Mun/Com/201/1/2011. Monthly Economic and Commercial Report CGI, Munich, Germany: January 2011 (Consular Jurisdiction: Bavaria & Baden-Wurttemberg)

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1 Mun/Com/201/1/2011 Monthly Economic and Commercial Report CGI, Munich, Germany: January 2011 (Consular Jurisdiction: Bavaria & Baden-Wurttemberg) Executive Summary Federal Government forecasts that German GDP will grow by 2.3 in 2011 GDP of Bavaria grew by 3.2 during the 1 st half of 2010 GDP of Baden-Wuertttemberg grew by 5 during the 1 st half of 2010 Indo-Bavarian trade during Jan-Nov 2010 at 1.91 billion (23.29 change) Indo-Baden-Wurttemberg trade during Jan-Nov 2010 at 2.1 billion (29.47 change) Indo-German trade during Jan-Nov 2010 at 14 billion (18.56 change) Siemens AG to increase stake in their Indian Subsidiary Meeting with Foreign Correspondent of FOCUS magazine in New Delhi Interview with Consul General by Editor-in-Chief of BusinessBavaria New Year Reception hosted by Deutsche Bank German-Indian Round Table (GIRT) Meeting in Munich Meeting with Deputy Director, Foreign Trade Relations, Asia/Pacific, Bavarian Economic Ministry Launching of Telepresence Room of Tata Communications in Munich INDIBAY Meeting Meeting with Head of Department, Economics Policy And International Relations, Baden-Wuerttemberg Ministry of Economics: Stuttgart Republic Day Celebrations: Indian Institute Meeting with Ms. Nicola Doll of Travellers World magazine Republic Day Celebrations in Nuremberg BAU 2011 Turnover of Bavarian Manufacturing Industry increases by 13.2 in 2010 Baden-Wuerttemberg Industrial Production increases by 14.9 during

2 I) Economic Outlook Germany Federal Government forecasts that German GDP will grow by 2.3 in The German economy has rapidly recovered from the economic crisis. The GDP grew by 3.6 in 2010, the largest economic growth registered since reunification. During the crisis year 2009, GDP shrank by 4.7. In its annual projection for 2011, the Federal Government forecasted that the upswing will continue in 2011 and the GDP will grow this year by 2.3. According to the report, exports in 2011 will grow by 6.5 and imports will increase by 6.4. Domestic demand is expected to grow by 2. The unemployment rate is expected to be 7 in 2011 (unemployment rate in 2010 was 7.7). 2. Foreign trade was once again major driving force for economic growth in Germany in After recording negative growth rates during 2009, German exports in 2010 increased by 18.5 to billion and imports increased by 20 to The economic performance in 2010 was achieved on an annual average by 40.5 million employees in Germany, which is an increase of persons or 0.5 on a year earlier. Meanwhile, various economic organisations forecast higher GDP growth rates for The German Council of Economic Experts predicted that Germany's economy will grow by 2.2 percent in Deutsche Bank forecasted that German GDP will grow by 2 in GDP growth rates of Bavaria and Baden-Wuerttemberg for the year 2010 are yet to be published. According to a recent report published by Bavarian Business Association (VBW), Bavarian GDP should grow by close to 4 in 2010 and by 3 in According to a report published by the Baden-Wuerttemberg State Statistical Office, Baden-Wuerttemberg economy is expected to grow by 4.75 in 2010 and by 2.5 in During the first half of the year 2010, GDP of Bavaria grew by 3.2 and GDP of Baden-Wuerttemberg grew by 5. II) GDP Figures 4. In value terms, GDP of Germany at current prices in 2010, amounted to Euro 2498 billion. GDP values of Bavaria and Baden-Wuerttemberg for the year 2010 are yet to be published. In the year 2009, GDP of Bavaria at current prices amounted to Euro 429 billion and Baden- Wuerttemberg Euro 343 billion. Comparative GDP figures along with growth rates of Bavaria, Baden-Wuerttemberg and Germany are given below. GDP Growth Rate GDP (at current prices) in Year 2007 Year 2008 Year 2009 Jan-June 2010 Period Bavaria Baden-Wurttemberg Germany In billion Euros Year 2007 Year 2008 Year 2009 Period Bavaria Baden-Wurttemberg Germany 2

