german investments in india -...
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Annual Review 2011
Investments & Cooperation
101
German Investments in India Germany is India’s 8th largest investor
Each year Germany has featured in the top ten list of investing countries in India. Since liberalization, Germany has been the 8th most
important investing country for India. During the last financial year (2010-11), however, it ranked 10th in the list of top ten investing countries.
Investment inflows from the country declined over 68% during the last financial year.
Germany specific highlights• Cumulative FDI inflows since August 1991 is nearly US
$3.7 billion accounting for 2.5% share
• Germany ranks 8th in the list of top ten investing countries
since 1991
• Top sectors attracting FDI inflows from April 2000 to May
2010 are Services Sector (19%), Chemicals-other than fertilizers
(14%), Trading (8%), Electrical Equipment (8%), Automobile
Industry (7.0%)
• 1,614 financial collaborations have been approved for
Germany since 1991 of a total of 20,502 for all countries
• 1,117 technical collaborations (14%) of Germany have
been approved out of a total 8,140 for all countries since 1991
• Top five sectors inviting technology transfer from Germany
since liberalization are Industrial Machinery (209), followed by
Electrical equipment- incl. computer software & electronics
(168), Chemicals – other than fertilizers (127), Misc. mechanical
& engineering industry (102) & Transportation industry (94)
• Since the year 2000, Maharashtra - 39%, Delhi (incl. UP &
Haryana)-17.8% and Karnataka-14.2% were the top 3 invest-
ment locations for German companies in India
• Germany’s investments into India during Apr.’10 to
Mar.’11 amounted to US $200 million, accounting
for only 1% of total investments in India in that year.
India seeks greater investment from Germany
During the visit of German Chancellor Dr. Angela
Merkel on 31st May 2011, India sought greater German
investment, particularly in the areas of infrastructure,
high technology, energy and basic and applied sciences.
"We wish to expand our production and R&D base and
encourage more technology transfers," stated Prime
Minister Manmohan Singh at an interaction with the
German Chancellor. He said there was admiration and
respect for the advances made by Germany in engi-
neering and technological development. The passion
for quality, hard-work and innovation of the German people
is admired by the people of India, he said. The two countries
also signed agreements in science and technology and research
between some of their institutions. The agreements are expected
to encourage greater exchanges in areas such as biotechnology,
nano-technology and material sciences.
The Indo-German partnership is all set to strengthen follow-
ing the Chancellor’s visit to India and the “Germany and India
2011-2012: Infinite Opportunities”, which will officially kick
off in September 2011. This is her second visit to India since
2007 and it coincides with the 60th anniversary of the estab-
lishment of diplomatic relations between India and Germany.
The year-long celebrations of the Germany Year will certainly
provide the stimulus to increase Indo-German partnerships
thereby increasing German investments in India in the future.
German Investment inflows since 2000
Since the year 2000, Germany has invested nearly US $3
billion (Table 7) accounting for 2.2% of total investments into
India. During the period from 2000 to 2010, the German invest-
Year (April-March)
From Germany(in US $ mil.)
From all coun-tries
(in US $ mil.)
% share of Germany
Table 7
Source: Department of Industrial Policy & Promotion, Govt. of India
Annual Review 2011
Investments & Cooperation
103
ments graph shows several crests and troughs. Af-
ter declining substantially in 2006-07, the following
year saw German investments sharply rise posting
a growth of 328%. The financial years 2008-09 and
2009-10 were also fairly good years for German in-
vestments, however, during the last financial year,
investments from the country dropped over 68%,
while the percentage share in the total investments
(since 2000) also reduced from 2.4% to 2.2%.
German FDI – Top Sectors (Apr’10- Mar’11)
The Services Sector with investments worth US
$45.76 mil. was the top sector with maximum
inflows in the last year (Apr.’10-Mar.’11), taking
up nearly 23% share of the total FDI inflows
from Germany (Table 8). This was followed by
Chemicals (excl. fertilizers) and Prime Movers (excl.
Electrical Generators) in the second and third place
respectively. While Chemicals accounted for a 13.4%
share with investments worth $26.80 mil., Prime
Movers - for the first time among the top sectors
- accounted for $15.7 million of total investments
with a share of nearly 7.9%. Consultancy Services
($13.11 mil., 6.56% share) and Railway related
components ($10.49 mil., 5.25%) were the 4th and 5th
most important areas for investments from Germany
during the last financial year.
During the last year (Apr’10 to Mar’11), the top
five categories took up only 56% of total invest-
ments, whereas in the previous year (Apr ’09 to
Mar’10), the top five accounted for nearly 75% of
all investments from Germany in that year, indi-
cating that the investments were more diversified
and spread over more categories.
In the last financial year, Electrical Equip-
ment, Chemicals, Services Sector, Automobile
Industry and the Trading Sector were among the
top five sectors for German investments
The winners last year in terms of German
investments were Prime Movers, Consultancy Ser-
vices, Railway related components and ceramics
S.No. Name of the Sector Amount of FDI inflow
in US $ mil.
% share
Table 8
0
100
200
300
400
500
600
700
800
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
123.34 113.48143.91
81.17
145.35
302.82
119.95
513.61
629.22 626.14
199.74
German investments into India since 2000(in US $ mil.)
Source: Department of Industrial Policy & Promotion, Govt. of India
Annual Review 2011
Investments & Cooperation
105
which featured among the top ten in the last financial year as
compared to the previous year, and the losers were Metallurgi-
cal and Miscellaneous industries, Industrial machinery, Tex-
tiles, Printing of books which were out of the top ten last year.
