Europe’s largest economy offers Indian entrepreneurs a strong base to expand in diverse sectors
When business conglomerate Kalyani Group acquired Germany’s RSBconsult last year, the move was aimed at further strengthening its position in the wind turbine sector. The acquisition helped the Indian company improve its product technology while harping on its own global supply chain capabilities drawn from its successful auto components business.
The German company offered superb design capabilities from components to wind turbine systems, and had projects across the globe.
| DARE/country facts | |
| Area | 357,114 km² (137,883 sq mi) |
| Population | 82,369,548 |
| Gross Domestic Product | 2,423.8 billion euro (2007) |
| Exports | 969 billion euro (2007) |
| Imports | 772.5 billion euro (2007) |
| Labor Force | 43.51 million (2007 est.) |
Kalyani Group is among a host of Indian companies to have made such strategic moves in Germany, and renewable energy is not the only sector of interest for Indian firms. Much action has been seen in the pharmaceutical space, primarily because Germany happens to be one of the biggest generic drug markets in Europe. It was in 2006 that Dr Reddy’s Laboratories snapped up fourth-largest German generic drug maker Betapharm Arzneimittel for approximately Rs 2,550 crore. This was, at that time, the biggest overseas acquisition by an Indian pharmaceutical company. Prior to that, Torrent Pharmaceuticals had acquired Heumann Pharma, the German generic drug distributor of Pfizer.
While acquisition of German firms seems to be the preferred route for some Indian companies who plan to grow quick, others such as IT major TCS have set up their development centers in the country to cater better to their European clients. With its Central European head office in Frankfurt, TCS has other regional offices in Munich, Hamburg, Dusseldorf, Waldorf and Stuttgart. “Information and communications technology (ICT) is perhaps the most important industry for Indian investors in Germany. Over the last five years, nearly half of all Indian FDI projects in Germany were in this sector,” says Michael Pfeiffer, MD, Invest in Germany, the agency that helps foreign companies set up shop in the country.
| Michael Pfeiffer Managing Director, Invest in Germany |
| What makes Germany an attractive destination for Indian businesses? The advantages to foreign investors in Germany are the same regardless of the prospective investor’s nationality. Germany offers advantages in the industries in which many Indian investors are very active. Indian investors are wise to place emphasis on ICT in Germany as it is Europe’s largest market in ICT, having brought in euro 146 billion in revenues in 2007. Indian investors are taking a keen interest in developments in renewable energies, and this is also an area where, thanks to a favorable investment landscape, infrastructure, and a highly qualified workforce, Germany excels. Lastly, pharmaceutical is an especially important industry for Indian investors in Germany. Germany is Europe’s number one market, not only because of its consumers, scientists, and hospitals, but also because of the quality of German researchers. More patents are registered at the European Patent Office from Germany than from the United Kingdom and France combined. When it comes to the European market, most entrepreneurs say they find it difficult because of the language and culture. Your comments. Lastly, there is a considerable Indian population in Germany’s major cities. Some regions even have cricket clubs or other organizations that could be particularly appealing to Indian citizens living in Germany. There are also non-stop flights to India from Germany’s Frankfurt airport. All German cities have at least one international (i.e. English speaking) school. What are the key sectors that are attractive for Indian investors? Indian investors come to Germany because they find a strong R&D infrastructure, knowledge of the industry among potential employees, professional support from authorities, investment promotion agencies, and business partners during the investment process. How is the tax system and labor law in Germany favorable for foreign companies? Labor laws in Germany are also more flexible than often perceived. Especially in the early stages of an investment, there are possibilities to ensure flexibility within employment relations. For example, investors can hire staff through a temporary employment agency providing flexibility in both the duration and potential termination of employment. Another possibility is to hire employees with fixed-term contracts, with no obligation to extend the employment. Regularly, fixed-term employment contracts can be signed for a maximum duration of two years. How easy or difficult is it to start a business in Germany? For most established companies, the appropriate form will probably be the GmbH (the German equivalent to the British Limited). Administratively forming a GmbH requires having a company’s articles of association certified by a German notary, company details entered into the commercial registry, and a further registration at the trade office. The whole process takes no more than two to three weeks, and sometimes even just a few days when the investor has all of his documents in order. In a short time, the German government is also expected to approve a reform to the law pertaining to the GmbH (the GmbH Act). These reforms will further streamline the process of founding a GmbH. How does your agency help foreign companies in entering Germany? sOur industry experts also will accompany the investor on fact-finding trips to various potential investment sites across Germany to help determine the best location for the investment project. In India we are excellently represented through the Indo-German Chamber of Commerce in Mumbai, New Dehli, Pune, Bangalore, Chennai, and Kolkata giving Indian investors the chance in many different locations to learn about the advantages of Germany as an investment location. |
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