3 III) Inflation rate 5. Inflation rate in Bavaria in January 2011 was 2. Compared to previous year, the price for heating oil increased by 23.3, petrol by 10.3, electricity by 7.2 and food by Inflation rate in Baden-Wuerttemberg in January 2011 was 2.1. Compared to previous year, the price for heating oil increased by 25.7, petrol by 9.3, electricity by 7.8 and food by 2.5. Sr. States Inflation rate ( change over same period in previous year) No January 2010 January Bavaria Baden-Wurttemberg IV) Trade figures Value in billion Euros & change in over same period of previous year Jan-Nov 2010 Bavarian Export Bavarian import Total Trade of Bavaria Export of Baden-Wuerttemberg Import of Baden-Wuerttemberg Total Trade of Baden-Wuerttemberg German Exports German Imports Total Trade of Germany V) Trade with 10 major Countries and India The trade figures of Bavaria and Baden-Wuerttemberg along with the rankings and value of trade for the year 2009 are given in tables below. Bavarian Imports (In million Euro) Rank Country Austria China Italy USA Czech Republic France Russia Netherlands Hungary UK Total Imports Bavarian Exports (In million Euro) Rank Country Austria USA Italy France UK China Spain Netherlands Belgium Switzerland Total Exports

4 Baden-Wuerttemberg s Imports (In million Euro) Rank Country USA Switzerland France Ireland Italy China Netherlands Austria Czech Republic UK Total Imports Baden-Wuerttemberg s Exports (In million Euro) Rank Country France USA Switzerland Netherlands Austria UK Italy China Belgium Spain Total Exports VI) Indo-Bavarian/Baden-Wurttemberg/German Trade 7. Indo-German trade is on an upswing. During the first eleven months of the year 2010, Indian exports to Bavaria, increased by to 674 million, to Baden-Wuerttemberg by to 740 million and to Germany as whole by to 5.66 billion. During the period January to November 2010, India s total trade with the State of Bavaria increased by to Euro 1.91 billion, the two-way trade with Baden-Wuerttemberg increased by to 2.1 billion and Indo-German trade as a whole increased by to 14 billion. Value in million Euros & change in over same period of previous year Jan-Nov 2010 Indian Exports to Bavaria Indian Imports from Bavaria Total Trade Indian Exports to Baden Wuerttemberg Indian Imports from Baden Wuerttemberg Total Trade Indian Exports to Germany Indian Imports form Germany Total Trade

5 Evolution of India's Trade With Bavaria Value in Million Euros Year Value in Million Euros Evolution of India's Trade With Baden-Wuerttemberg Year Evolution of India's Trade With Germany Value in Million Euros Year Major 10 Indian Exports to Bavaria Year 2008 Year 2009 Sy.Co Product category Euro Euro Apparel of silk or man-made fibres, excl. Of knitted 804 or crocheted fabrics Electronic valves and tubes and other electronic 865 components Paints, varnishes and mastics Bearings, gears, gearing and driving elements Textile products n.e.s Machinery & Apparatus for electricity production 861 distribution and control Apparel of cotton, excl. of knitted or crocheted 806 fabrics Apparel of knitted or crocheted fabrics of cotton Footwear Articles of leather and leather clothes (excl. 812 footwear) Total Imports of Bavaria from India

