Interview with Raveesh Kumar | Consul General of India in Frankfurt
First published in M+V’s India Insight in June 2015
M+V: What was your experience of the visit of Indian Prime Minister Narendra Modi to Germany to inaugurate the Hannover Industrial Trade Fair 2015?
Raveesh Kumar (R.K.): The joint inauguration of the Hannover Industrial Fair, where India was the Partner Country, by Prime Minister Narendra Modi and Chancellor Angela Merkel was an important step towards strengthening of the Indo-German economic partnership. Simultaneously, the visit was a combination of political, economic, social and cultural outreach to Germany, which is the industrial and technical powerhouse of Europe. The objective of Prime Minister’s visit was to invite the German industry to invest in India under the initiative of ‘Make in India’. The importance of ‘Ease of Doing Business’ with India was highlighted by the Prime Minister in his inaugural speech and in his discussions with top German CEOs during the visit. To mark the success of the event, Indian companies signed 11 MoUs with German firms in order to boost foreign fund inflows as well as promote domestic manufacturing.
M+V: Has India changed since Narendra Modi became the Prime Minister of India?
R.K.: In my opinion, the new government has made rapid strides towards inclusive growth for the people of India. It has been just over a year since the government under the leadership of Prime Minister Narendra Modi has been in power – a period that has been characterised by significant economic and political transformation. All the major economic parameters are looking bright. Inflation has declined by over 6 percentage points since late 2013. The current account deficit has declined from a peak of 6.7% of GDP (in Q3, 2012-13) to a more manageable level of 1.5%. The fiscal deficit is at 3.99% in 2014-15 and is projected to meet the medium-term target of 3% of the GDP. After a phase of deceleration, real GDP has been growing at 7.3% for the period 2014-15 against 6.9% in 2013-14. Most of the international financial institutions including the World Bank, IMF, UNCTAD, OECD and others are predicting even faster growth in the coming years. Moody’s have recently upgraded the rating of India as positive, on account of our concrete steps in various economic segments. Several reform measures have been undertaken by this government in the areas of streamlining of taxation, FDI policy liberalisation, labour and land reforms.
The government has also launched social and financial inclusion schemes to ensure uniform and equitable growth. Jan Dhan Yojana, which is a comprehensive financial inclusion by opening of bank accounts of people who have been left out of the process so far, gained acceptance immediately. It is notable that on the inauguration day, a record 15 million bank accounts were opened under this scheme and so far 150 million have been covered under this scheme. Jan Dhan, Aadhar and Mobile (JAM) – for direct benefit transfer will remove the middleman and ensure plugging of leakage of benefits.
M+V: Modi recently stated that in the last year, “the world’s perception about India has changed.” Can you tell us how this might affect foreign investments in India?
R.K.: First, the perception changes and now, the reality is changing. The Indian government’s policy regime and a robust business environment have ensured that foreign capital keeps flowing into the country. The government has taken many initiatives in recent months such as relaxing FDI norms across sectors like defence, PSU oil refineries, telecom, power exchanges and stock exchanges. FDI into India through the direct approval route increased by 162% to US$ 1.91 billion in the first ten months of the current fiscal year. FDI to India doubled to US$ 4.48 billion in January 2015, the highest inflow in the last 29 months. The foreign inflows have grown to touch US$ 25.52 billion during the April-January 2014-15, an increment of almost 36% from the corresponding period last fiscal. Any foreign investor looks at three things before putting his money – stability of the system and assurance and value of returns. India satisfies all these conditions – it is the fastest growing economy in the world with a history of political stability.
M+V: The ‘Make in India’ initiative seems to have been welcomed by the German industry. How exactly can German companies with the intention to invest in India benefit from this initiative?
R.K.: The ‘Make in India’ initiative comprises of 25 sectors that have been identified to encourage targeted investment inflow in India. Germany has carved a niche for itself in sectors like defence manufacturing, electronics, infrastructure, automotive technology, machinery, renewable energy, infrastructure, waste management and India’s dual education system. As they also form the core of the ‘Make in India’ initiative, during Hannover Messe, these areas were identified as potential sectors for further collaboration and these 25 sectors under ‘Make in India’ initiative have received arrays of incentives and relaxations for investors, information about which is readily available online on ‘Make in India’ website (www.makeinindia.com). Additionally, the government has also eased foreign entry into these sectors. Electronic portals such as eBiz have been set up by the government, which provide online access to core services that are required to obtain necessary clearances, licenses and complete mandatory tax registrations. eBiz also offers online access to a number of regulatory filing services that are needed to operate business/industrial units.
M+V: In addition to the ‘Make in India’ initiative, Modi has announced a project to create 100 Smart Cities in India – and
Germany is set to partner in developing three smart cities. Can you tell us something more about the current state of affairs of that project?
R. K.: In January this year, Germany has agreed to develop three smart cities in India in the ambitious project of building 100 Smart Cities. A Joint Declaration of Intent on Sustainable Urban Development was signed during the Hannover Messe 2015 between the Ministry of Urban Development, Government of India and the German Federal Ministry of Environment, Nature Conservation, Building and Reactor Safety. It talks about cooperation in development of smart cities. The exact name and number of cities will be decided in due course.
M+V: What is your personal advice for foreign companies that want to sell their products in India?
R. K.: I would like to emphasise that the overall mood and environment in India is business and investment friendly. We are aware about the concerns and we are taking steps which are geared to generate a favourable investment climate in the country. We need the support of foreign companies and my advice is very simple – India is changing. You will find an environment that is not only open but welcoming. Now is the time to go to India if you have not been there already.
M+V: Is there something particular that consulting companies can do to support companies that want to expand to India?
R. K.: Consulting companies based in Germany are bridges or guides to German companies that want to invest in India and vice versa. Many times, companies that want to invest abroad do not have enough resources or expertise to make the correct decisions. Consulting companies that also have a presence in India are better placed to advise them by removing misperceptions about India and presenting them with a realistic picture to make their venture successful and fruitful.
The task of the consulting companies is to do the necessary hand holding for potential investors desiring to invest in foreign countries. It is in the benefit of the respective governments and the consultants to work closely to ensure smooth transactions in order to set base in the destination country. This also is the objective of the Indian government.
M+V: You have been living in Germany since 2013. What is your favourite experience so far?
R. K.: I find my experience in Germany very stimulating and deeply satisfying, both personally and professionally. It is actually difficult to recall one favourite experience because there have been many but the few days which I spent with my family wandering through the black forest region has been a wonderful experience.
M+V: You will be part of our business conference India Day in June in Cologne. What are your expectations for the companies’ view on India investments?
R. K.: Last year when I addressed the India Day in Cologne, the present government had just assumed office. There were several unanswered questions and to some extent hesitation amongst the companies with regard to future investments in India. The past year has changed this perception. The overall mood for the industry is positive. The clear mandate of the current government is to encourage and ease manufacturing in India. Germany is the land of hidden champions and I expect that these companies will find it an appropriate time to consider India as their next manufacturing destination.
Thank you Mr. Kumar for this interview!