Trade between Germany and India is set to top €20 billion this year – no country of the European Union is more important to India for business.
As the Asian giant’s economy continues to grow it creates a seemingly unquenchable thirst for energy – much of which will have to come from renewable sources. And the government is serious about promoting the industry, creating huge opportunities for German industry, seen as a global leader in the field.
The numbers show how much is needed – there are more than 1.2 billion people living in India and a persistent economic growth rate of six to seven percent. The government’s budget report for 2012-13 says India needs to more than double its current installed generation capacity to over 300 gigawatts by 2017 to be able to provide the people and economy with what is needed.
The issue of climate change and reduction of carbon dioxide emissions is firmly on the agenda, leading Indian authorities to look to Germany for cooperation and inspiration.
There are many domestic Indian initiatives, such as the National Solar Mission, established in 2009 to try to tap into the Indian solar power potential of up to 5,000 TWh (terrawatt hours) per annum. And the Indian government is planning to encourage development and attract investment in the renewable field with tax breaks, loans, tax holidays and subsidies for foreign and domestic investors.
Renewable targets still far away
The country has already recorded the fastest growth in renewable energy investment globally, with a 62 percent rise, according to the Renewable Global Status Report, 2012. But renewable energy only accounts for about six percent of Indian power – a far cry from its 2020 target of at least 15 percent. It needs $50 billion in investment for the renewable sector over the coming five years – creating what could be huge opportunities for German firms.
Many German companies are already heavily involved in India, particular in such areas as mechanical engineering, chemicals, automobiles, trading and electric equipment. But there is still a long way to go in the renewable sector.
This is largely due to the fact that the idea of sustainability is not fully established in India, and many bureaucratic and infrastructure hurdles have to be cleared when setting up a company in this field.
Still, the fact is that India’s renewable sector is evolving and growing each day. And the country is making genuine efforts in undergoing a structural shift in its economy towards a green agenda.
Even though the sector can currently be described as volatile and unpredictable, Germany should focus on long-term adaptive and realistic high-tech business solutions to replicate its domestic green success story in India.
Germany is considered a world leader in the renewable sector, and businesses are finding their way to India’s market. It is the obvious partner for India in the energy sector – the two countries must adopt a strategic vision to enable the technical strengths of German science and business to work profitably in the Indian market.
Vijeta Rattani is a DAAD scholar associated with the Jean Monnet Centre for European Studies, Bremen University and PhD student at the Centre for European Studeis, Jawaharlal Nehru University, India.