6 Major 10 Indian Imports from Bavaria Year 2008 Year 2009 Sy.Co Product Category Euro Euro 885 Automobiles Machine Tools Measuring and automatic control instruments and 872 appliances Chassis, bodies, engines, parts and accessories for 884 motor vehicles, etc Machinery for working rubber or plastics Medical and surgical equipment and orthopaedic appliances Machinery, n.e.s Bearings, gears, gearing and driving elements Industrial plants Machinery and apparatus for electricity production, distri. & Cont Total Exports of Bavaria to India Major 10 Indian Exports to Baden-Wurttemberg Year 2008 Year 2009 Sy.Co Product category Euro Euro Television and radio receivers, sound or video 864 recording or reproducing appar. & associated goods Apparel of cotton, excl. Of knitted or croche.fabrics Machinery & Apparatus for electricity production 861 distribution and control Jewellery, goldsmith's or silversmith's wares Apparel of knitted or crocheted fabrics of cotton Articles of leather and leather clothes (excl. footwear) Chassis, bodies, engines, parts & acce. for motor 884 vehicle.etc Basic pharmaceutical products Articles of metal, n.e.s Automobiles Total Imports of Baden-Wuerttemberg from India Major 10 Indian Imports from Baden-Wurttemberg Year 2008 Year 2009 Sy.Co Product category Euro Euro 845 Lifting and handling equipment Motors and engines (excl.engines for 841 agri.tractors,aircraft,road vehicles) Machinery for Textile Apparel and leather Production Medical and surgical equipment and orthopaedic 871 appliances Chassis, bodies, engines, parts and accessories for 884 motor vehicles, etc Machinery for paper production and printing Measuring and automatic control instruments and 872 appliances Machinery and appara. for electricity production 861.distribution & Control Machinery, n.e.s Machine Tools Total Exports of Baden-Wuerttemberg to India

7 VII) Five principal export commodities S. No Name of Export Commodity Bavaria Year Motor Vehicles and Parts 2. Machinery Electrical Products Chemicals & Pharmaceuticals 5. Food Products 6574 Total Exports Value in million Euros S.No Name of Export Commodity 1. Machinery Motor Vehicles and Parts Pharmaceuticals Electrical products 8454 Baden- Wurttemberg Year Electronic products- data processing and optical products 8365 Total Exports VIII) Five principal import commodities Value in million Euros S.No Name of Import Commodity Bavaria Year Motor Vehicles and parts 2. Electrical products Machinery Chemicals & 8656 Pharmaceuticals 5. Food industry 6218 Total Imports S.No Name of Import Commodity 1. Pharmaceuticals Machinery Electronic products-data processing and optical products Motor vehicles and components Baden- Wurttemberg Year Chemical products 8218 Total Imports IX) Top 5 export and import items in India-Bavaria and India-Baden Wurttemberg trade Top export items of Bavaria to India - Year EXPORTS TO INDIA Medical & surgical equipment and orthopedic appliances Machinery, n.e.s Bearings, gears, gearing & driving elements Industrial plants Top export items of Baden- Wuerttemberg to India. Year Machinery for paper production & printing Measuring & automatic control instruments and appliances Machinery for electricity production & distribution Machinery, n.e.s Machinery for electricity production & distribution Others Machine Tools Others IMPORTS FROM INDIA 7

