German companies have rated India as the highest performing country among the Bric markets, according to a recent report by EY Delphi.
"India is assumed to be the highest performing country among the Bric (Brazil, Russia, India and China) markets. According to the 94% of the surveyed CEOs and CFOs from leading German hi-tech companies, India currently offers better investment climate than other Bric countries," the report said.
Prime Minister Narendra Modi released the report during his recent visit to Germany. In pursuance of Indian government's efforts to encourage Indo-German collaboration in high-technology manufacturing, the Indian embassy in Berlin in partnership with EY had undertaken a study on "Prospects for Indo-German collaboration in hi-technology manufacturing".
The study was anchored to the 'Make in India' initiative and other national programmes initiated by Modi. Its objective was to identify high-technology sectors that are most suitable for Indo-German collaboration and to develop investor-related sector information resulting in a platform that facilitates trade and investments in these particular sectors.
The survey has nine key findings. It revealed the readiness of German companies to invest in India. "Investors recognise India's market growth, large market size and efforts to attract FDI. Perceived obstacles, meanwhile, are infrastructure, administration and regulation. Out of 13 high-tech manufacturing sectors analysed, seven offer greatest convergence for Indo-German collaboration: the electronic systems design and manufacturing (ESDM) sector, the automotive sector, civil aviation and airports, transportation infrastructure, water, renewable energy and heavy engineering," said the report.
The surveyed audience also recognised the high-tech consumer market in India, which is being driven by the rapidly growing section of Indian society with medium levels of income. Increasing disposable incomes, in combination with a high demand for technologically advanced products and applications, create an attractive environment for high-tech manufacturing.
"To further stimulate collaboration between Europe and Asia –and in particular between India and Germany – it is important to build and improve institutionalised bilateral mechanisms. An improved business environment will have immediate positive effects on collaboration and create further opportunities for investment. It will also create spillover for adjacent sectors, while medium- and long-term investment will generate multiplier effects, with positive effects on both economies," the survey said.
However, a set of challenges is impacting the German companies' investment decisions. Across all high-tech manufacturing sectors and investor groups – including companies starting a business, companies already operating in India, and potential investors which operate in other Bric countries – several perceived challenges have been identified. They would require improvement in infrastructure, simplification of regulatory procedures, liberalisation of FDI and simplification of the tax system, it said.
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