VDMA Web-Seminar - Impact of COVID on Indo German Trade and Challenges faced by German companies in India.

VDMA India

In continuation to reaching out to our members and to interact closely during these unprecedented times, VDMA India organized an interactive session jointly with the German Embassy & German Consulates on "Impact of COVID-19 on Indo-German trade and challenges faced by German companies in India" on the 14th May, 2020.

In continuation to reaching out to our members and to interact closely during these unprecedented times, VDMA India organized an interactive session jointly with the German Embassy & German Consulates on "Impact of COVID-19 on Indo-German trade and challenges faced by German companies in India" on the 14th May, 2020.

VDMA offered this event as a knowledge sharing platform and acted as a bridge head for VDMA members in India who are now beginning to start their operations and facing unfamiliar issues as a result of Corona crisis.
 
A strong participation from VDMA members from India and other prominent German association and bodies coupled with VDMA headquarter professionals across varied sectors of the mechanical engineering industry made this interactive session truly successful. The webinar received an overwhelming response of 100 participants (maximum registration limit) from the industry and German engineering fraternity, was attained within few minutes of starting the webinar. VDMA India would like to thank all the participants for connecting and would continue to support its members as they look for practical and realistic solutions in these unpredictable times.

VDMA (Mechanical Engineering Industry Association) was founded in November 1892 and is the most important voice for the mechanical engineering industry today. It represents the issues of the mechanical and plant engineering sector in Germany and Europe. VDMA represents around 3,300 mostly medium-sized companies in the capital goods industry, making it the largest industry association in Europe with its members contributing to 78% as exports amounting to € 232 billion production.

It was a proud privilege to welcome the esteemed panelists to share their insights on the current crisis and address concerns of the participants.

Dr. Joerg Polster – Minister & Head of the Economic Cooperation, German Embassy, New Delhi
Dr. Juergen Morhard – Consul General of Federal Republic of Germany, Mumbai
Ms. Karin Stoll - Consul General of Federal Republic of Germany, Chennai

The session was moderated by Mr. Rajesh Nath, Managing Director, VDMA India, who explained the term “Black Swan” which is being used by several global experts to describe the 2020 recession caused by COVID-19.
 
A ‘Black Swan’ is an unpredictable event that is beyond what is normally expected of a situation. The underlining takeaways from this term are –

First- These events are extremely rare, cannot be predicted beforehand and come with severe consequences.

Second- Since they cannot be predicted, the only way to escape or reduce damage is to have robust systems in place.
Mr. Rajesh Nath, also put forth the concerns and queries of the attendees in front of the esteemed panelists of the webinar.


Some of the main highlights of the interactive session are as follows:

The panellists apprised the participants on the current situation of COVID in Germany and the approach of the German Government in facilitating trade and economic prosperity. It was quite interesting for all to learn about some of the schemes and stimulus provided by the German Government to boost their economy. 

Almost half a million companies in Germany have sent their staff on short-term working schemes known as “Kurzarbeit” — to trim their payroll costs with immediate effect.  Short-term working worked well as a tool to prevent massive layoffs during the last crisis. It sends people home or slashes their hours substantially but keeps them officially employed with the state funding around two-thirds of their salary. 

The German government also funded mainly anyone working in the health sector with comprehensive package funding amount was € 3.5 billion, another € 55 million to improvement of healthcare structures. Govt small and medium entrepreneurs/ self-employed termed as “Immediate assistance program”. An amount of € 50 billion for applying for loans was possible. Small businesses upto 5 employees received € 9000 assistance, upto 10 employees € 15000, etc and so on based on certain procedures followed. There was a € 100 billion package for equity measures and € 400 billion package for guarantees. Also a provision was made of € 100 billion for existing programs within KFW (German Development Bank).  

It was also reiterated that more and more companies are now looking for increasing the localisation measures versus globalisation.

The German Embassy and Consulates have been instrumental and extremely supportive in providing assistance to the German nationals who wanted to exit the country and reach Germany.

The main issues being faced by Germany companies in India due to COVID-19 who are struggling to reopen their operations due to was due to shortage of man power. As it is due to the demand side shock, new business opportunities are almost impossible under the current circumstances. Companies are further struggling to serve their existing client base as service engineers cannot reach the clients due the strict travel restrictions imposed by the Government in certain areas. 

All the panellists very graciously, immediately agreed to help the German companies who could write their operational and business concerns to industry bodies like VDMA India, or other associations. This assurance from the Consulates was extremely supportive and motivating for all the participants.

A poll was also conducted in real time with all the attendees on how they felt about Germany’s approach to tackle the COVID-19 pandemic. 85% of the respondents said that Germany’s approach was efficient in combating the disaster, 10% felt that is was average, whereas according to 5% there was room for an even better approach to be adopted by the German Government.

 

 

Questions pertaining to various VISA applications were also addressed during the course of this webinar by the esteemed panellists. It seemed from the discussions, that we would have to further wait to get VISA related activities be it business visa or student visa until normalised and the only exceptions made would be if there is a medical emergency or any German nationals with concerns on a case to case basis. Germany has around 20,000 Indian students studying, and the Consulate requested the students to check the updated status with their individual Universities and if need a visa for travel after removal of travel restrictions would have to reapply for visa.

Probable strategies of Indian Government to attract industries like Electric Vehicles, Information Technology, Logistics, Pharmaceuticals, etc were also briefly discussed during the session. It was emphasised by the Consul Generals that it is equally important to keep the existing investors contended while looking for new investment opportunities as both are very important aspects of a flourishing economy. Improving current infrastructure facilities to do business is also an integral part for eg. electricity, clearance issues related from land to building a facility, also the Government taking steps to keep the investors protected with their investments to name a few.

A second poll was conducted amongst the participants on how they felt about India’s approach towards the COVID pandemic. It was a more of a mixed response this time as 38% of the respondents said that it was an efficient approach adopted by the Indian Government, 33% felt that is was average, whereas according to 22% there was still room for improvement.

 

 

 

Mr. Rajesh Nath concluded the discussion saying that times are difficult no doubt, but he who shows resilience, he who shows determination and he who shows foresight, shall come out of this successfully. He also quoted a Sanskrit shloka from the epic Mahabharata which says “Yato Dharmastato Jaya” - Where there is adherence to right action, there [alone] lies victory.  

Before finally wishing everyone adieu, a third poll was conducted on what the attendees felt about the period of normalcy due the corona pandemic. 37% of the respondents felt that it would be somewhere about 6 to 9 months before everything gets backs in order.

 

 

As India slowly limps back after the lockdown, the need is to kick start the economy. The stimulus package of around 300 Billion USD announced by the Government which is around 10% of our GDP should give a supporting hand to MSMEs as well as small enterprises who were struggling for survival. What India and Germany can learn and perhaps compliment each other on is successfully achieving low mortality rates due to COVID-19. Surely new opportunities would emerge for the Indo-German trade in the coming period and it is to be seen how we can leverage these possibilities.

VDMA would once again like to thank the Panelists – Dr. Polster, Ms. Stoll and Dr. Morhard for the interesting and frank discussion for taking out time from their very busy schedule to address the concern of VDMA members.