8 Top Bavarian import items from India. Year Machinery for electricity production & distribution Apparel of cotton, excl. of knitted or crocheted fabrics Apparel of knitted or crocheted fabrics of cotton Footw ear Top import items of Baden-Wuerttemberg from India. Year Articles of leather and leather clothes (excl. footw ear) Chassis, engines, parts & acce. for motor vehicle Basic pharmaceutical products Articles of metal, n.e.s 62 9 Articles of leather and leather clothes (excl. footw ear) Others Automobiles Others X) India s Investment interest Siemens AG to increase stake in their Indian Subsidiary 8. Siemens AG, Munich headquartered engineering and technology giant, announced its plans to increase its stake in the Indian subsidiary, Siemens Ltd, from the current 55 percent to 75 percent. The company will offer public shareholders of Siemens Ltd. at INR930 per share. In case of full acceptance of the offer, the investment will total around 1 billion. In fiscal 2010 (ended September 30, 2010), Siemens Ltd. India achieved a revenue of around 1.5 billion and a profit from operations of about 200 million. XI) India-Related Events Meeting with Foreign Correspondent of FOCUS magazine in New Delhi 9. Ms. Dorothea Reicker, Foreign Correspondent of FOCUS magazine in New Delhi called on the Consul General on 4 th January and briefed on the contribution of the magazine in bringing the people of the two countries together and in the exchange of ideas, views and policies. She also sought the advice of Consul General in widening their role in India and in furthering the partnership between the two countries. Consul General also met Ms. Gudrun Dometeit, Deputy Head of the political department of FOCUS, based in Munich, over lunch on 10 th January. Ms. Dometeit is a traditional hand on India and has contributed a series of articles earlier. Consul General briefed her on the trends in Indian economy and the prognosis for partnerships between companies from both sides. Interview with Consul General by Editor-in-Chief of BusinessBavaria 10. Mr. Terry Swartzberg, Editor-in-Chief of BusinessBavaria newsletter, published by Investin-Bavaria bureau of Bavarian Economic Ministry interviewed the Consul General on January 7, 2011, for a special article titled India and Bavaria: Partnership for growth. The interview will be published in BusinessBavaria s February newsletter in connection with the visit of Bavarian Economic Minister s visit to India in February New Year Reception hosted by Deutsche Bank 11. The Munich office of Deutsche Bank hosted their annual reception at the bank s premise in Munich on January 17, Mr. Stefan Krause, Member of the Board, Deutsche Bank, in his welcome words mentioned that the better performance of emerging economies like India and China helped German economy to note an economic growth of 3.6 in the year He said that according to Deutsche Bank forecast, German GDP will grow by 2 in

9 German-Indian Round Table (GIRT) Meeting in Munich 12. German-Indian Round Table (GIRT) started with their 1 st meeting of the year 2011 at Bayern LB, Munich, on January 19, with a strong attendance of over 30 leading businessmen from the region. Mr. Karl-Heinz Sturm, Board member of Bayern LB gave a presentation on the Operations of German Centre in Delhi.Gurgaon, a joint venture of the Bavarian Landes Bank (Bayern LB) and the LandesBank of Baden-Wuerttemberg (LBBW). Mr. Sturm mentioned that the centre, started in November 2008, has currently 24 companies occupying almost 40 capacity of the centre. Mr. Rajnish Tiwari, Research Associate, at the Institute of Technology and Innovation Management, spoke on the topic Indian Investments in Germany: Actual trends and critical success factors, pointing out that the cumulative sum of Indian FDI in Germany at about billion, is higher than German investment of US$ 3.5 billion in India since He said that a total of 190 Indian subsidiaries operating in Germany have around employees in their payrolls. According to Mr. Tiwari, the growing Indian economy will bring more revenue to Indian companies and the trend of Indian investments in Germany would increase in the coming years. Meeting with Deputy Director, Foreign Trade Relations, Asia/Pacific, Bavarian Economic Ministry 13. Consul General met with Dr. Katja Hinz, Deputy Head, Foreign Trade Relations, Bavarian Economic Ministry, along with officials from the Bavarian Economic Ministry s investment promotion bureaus Invest-in-Bavaria and Bayern International over lunch in Munich on January 19, The meeting was conceived as a prelude to the visit of the Bavarian Economic Minister Mr. Martin Zeil to Bangalore, Pune and Delhi along with a 40 member strong business delegation from January 13-19, Consul General briefed the officials on the Indian growth story, the strong and growing Indo-German and Indo-Bavarian relations, the focus on the Indian infrastructure sector and the future prospects. Dr. Hinz mentioned that the Bavarian State Office in Bangalore is celebrating its 10 th anniversary this year and the visiting delegation will attend a special ceremony in this regard. Consul General also offered support in facilitating political and business meetings in India. Launching of Telepresence Room of Tata Communications in Munich 14. Tata Communications launched its Telepresence Room at Le Meridien Hotel in Munich on January 19, 2011, in the presence of around 50 invited guests from the Bavarian Government, industrial associations and representatives of companies. Mr. Claude Sassoulas, Managing Director, Europe and Africa, Tata Communications, in his presentation said that telepresence is a high-definition video conferencing service with brilliant video and audio quality. He informed that the Telepresence rooms have already been launched in more than 32 international locations and Munich is the second one in Germany after Frankfurt. Tata Communications is mainly targeting SMEs as big companies normally have their in-house facilities. INDIBAY Meeting 15. INIDBAY, the Indo-Bavarian Forum, hosted their 1st meeting on January 20, 2011, in Munich. The meeting was attended by around 25 invitees, representing Bavarian Government, Indian Institute Munich, tourism and Ayurveda consultants, businessmen from SMEs etc. Welcoming the guests, Dr. Martin Huebler, President of INDIBAY mentioned that the forum was founded in 2010 with an objective to offer a platform in Bavaria for exchange of experiences/views/ideas for Germans and Indians living in Bavaria, wherein the focus topics would be modern India and modern Bavaria. He said that INDIBAY will try to promote political, economic and scientific relations between Bavaria and India. He added that apart from conducting meetings/presentations, INDIBAY will also attempt to lead business/cultural delegations to India 9