German FDI: Region-wise distribution
With investments worth nearly US
$74 million, and a 37% share, Maha-
rashtra attracted maximum German
investments during the last financial
year i.e. Apr.’10 – Mar’11 (Table 9). In
the previous year it was the Delhi
area, which with nearly 51% of total
German investments was far ahead
of the other regions. During the year
of reporting, Delhi moved to the
third place with Hyderabad taking
up a slightly larger share (10.9%)
of German investments than Delhi
(10.7%). Kanpur is a new entrant
into the list of top investment loca-
tions for German companies, taking
up the 5th position with investments
worth US $10.3 million and a share
of nearly 5.2%. Chennai ranked
fourth, accounting for US $18.2 million of total German invest-
ments into India and a share of 9.1% during the last financial
year. Karnataka (Bangalore) with investments to the tune of
US $8.6 million and a share of 4.3% ranked sixth among the
regions most popular for German investments last year.
1 Services sector 22.91%
2. Chemicals (other than fertilizers) 13.42%
3. Prime movers (other than electrical generators) 7.85%
4 Consultancy services 6.56%
5 Railway related components 5.25%
6 Trading 5.00%
7 Ceramics 4.00%
8 Computer software & hardware 3.97%
9 Automobile industry 2.52%
10 Electrical equipment 2.35%
11 Others 26.17%
1
2
345
6
7
8
9
10 11
Sector-wise break up of German FDI inflows (Apr.’10-Mar.’11) % Share
S.No. Regional Offices of RBI
States covered FDI inflows in US $ mil
% of FDI inflows
Table 9
Source: Department of Industrial Policy & Promotion, Govt. of India
Annual Review 2011
Investments & Cooperation
107
FDI & FTCs approved for Germany from Apr’10-Mar’11
During the last financial year, 6 cases were approved for
Germany, whereby all six were with financial participation
(Table 10). This means that there were no technology cases
approved for Germany during the last financial year. Cement &
Gypsum products, Defence industries, Transportation industry,
Chemicals, Trading and Miscellaneous industries all had 1
approved case each, whereby Cement& Gypsum accounted for
nearly 78% of the FDI approved, followed by the Defence industry
with nearly 19% and the Transportation industry with nearly 4%.
German Investments through Automatic Route
Foreign Investment in India can either fall under the - (a)
Automatic route or (b) Approval route.
a. Automatic Route
Under the current FDI Policy, Indian companies engaged
in most of the sectors / industries can issue shares to foreign
investors up to 100% of their paid up capital under the Auto-
matic Route. The Reserve Bank of India (RBI) issues regulations
in these regards. Under the Automatic route, no permission is
required from the Government of India or RBI.
b. Approval Route
In cases where Automatic Route is not available, an applica-
tion has to be made to the Foreign Investment Promotion Board
(FIPB), Ministry of Finance, Government of India. However due
to continuous liberalization in the FDI guidelines in February,
2006 such cases have reduced drastically and most of the cases
now fall under Automatic route.
During the financial year 2010-11, out of the total of US
$199.74 million German investments made in India, around
US $ 150.43 million (75.3%) came through the automatic route
or via the Reserve Bank of India (Table 11). In the 2009-10,
82.5% came through the automatic route, while in 2008-09,
Nearly 62% were routed through the RBI.
Top FDI inflow cases from Germany through Indian companies
According to the data received from the Ministry of Commerce,
Govt. of India, FDI inflows worth around US $1,363 million
were received from Germany through Indian companies from
April 2000 to May 2011 (Table 12). In the list of top investing
companies during this period were:
• MHM Holding GmbH
• DKV International Health Holding AG
• Allianz Se
• Metro Cash & Carry International GmbH
• Oil Tanking India GmbH
• Deeree & Co.
• Lanxess Deutschland GmbH
• Deutsche Boerse AG
• Intel Mobile Communications GmbH
• Lanxess Deutschland GmbH
The top three companies: MHM Holding GmbH for manu-
facturing printing/packaging inks, resins, enamels, adhesives
etc. with Micro Inks Ltd.; DKV International Health Holding
for manufacturing power capacitors with Apollo Energy Pvt.
Ltd. and Allianze SE who are Insurance carriers through their
Indian counterpart Bajaj Allianz ((Life insurance) accounted for
nearly 39% of the total amount of inflows through collaboration
with Indian companies
S.No. Name of the Sector No. of Approvals Amount of Foreign Direct Investment
Approved (in US$ million)
%age with FDI Approved
Table 10
Source: Department of Industrial Policy & Promotion, Govt. of India
Investments & Cooperation
Annual Review 2011108
S.No Name of the Sector Total inflows receivedin US $ million
Received by RBI (under automatic route) in US $
million
Table 11
Source: Department of Industrial Policy & Promotion, Govt. of India
Annual Review 2011
Investments & Cooperation
109
S.No Name of the Sector Total inflows receivedin US $ million
Received by RBI (under automatic route) in US $
million
S.No. Indian company FDI Route Foreign Collaborator
Region Item of manufacture Amount in US $ million
Table 12
Source: Department of Industrial Policy & Promotion, Govt. of India
Maximum investments into Germany from EUAt the beginning of 2010, German companies had invested € 985 billion abroad, €31 billion more than in the previous year.
More than a half (57%) went to EU countries. Germany too is an attractive location for investments. According to the Deutsche
Bundesbank, foreign direct investments into Germany stood at € 470 billion at the beginning of 2010, of which €361 billion
(nearly 77%) came from the EU-countries.