german investments in india -...

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

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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.)


Annual Review 2011


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


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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



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


Annual Review 2011


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


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.

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