10 and will support Bavarian SMEs in their business activities in India. Consul General gave a presentation on the topic Indian Economy and chances for Bavarian/German companies. Meeting with Head of Department, Economics Policy And International Relations, Baden- Wuerttemberg Ministry of Economics 16. In connection with the visit of the Economic Minister of Baden-Wuerttemberg Mr. Ernst Pfister to Chennai, Mumbai and Pune from February 6-12, 2011, Consul General met Mr. Hartmut Reichl, Mr. Juergen Oswald, and Mr. Christoph Seitzer from the Baden-Wuerttemberg Ministry of Economy along with Dr. Herbert Neuland, Managing Director, Baden-Wuerttemberg International on January 21, 2011 in Stuttgart. The objective of the meeting was to brief the officials on their upcoming visit along with a 17 member delegation. The officials informed Consul General that the delegation will be visiting bc India 2011, the Indian version of Bauma, the International trade fair for construction machinery, building material machines and construction vehicles in Mumbai and also be hosting Business Forums titled Baden-Wuerttemberg, The German Southwest: your Gateway to Indo-German Synergies both in Chennai and in Pune. Consul General briefed the delegation on upcoming opportunities in sectors like urban development, energy, processed food, automotive, mechanical engineering in India. Republic Day Celebrations: Indian Institute: Munich 17. The reputed Indian Institute Munich organised a grand function to mark the 62nd Republic Day of India at the famous Volkerkunde Museum in Munich on January 26. The event was attended by over 200 people. The programme included a presentation by Mr. Frank Elbe, former German Ambassador to India on the topic The rise of India - Chances and Risks. Ambassador Elbe touched upon the economic liberalisation of Indian economy which led to the robust growth in the recent years, the growing Indo-China bilateral trade, growing tensions in the neighbouring countries and the political scenario in India. Consul General set the overall backdrop to ambassador Elbe s presentation, highlighting the key factors which tilt the balance towards optimism. The event also included a Sitar performance by local artist Mr. Sunil Banerjee and ended with a reception. Meeting with Ms. Nicola Doll of Travellers World magazine 18. Consul General met Ms. Nicola Doll of Travellers World magazine on 27 January. Traveller s World is an important upmarket German language travel publication from Munich. The magazine caters to the high-end German language niche mainly in Germany, Switzerland and Austria and is published on quarterly basis. Ms. Doll briefed CG about the special supplement on India in their latest issue, which they brought out in cooperation with the India Tourism office in Frankfurt. Traveller s World has in the past carried extensive articles on India and has demonstrated a very favourable and genuine inclination towards coverage of India. Republic Day Celebrations in Nuremberg 19. The German-India Society (DIG) Nuremberg organised a special event to mark the Republic Day on January 29, 2011 in Nuremberg. The event was attended by around 35 people. Mr. Sundaram Iyer, President, DIG Nuremberg welcomed the guests. Mr. Foerther, Mayor of Nuremberg in his greetings mentioned that the City of Nuremberg is keen to have close business ties with India and said that the Nuremberg trade Group is active in India hosting two trade fairs namely BioFach India and BulkSolids India. Consul General spoke on the opportunities for the companies from the region and urged them to take full advantage of the visits of Bavarian and Baden-Wuerttemberg Economic Ministers to India in February DIG Nuremberg also screened a film on Ganges. The event ended with a reception. 10

