India's PM Modi, German Chancellor Merkel agree to fast-track business deals

German Chancellor Angela Merkel being greeted by Indian Prime Minister Narendra Modi on her arrival in New Dehli, India, on Oct 5, 2015. Germany wants to be a partner in India's economic development, Chancellor Angela Merkel said in New Delhi ahead o
German Chancellor Angela Merkel being greeted by Indian Prime Minister Narendra Modi on her arrival in New Dehli, India, on Oct 5, 2015. Germany wants to be a partner in India's economic development, Chancellor Angela Merkel said in New Delhi ahead of talks with the government in New Delhi. Merkel and Indian Prime Minister Narendra Modi are scheduled to lead the third inter-governmental consultations PHOTO: EUROPEAN PRESSPHOTO AGENCY

NEW DELHI (AFP) - Indian Prime Minister Narendra Modi on Monday (Oct 5) hailed Germany as a "natural partner" of India after signing deals with Chancellor Angela Merkel on clean energy and speeding up the European powerhouse's investment in Asia's third-largest economy.

Dr Merkel held lengthy talks with the Mr Modi on her first trip to New Delhi since Mr Modi's right-wing party stormed to power in May 2014 promising to reform and revive the economy.

Briefly leaving behind a refugee crisis in Europe, Dr Merkel and her ministers signed 18 deals with India's government, including on renewable energy and fast-tracking approvals for German companies to operate in India.

"We see Germany as a natural partner in achieving our vision of India's economic transformation. German strengths and India's priorities are aligned," Mr Modi said after meetings lasting three hours with Merkel, who arrived in the capital on Sunday.

Foreign companies have long despaired at India's levels of taxation, corruption and other obstacles to doing business. But many have welcomed Modi's efforts to make it a faster and more reliable place to invest.

The two countries signed agreements worth 2 billion euros (S$3.2 billion) on German investment in developing India's clean energy corridors and solar energy industry, ahead of crucial UN climate change talks late this year.

"Energy cooperation is very much in the foreground, particularly exploring and developing rural areas is very much on our agenda," Dr Merkel said, standing alongside Mr Modi.

India, the world's third-largest emitter of greenhouse gases, has pledged to generate 40 per cent of its electricity from renewable sources within 15 years as part of its action plan for the upcoming talks in Paris.

But India has rejected calls to curb its heavy reliance on coal for power, instead calling on industrialised country to bear the burden of curbing emissions.

Germany is already India's most important trading partner in Europe and both Mr Modi and Dr Merkel have said they are keen to increase trade.

Trade was worth nearly 16 billion euros in 2014 - mostly chemicals, machine tools, electrical goods and textiles.

But Dr Merkel's Foreign Minister Frank-Walter Steinmeier said German companies were concerned about "too much red tape, infrastructure hurdles, corruption, lack of skilled labour (and) tax disputes" in India.

"A reliable legal and administrative framework is indispensable for German companies in India," he said in an interview with the Hindustan Times before the talks, while applauding Mr Modi's government for moving in the right direction.

Dr Merkel welcomed the fast-track approval agreement signed on Monday, which will ensure German companies have a single point of contact with the Indian government, to avoid its notorious and multiple layers of bureaucracy.

"I was very glad we were able to sign the fast-track agreement today so that the speed with which you provide licences to companies to set up business is increased," she said.

German investments in India stand at 9.7 billion euros with about 1,600 companies in the country, where the chemistry, energy and pharmaceuticals sectors are of greatest interest.

The leaders met in April on Mr Modi's first official visit to Germany, where the Indian premier sought more investment as he intensifies his drive to make India a manufacturing hub.

Among the deals signed on Monday, Germany agreed to lend India some of the vocational education expertise that has turned it into an engineering giant, with skilled workers crucial for Mr Modi's "Make in India" campaign.

"We can look forward with confidence to increased investment, trade and technology partnerships in manufacturing, infrastructure and skill development," Mr Modi said.

Dr Merkel and her delegation of Cabinet ministers and German business leaders will resume talks with Mr Modi on Tuesday when they attend a business forum in the southern technology hub of Bangalore. The German leader leaves later the same day.