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German Businesses in India Say Bureaucratic Hurdles Worsening

Sudhi Ranjan Sen and Santosh Kumar

28 June 2024 at 6:45 am·2-min read

(Bloomberg) -- More German companies cited bureaucratic hurdles in India as a problem to doing business in the country this year than in 2023, an issue that will likely feature in talks when Chancellor Olaf Scholz visits the South Asian nation later this year.

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Some 64% of German businesses listed bureaucratic hurdles — such as protectionist measures and procurement rules — as the biggest drawback to operating in the country, up from 53% last year, according to a new survey from the Indo-German Chamber of Commerce. Corruption was the second-biggest problem, cited by 39% of businesses, down from 47% last year, the report released Friday showed.

About 2,000 German firms operate in India, employing as many as 750,000 locals, with many of the businesses considering expanding investment in India to take advantage of its large market size and fast-growing economy. Discussions on improving the business environment will be part of Scholz’s agenda when he visits India in October, Germany’s ambassador to India, Philipp Ackermann, told reporters Friday in New Delhi.

US and Japanese businesses have raised similar concerns as the German firms about bureaucractic hurdles. German companies cited tariff and non-tariff barriers as major concerns, the survey showed.

India’s Prime Minister Narendra Modi is aggressively promoting the country as a manufacturing alternative to China as businesses look to diversify their supply chains and tensions between the US and Beijing simmer.

On Scholz’s agenda in October will be discussions around India’s trade deal with the European Union, climate change and more investments from Germany, the ambassador said. He added that German industry “was never more optimistic” about the South Asian country and more medium and small firms want to invest.

“India offers a unique combination of market size, market potential and a talent pool for German companies,” Stefan Halusa of the Indo-German Chamber of Commerce said Friday. But “bureaucratic and regulatory hurdles are still the biggest problem,” he said.

“A more efficient administration, the continuous fight against corruption and a simplified tax system would further increase India’s attractiveness for German companies,” he added.

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