Prime minister Narendra Modi urged German companies on Tuesday (6) to do business in India, promising tax and other economic reforms on the final day of chancellor Angela Merkel’s visit.
India and Germany also pledged to revive efforts to reach an Indo-European free trade pact after talks were derailed by a ban on Indian generic drugs.
After the leaders toured a German engineering factory in India’s technology hub of Bangalore, Modi called on the European powerhouse to invest in Asia’s third largest economy to provide jobs for millions of young people.
“We have worked aggressively in the last 15 months to make India an easy place to do business,” Modi said alongside Merkel.
The two leaders held lengthy talks in New Delhi on Monday (5) during the chancellor’s first visit to India since Modi’s Bharatiya Janata Party (BJP) stormed to power in May 2014.
Germany pledged over €1 billion in Indian solar power projects as the countries signed a series of deals aimed at expanding trade.
Germany, Europe’s largest economy, is looking to expand its presence in India to compensate for a slowdown in China. Merkel’s delegation was joined by bosses from household names like Siemens, Airbus, E.ON and Thyssenkrupp.
The Indo-European trade talks have been on ice since earlier this year when India walked out in a row over exports of generic drugs to the European Union.
Although Merkel and Modi made no mention when they addressed journalists of resuming talks on the trade agreement, it was perhaps the key “deliverable” of her trip to Delhi. Both leaders “committed themselves to bringing about the earliest possible resumption of talks”, said a joint statement issued after their three-hour talks.
India’s top diplomat made clear Modi was counting on Merkel to help lift “unwarranted” restrictions on the sale of more than 700 Indian medications in the EU.
“It’s our hope that this matter would be looked at fairly and sensibly, and would hopefully not be an impediment to the free trade deal,” foreign secretary Subrahmanian Jaishankar said.
India and Germany also signed an agreement to fast-track business approvals, providing German firms with a single point of contact to help them navigate a web of red tape that often thwarts initiative.
In Bangalore, Modi singled out his government’s push to turn India into a manufacturing hub, saying it had fast-tracked clearances for foreign companies to set up shop in the world’s second most populous country.
“One of the biggest challenges in India today is to productively employ our youth,” Modi said at a forum in the southern city.
Modi said he hoped to introduce a long-awaited national sales tax in 2016 to replace a myriad of overlapping state and national duties.
The Goods and Services Tax along with several other economic reforms have been stuck in parliament, where Modi’s party lacks a majority in the upper house. Modi and Merkel toured a Bosch factory in Bangalore, as company executives said they plan to invest Rs6.5 billion (over €100m) in India this year.