has started affecting Germany.
Though technically the German economy may not have entered recession yet, economic activity is clearly down. The automobile industry is facing difficulties not only in India but also in Germany. Merkel is accompanied by a delegation of about dozen ministers. Reports indicate that close to 20 agreements will be signed.
Till recently, Germany’s position as Europe’s largest economy allowed Merkel to assume a leading role within the European Union (EU) during the crises dealing with sovereign debt and refugees. In the last one year, however, her position within Germany and Europe has weakened. Strains within the ruling grand coalition between the Christian Democratic Union (CDU), the Christian Social Union (CSU), and the Social Democratic Party (SPD); and the recent election setbacks have domestically affected her.
Merkel has already declared that she will not seek another term as Chancellor. Annegret Kramp-Karrenbauer (AKK) has been elected as her successor to lead the CDU. With Britain moving out, political power within the EU is moving more towards France, and French President Emmanuel Macron has laid out an ambitious reform agenda for the Union.
Germany had relied mainly on its economic power for influence owing to its difficult past. Instead of stand-alone power, it prefers to operate as an integral part of the EU and NATO. A close Franco-German alliance within Europe; and a strong transatlantic security and economic partnership has been the cornerstone of Berlin’s foreign policy.
With an uncertain US policy under President Donald Trump, Germany has been looking for some serious new engagements. During the last decade, it tried focusing on BRICS economies. After the Ukrainian crisis, EU-Russia partnership damaged. Germany is still trying to figure out new ways of selective engagement with Russia. Despite some unease with the Belt and Road Initiative (BRI) activities in Europe, China continues to be an attraction. Germany is also looking at India seriously. It describes India as an ‘anchor of stability’ in South Asia.
After 2014, Berlin was hopeful that the Narendra Modi government will deliver the EU-India Free Trade Agreement (FTA). On this front, India has disappointed Germany. Now with very little chance of an FTA in near future and slowdown in the Indian economy, Germany seems to have diverted its attention more towards issues concerning sustainable development, renewable energy, skill development, etc. Germany, after all, is transforming its economy thoroughly under its ambitious energy transition programme ‘Energiewende’.
With $24 billion of bilateral trade and seventh-largest investor in India, Germany will continue to be an important economic partner. As strategic partners since 2001, both have established solid institutional arrangements to discuss bilateral and global issues. They have also worked closely on matters related to the UNSC expansion. Germany is also one of the most productive collaborators in joint scientific projects for Indian researchers.
Around 1,700 German companies are active in India, with more than 600 in the engineering sector. Around 600 Indo-German joint ventures are in operation. Similarly, about 200 Indian companies work in Germany, mainly in the areas of IT, auto, biotechnology and pharmaceuticals. A fast track clearance system for German companies has already been set up within the Department of Industrial Policy and Promotion.
Due to its demographic profile, Germany is also looking for high-skilled legal migration from countries such as India. At 3 per cent, unemployment rate in Germany is among the lowest in Europe. About 90 per cent employment opportunities in Germany in the coming years are expected to be in the medium- and high-skill sectors.
India, with its large young population and extensive higher education establishments, has the potential to fulfil some of its demand. Within EU, Germany is the only country which has seriously implemented the Blue Card scheme. The Blue Card is a work and resident permit issue to highly-qualified individuals from non-EU countries. It provides comprehensive rights to third country citizens and may also lead to permanent residency. About 85 per cent of these cards are issued by Germany alone. Indians have received more than 20 per cent of total EU Blue cards issued so far. Opportunities arising from high-skilled legal mobility to Germany needs to taken more seriously.
In recent years, both India and Germany have been looking for enhanced roles and new responsibilities in an emerging international order. Despite these broader objectives and trade issues, Merkel perhaps will focus more on sustainable development, renewable energy, as well as skills and mobility.
On Kashmir, Germany may repeat the common EU position that it remains concerned about restrictions and encourage India and Pakistan to seek political and peaceful situation.Gulshan Sachdeva is Jean Monnet Chair at the School of International Studies, Jawaharlal Nehru University and Editor-in-Chief, International Studies. Views are personal.