0
GERMANY
INVESTMENTS AND OPPORTUNITIES
QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776
WWW.QUADGROUP.IN
CONTENT
LAYOUT
INDIAN ECONOMY
GERMANY AND INDIA
ROAD AHEAD
BUSINESS CENTRE
QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 ...
INDIAN ECONOMY
SINCE 1991
QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776
WWW.QUADGROUP.IN
INDIA’S GROWTH STORY
The Indian
Economy has
shown accelerated
growth since the
economic reforms
of 1991.
Presence of publi...
GDP GROWTH RATES OF INDIA POST RECESSION
6.7
8.5
9.3
6.2
5.4 5.3
6.8
8
8.5
7.6
6.5 6.4
0
1
2
3
4
5
6
7
8
9
10
2008 2009 20...
CURRENT SCENARIO
The Indian Rupee has reached an all time low of Rs58.15*. IT and Pharmaceutical companies will
benefit. A...
INVESTMENT IN INDIA
India has a conducive foreign
investment environment that
provides freedom of entry,
investment, locat...
ATTRACTIVENESS OF THE INDIAN MARKET
India has the
Best licensing
regime
|KEARNEY
India is the
most favoured
democracy for
...
TOP 10 COUNTRIES INVESTING IN INDIA
Country (Rank wise)
FDI inflows
August ’91 – Mar ’12
(in US $ million.)
% share of tot...
GERMANY IN
INDIA
QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776
WWW.QUADGROUP.IN
ECONOMIC STATUS
• From -0.6% in 2012, the GDP showed growth
of 0.1% in Q1 ‘13. Ernst and Young has
forecasted a growth of ...
GERMANY AND INDIA
German companies in India have earned an excellent reputation, on the strength of their high technologic...
CURRENT SCENARIO
In 2012, FDI equity inflows from Germany was 38,830.57 million
2nd largest partner for technology collabo...
GERMAN INVESTMENT INFLOWS SINCE 2000
With $1096 Billion in 2008, the
amount of investments abroad
increased to $1315 Billi...
GERMAN FDI EQUITY INFLOWS SINCE 2000
Year FDI equity inflows from Germany*(US$ in
million)
2000 86.39
2001 133.05
2002 138...
SECTOR WISE FDI EQUITY INFLOWS
71%
5%
4%
3%
3%
2%
2%
2%
1%1%
6%
1 2 3 4 5 6 7 8 9 10 11
Sector % share
1 Miscellaneous mec...
TOP 10 GERMAN FDI EQUITY INFLOW CASES
Name of the company Industry
MHM HOLDING GMBH MFG PRINTING INKS/PKG INKD,
RESINS,ENA...
REGION WISE FDI INLOWS FROM GERMANY
• The RBI regional office in
Mumbai(Maharashtra, Dadar & Nagar
Haveli, Daman & Diu) re...
SMALL AND MEDIUM INDUSTRIES
• SMEs in Germany are strong in areas of
auto components, machine and hand
tools, toys and pha...
INDIA ADVANTAGE
Labour costs
in India are
considerably
low.
Availability of
skilled
manpower
Rich natural
resources at
com...
CONCERNS AND OPPORTUNITIES
Opportunities
• Large talent pool and the low cost of operation.
• Increased demand due to the ...
PROMOTION OF INDO-GERMAN TIES
• Indo-German Chamber of Commerce
The IGCC is one of the most important
institutions promoti...
ROAD AHEAD
FUTURE OUTLOOK
QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776
WWW.QUADGROUP.IN
EDUCATION AND RESEARCH
The Education sector in India is on the rise. The literacy rates have increased to 67%. The
Indian ...
INSURANCE
Munich Re has entered the Insurance sector and has signed a number of joint ventures
in India covering Non-life ...
TECHNOLOGY
The technological partnership of India and Germany is very crucial for development of further
trade relations a...
FUTURE OUTLOOK
The trade between India and Germany is expected to reach Euros 20 billion
According to a recent study by KP...
FOR PROSPECTIVE INVESTORS
A large market size,
and population having
varying tastes, the
German companies
should look to h...
CONCLUSION
• India has expertise in knowledge based industries. The R&D centres and BPOs make India an attractive destinat...