11 XII) Trade Fairs in Germany BAU BAU 2011, world s leading trade fair for architecture, materials and systems, took place at the Munich trade fair centre from January 17-22, BAU is held in Munich in every two years since The fair focuses on architecture, materials and systems for industrial and commercial construction, residential construction and interior building and covers sectors like planning, building and design process. BAU was inaugurated by Federal Minister for Building and Urban Development Dr. Peter Ramsauer this year where the top themes were sustainable building and building for life. BAU 2011, has attracted around 238,000 visitors, particularly noticeable was the participation from India; 5 Indian companies presented their latest products and services. The Builders Association of India were also present. XIII) General Economic News Turnover of Bavarian Manufacturing Industry increases by 13.2 in The turnover of the Bavarian manufacturing industry has increased by 13.2 to billion in November 2010, compared to the same month of the previous year. Out of this, billion were achieved through exports. The export share during 2010 reached The number of incoming orders increased during 2010 increased by 20.1, out of which domestic orders increased by 18 and the foreign orders increased by The number of employees in Bavarian manufacturing increased in 2010 by 0.7, compared to Baden-Wuerttemberg Industrial Production increases by 14.9 during Baden-Wuerttemberg s industrial production increased during 2010, by 14.9, compared to the same period of the previous year. The highest growth was marked by the Automotive and automobile component industry (30.5), followed by metal industry (24.14), electronic industry (21.8), etc. The production in the pharmaceutical industry however decreased by 4.7 during XIV) Publicity of Trade Fairs/Events Conducted in India 23. During the month, CGI Munich gave wide publicity among the German industrial associations, business federations and chambers of commerce & industry to the following trade fairs/events in India to encourage German participation: A. 2 nd Global Economic Summit from January 27-29, 2011 in Mumbai, organised by the All India Association of Industries (AIAI). ( ). B. Reverse Buyer Seller Meet for Rubber Products from January 20-21, 2011, organised by Capexil at Chennai Trade Centre (wwww.capexil.com/latest_events.php.) C. 19 th International Engineering & Technology Fair (IETF) from February 10-12, 2011, held at Pragati Maidan, New Delhi, organised by Confederation of Indian Industry (CII). ( ) D. 2 nd Food & Agri Exporters Enclave, on February 8 th 2011 at ASSOCHAM House, New Delhi, organised by ASSOCHAM ( E. 9 th International Railway Equipment Exhibition (IREE 2011) from September 28-30, 2011, at Pragati Maidan, New Delhi, organised by Confederation of Indian Industry (CII). ( F. 17 th Partnership Summit 2011 at Mumbai from January 24-25, 2011, oragnised by Confederation of Indian Industry (CII) in association with Ministry of Commerce and Industry, Government of India. ( ) 11

12 24. The report issues with the approval of Consul General. (Dr. Binoy George) Consul (PIC) February 24,