Indian companies top the list of emerging economies acquiring German firms, acting German ambassador to India told KR Sudhaman in an interview. Excerpts:

Do you subscribe to the view that Indian companies are looking at acquisitions in Europe and in Germany in the face of rising insolvency in the continent due to the debt crisis?

If you permit me to say the characteristic of German investment in India is that German companies are here for long time. This shows that they believe in long-term partnership. German investments are not hit and run. They are strategic and long-term. So in general very smart investment.

Germany by the way is very successful country now because 10 years ago it took the right decisions on labour reforms as it was facing a crisis at that time. India also started reforms during a crisis in 1990s. More precisely, Indian companies have analysed the market and they have found very good climate in Germany.

So you think the climate is good for Indian companies to look for acquisitions in Germany?

Per unit labour cost is one of the lowest in Germany and this is one of the reasons for success of German companies. This makes production per unit very competitive in Germany. It is because of labour efficiency and technology. Employees have contributed greatly to the long-term health of the companies. Indian companies have understood that. I have very interesting figure. When you take emerging markets, India is now on top of emerging markets investment in Germany. inEvery fourth acquisition in Germany is by an Indian. India is on top followed by Russia and then China among emerging economies.

Which are the sectors that Indian companies are looking at in Germany?

The sectors are software, automotive and renewable energy. Suzlon is a very good case in point. India ranks 12th in greenfield and brownfield projects in Germany. Ten important Indian projects in Germany since 2003 are Suzlon Energy, Kalyani group, Jet Airways, Hexaware Technologies, Firepro systems, Dabur India, Veauli Engineers, Ensoft Informatics, Orient Autocom Stamping, and Bharat Fritz Werner.

Why do you think Indian companies are looking at Germany?

The reason is that I see a lot of similarity in business mentality. Like in Germany, it is family business in India. They go for strategic acquisition.

Are Indian companies spread all over Germany?

There are 280 Indian companies spread over 16 federal states in Germany as of 2010. They employ about 13,000 people.

Apart from Germany, which are the other countries in Europe where Indian companies are looking at acquisition?

In general, I believe in India’s opening up to markets in Europe and global markets. India should go step by step to acquire companies and not rush into it. A cautious approach should be adopted. But the potential is enormous.

How do you see Indo-German economic cooperation moving forward?

We have a target to achieve $20 billion bilateral trade, which we hope to achieve this year. This is only one step. The potential is much more. There are 1,500 German companies in India giving direct and indirect employment to half-a-million Indian people. Germany is strong in auto and auto components and clean energy. India is also strong in those areas and there is a lot of potential for bilateral cooperation. India and Germany can also cooperate in skill development. Germany is strong on vocational education. The German model of dual education, that is combining theory with practical training, will be very useful in helping India realising skill development of 500 million people by 2022. We have now lowered the criteria for issue of blue card that provides permanent resident status to migrants. Now any Indian, who completes education in Germany, can stay for one more year without a job. Now there are several universities in Germany where Indian students can pursue their graduation, post graduation and Phds in English. There has been 25 per cent increase in Indian students in Germany last year.

Are Indian companies preferred to Chinese companies in Germany?

India and Germany have a lot of things in common. Both the countries believe in democracy. There are similarities in values. Indian companies can also look at East Germany for investments. East Germany has state-of-the art infrastructure and it is a place to invest for Indian companies.

What could be the future areas of cooperation between the two countries?

We will have one interesting investment soon. TUEV is a setup involved in technical verification. For example, every technical unit, say a car, will be certified.

A pilot project is likely to be started in New Delhi for certification of cars. TUEV did a similar project in Turkey after which road accident deaths got reduced. This may not be a big investment but an important one. In Railway signalling too, there is something in the offing.