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German Investment in India Report

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A report on the investments made by German companies in India

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  1. 1. GERMANY INVESTMENTS AND OPPORTUNITIES QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  2. 2. CONTENT LAYOUT INDIAN ECONOMY GERMANY AND INDIA ROAD AHEAD BUSINESS CENTRE QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  3. 3. INDIAN ECONOMY SINCE 1991 QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  4. 4. INDIA’S GROWTH STORY The Indian Economy has shown accelerated growth since the economic reforms of 1991. Presence of public sector in many industries was reduced to pave way for FDI. In 2008, India grew at 6.7%. This growth accelerated to 9.3% in 2010-11. The contribution of total trade in goods and services to the GDP rose from 16% in 1990–91 to 47% in 2008–10. India's major trading partners are the European Union, China, the United States of America and the United European Union. Since January 2003, India has received over US $ 5 billion of FII investment. QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  5. 5. GDP GROWTH RATES OF INDIA POST RECESSION 6.7 8.5 9.3 6.2 5.4 5.3 6.8 8 8.5 7.6 6.5 6.4 0 1 2 3 4 5 6 7 8 9 10 2008 2009 2010 2011 2012 Q1 2013 Actual Forcasted source-www.rbi.org.in QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  6. 6. CURRENT SCENARIO The Indian Rupee has reached an all time low of Rs58.15*. IT and Pharmaceutical companies will benefit. Auto-makers and Petro-Chemical based products like textiles and tyres are majorly impacted. Foreign institutional investors brought around $15 billion into Indian equities (Jan-May ’13). June has seen capital outflows so far. Companies like Bosch and BASF are looking to increase their promoter stakes to 75%. Previous year FDI for India stood at $27.3 billion, lower by 13%. India has received $15 billion of net FII equity inflows out of the $17 billion inflows into Asia Pac (ex- Japan / China / Australia) Inflation rate as of April ’13 stood at 9.4%. The high inflation expectations, coupled to an actual trend of falling inflation is expected to create a opportunity for investors. With the 4.9% of fiscal deficit in 2012-13, the government expects more investment in the coming quarters. Raghuram Rajan plans to liberalise rules for FDI and portfolio investment. *as of 11th June ‘13 QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  7. 7. INVESTMENT IN INDIA India has a conducive foreign investment environment that provides freedom of entry, investment, location, choice of technology, production, repatriation of capital, dividends etc. which is specifically aimed at enhancing flow at FDI. Government has done away with the complex pre-entry approvals. FDI can enter India in most sectors through automatic route. Source- http://indiainbusiness.nic.in 19 12 7 6 5 5 4 4 4 3 0 5 10 15 20 Services Sector Construction Development Telecommunication Computer Software and Hardware Drugs and Pharamaceuticals Chemicals Power Automobile Industry Metallurgical Hotel and Tourism SECTOR WISE % SHARE OF INVESTMENT QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  8. 8. ATTRACTIVENESS OF THE INDIAN MARKET India has the Best licensing regime |KEARNEY India is the most favoured democracy for the global investors | KEARNEY India was rated among the most favourite investment destinations| UNCTAD, JETRO, JBIC, Deutsch Bank, EIU etc. 6th most attractive investment destinations |KEARNEY Business Confidence Index, 2003 Major destination for foreign venture capital funds |Far Eastern Economic Review QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  9. 9. TOP 10 COUNTRIES INVESTING IN INDIA Country (Rank wise) FDI inflows August ’91 – Mar ’12 (in US $ million.) % share of total inflows Mauritius 67,777 37.1 Singapore 17,496 9.6 UK 16,567 9.1 USA 13,014 7.1 Japan 9,146 5.0 Netherlands 7,737 4.2 Cyprus 6,425 3.5 Germany 5,293 2.9 France 3,207 1.8 UAE 2,254 1.2 SOURCE-www.indien.ahk.de QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  10. 10. GERMANY IN INDIA QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  11. 11. ECONOMIC STATUS • From -0.6% in 2012, the GDP showed growth of 0.1% in Q1 ‘13. Ernst and Young has forecasted a growth of 19% by 2014 • The industrial production on a rise, at 1.8% in April 2013. • Demand from US to increase the exports from the Euro Zone. The total FDI outflow- $ 66.8 Billion in 2012. • Structural gaps in the government budgets due temporary nature of social security fund surpluses. • Confidence in real markets will improve further over the course of the year. This will give businesses an incentive to invest and hire additional workers. | Ernst & Young EUR/USD Exchange Rates Source- http://www.oanda.com/currency/historical-rates/ QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  12. 12. GERMANY AND INDIA German companies in India have earned an excellent reputation, on the strength of their high technological standards, efficient business execution and long term commitment. In 1867, Siemens laid the first telegraph connection. Bayer started local operations in India in 1896. Germany is India’s fourth largest trading partner (after US, UK and Japan). From $15,006.36 million in 2007-8, trade increased to $24,218.35 million in 2011-12. Most investments from Germany to India were from the large German manufacturing corporates. The service industry and the German Mittelstand have seen great success too. In the financial services sector Deutsche Bank is a major international player and Allianz Insurance with its Bajaj Allianz joint venture is the largest foreign insurer in India. QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  13. 13. CURRENT SCENARIO In 2012, FDI equity inflows from Germany was 38,830.57 million 2nd largest partner for technology collaborations 8th in the list of top ten investing countries since 1991 More than 1,800 German companies & 600 JVs between India and Germany in operation German FDI inflows since August 1991 to March 2012 is nearly US $5.3 billion 1,620 financial collaborations have been approved for Germany since 1991 (7.8%) Government of India signed BIPA with The Federal Republic Of Germany for the Promotion and Protection of Investments QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  14. 14. GERMAN INVESTMENT INFLOWS SINCE 2000 With $1096 Billion in 2008, the amount of investments abroad increased to $1315 Billion in 2010 Germany, today is the 4th largest trading partner 65% of German companies surveyed by KPMG said they are looking to expand their India operations further. **Financial Year followed Source- http://indien.ahk.de/ 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Total Investment Inflows from Germany** Total Investment inflows US$inmillion QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  15. 15. GERMAN FDI EQUITY INFLOWS SINCE 2000 Year FDI equity inflows from Germany*(US$ in million) 2000 86.39 2001 133.05 2002 138.11 2003 78.80 2004 158.15 2005 83.34 2006 312.70 2007 343.16 2008 788.78 2009 599.93 2010 197.66 2011 1484.26 *Calendar Year followed QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  16. 16. SECTOR WISE FDI EQUITY INFLOWS 71% 5% 4% 3% 3% 2% 2% 2% 1%1% 6% 1 2 3 4 5 6 7 8 9 10 11 Sector % share 1 Miscellaneous mechanical & Engineering Industries 71.04 2 Services Sector 5.45 3 Construction Development 3.95 4 Industrial Machinery 2.83 5 Telecommunications 2.47 6 Automobile Industry 2.07 7 Chemicals (other fertilisers) 1.96 8 Boilers & Steam generating plants 1.95 9 Trading 1.40 10 Electrical Equipments 1.08 11 Others 5.8 QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  17. 17. TOP 10 GERMAN FDI EQUITY INFLOW CASES Name of the company Industry MHM HOLDING GMBH MFG PRINTING INKS/PKG INKD, RESINS,ENAMELS ADHESIVES DKY INIL HEALTH HOLDING MANUFACTURE OF POWER CAPACITORS ALLIEANZ SE INSURANCE CARRIERS, LIFE METRO CASH & CARRY INTERNATIONAL GMBH TRADING OIL TANKING INDIA GMBH(JV) CONSTRUCTION AND MAINTENANCE DEEREE AND CO. INTERNET SERVICES LANXESS DEUTSCHLAND GMBH MANUFACTURE OF CHEMICAL PRODUCTS DEUTCH BOARSE A.G. SECURITIES DEALING ACTIVITES Source- http://dipp.nic.in/ QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  18. 18. REGION WISE FDI INLOWS FROM GERMANY • The RBI regional office in Mumbai(Maharashtra, Dadar & Nagar Haveli, Daman & Diu) received the maximum FDI inflow of 37% in 2010- 11. • The Delhi region(Delhi, part of UP and Haryana) received the maximum FDI in 2009-10. • Top 3 investment locations: Maharashtra - 39% Delhi (incl. UP & Haryana)-17.8% Karnataka-14.2% 73.91 21.82 21.47 18.2 10.3 8.58 4.32 2.42 1.44 0.72 0.31 0.04 0.03 0.03 36.15 US$INMILLION REGIONAL OFFICES For April’10- March’11 QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  19. 19. SMALL AND MEDIUM INDUSTRIES • SMEs in Germany are strong in areas of auto components, machine and hand tools, toys and pharmaceuticals • Mittelstand companies account for nearly 50 per cent of the country’s GDP employing about 70 per cent of the nation’s workforce. • SMEs constitute 99.7 per cent of the companies in Germany • German companies face challenges like red tapism, corruption, poor infrastructure and requirement of number of licenses to start a business. Break-up of SMEs in India QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  20. 20. INDIA ADVANTAGE Labour costs in India are considerably low. Availability of skilled manpower Rich natural resources at competitive costs Regular reforms in the financial sector. Access to the vast domestic and South Asian market Growing consumerism and growing middle class Growing working age population Source-http://www.ibef.org QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  21. 21. CONCERNS AND OPPORTUNITIES Opportunities • Large talent pool and the low cost of operation. • Increased demand due to the growing middle class. • Hub for Global outsourcing, Manufacturing and design • The software IT parks, BPOs, SEZs instrumental in the growth • Untapped rural market Concerns • Lack of stable policies, High tariffs and Bureaucracy • Study shows SMEs find it difficult to train employees • Infrastructure growth hasn’t kept pace with the growth of the Economy. It makes the deliveries of the services difficult and costly. QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  22. 22. PROMOTION OF INDO-GERMAN TIES • Indo-German Chamber of Commerce The IGCC is one of the most important institutions promoting Indo-German trade relations. Founded in 1956, It is now the largest German chamber abroad with more than 6500 members. IGCC is headquartered in Mumbai with branch offices in New Delhi, Chennai, Kolkata, Bangalore and Düsseldorf and liaison offices in Hyderabad and Berlin. • Indo–German Joint Economic Commission The IGJEC deals with matters of bilateral trade and investment The main Indo-German economic agreements: • Agreement for the Avoidance of Double Taxation, which came into force on Dec 19, 1996 • Agreement for the Promotion and Protection of Investments, which came into force in July 1998 • Agreements on co-operation in scientific research and technological development of 1971 and 1974 Source- http://www.ibef.org QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  23. 23. ROAD AHEAD FUTURE OUTLOOK QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  24. 24. EDUCATION AND RESEARCH The Education sector in India is on the rise. The literacy rates have increased to 67%. The Indian government plans to open up 70 new universities for further studies by 2020. Education will emerge as an attractive investment theme in India, with the population’s median age below 25 years, and with a visible shift in mass mindset towards spending for education. India and Germany to spend €3.5 m each on research and innovation QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  25. 25. INSURANCE Munich Re has entered the Insurance sector and has signed a number of joint ventures in India covering Non-life Health Insurance (their subsidiary DKV launched a joint venture with Apollo Group); Non-life (Non Health) Insurance (their subsidiary ERGO signed an agreement with HDFC) by way of a joint shareholding (26%) in HDFC. Allianz and CARE agreed to become partners for micro-insurance in India for the tsunami-affected people in Tamil Nadu. An MoU has been signed between General Insurance Council of India and the German Insurance Association on April 3, 2008 to promote cooperative relationship, mutual understanding and exchange views and information on matters and activities of common interest. QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  26. 26. TECHNOLOGY The technological partnership of India and Germany is very crucial for development of further trade relations and corporate alliances. Germany's leading news magazine Der Spiegel has cited India as the No.1 destination for offshore development by German software companies. Cooperation with Germany in the field of Information Technology, biotechnology, auto components and renewable energy is increasing. Indian Government has accorded approval to the Special Incentive Package Scheme to attract investments for setting up semiconductor fabrication and other micro and nanotechnology manufacture industries in India. QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  27. 27. FUTURE OUTLOOK The trade between India and Germany is expected to reach Euros 20 billion According to a recent study by KPMG more than 80% of the German companies see India with tremendous growth potential. Despite challenges that the German companies face, especially the SMEs, they remain quite bullish about the Indian Market. Harsh Pati Singhania, President, FICCI highlighted two main forces which would stimulate Indo-German ties in future. • First, the mutually reinforcing link between economy and technology in the bilateral relations. • Second, the trend of bilateral investment and third, is a partnership in the global arena on concerns of global impact such as poverty, disease, environment and climate change, energy security etc. The German pharmaceutical industry has seen tremendous growth and Generics constitutes one-fifth of that growth. Germany has developed affordable generic medicines and now collaboration with India will make them available to Indian SMEs. Indonesia, Vietnam, Myanmar and Russia are the emerging markets which could draw away investments meant for India. QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  28. 28. FOR PROSPECTIVE INVESTORS A large market size, and population having varying tastes, the German companies should look to have a wider portfolio of customized products Indian market is price sensitive. Pricing of the products should be done keeping in mind the local mindsets. German SMEs have difficulties in procuring talent. SMEs typically do not have the funds or resources to conduct training sessions. The companies setting up business in India should lay focus on quality, technology and after sales support. It can prove beneficial for German companies to find a local partner. Doing business is easy and entry becomes convenient too. Due to large market size, company encounter lower volumes and larger business cycles. Thus, it is crucial to have a reliable vendor. QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
  29. 29. CONCLUSION • India has expertise in knowledge based industries. The R&D centres and BPOs make India an attractive destination. • The efficiency of the policies and the lack of proper infrastructure makes the trickle-down effect difficult.s It is difficult for corporates to tap the potential of Indian market in absence of proper procedures and innovative systems to reach the heart of India. • The working age population is on the rise and the dependency ratios are lower. This means, the strain on the public finances is going to decrease, having a positive impact on the deficits and growth of the economy. • Although, the growth of the middle class in India is a boon to the companies, but the income levels are still lesser than those in developed countries making it imperative for business’ to price their products sensitively. • India does have an edge over other countries when it comes to the supply of resources and skilled manpower. India is a hub for outsourcing. • According to a survey, tapping into new sales markets (66 percent) and sources of supply (49 percent) were the main motives for SMEs to operate internationally. Apart from this, 34 percent mentioned "access to knowledge“, 23 percent "skilled workers" and "low-cost labour" was a motive for another 9 percent. QUAD BUSINESS SOLUTIONS | GURGAON, INDIA | +91 124 4930776 WWW.QUADGROUP.IN
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