Befahrene Strasse in Indien

    International cooperation

    India: strong partner, big potential

    The VDA has been working closely with Indian automotive associations for many years. On the occasion of the German-Indian governmental consultations on 2 May, we took a look at some of the projects and opportunities for both countries.

    The VDA has been working closely with Indian automotive associations for many years. On the occasion of the German-Indian governmental consultations on 2 May, we took a look at some of the projects and opportunities for both countries.

    The sixth governmental consultations between Germany and India were held on 2 May. Chancellor Olaf Scholz met with Indian Prime Minister Narendra Modi, with numerous federal ministers from both countries involved in the consultations. On the agenda were topics of great importance for the automotive industry, such as cooperation on climate protection, energy transformation, and the UN Sustainability Goals.

    "In particular, the conversations aimed to help encourage India to not further seal off the market, but rather to open itself up to its own industry with regard to international sales markets," says VDA President Hildegard Müller. "The VDA explicitly supports the activities of the federal government and the EU to negotiate a trade and cooperation agreement with India. In so doing, cooperation in the areas of resources and energy should be further intensified."

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    German-Indian cooperation in the areas of resources and energy should be further intensified.

    Hildegard MüllerPresident, Verband der Automobilindustrie e.V.

    India is also Germany's most important partner in bilateral development cooperation. The outcomes of these conversations and upcoming political decisions will also influence upcoming political decisions and cooperation between both countries in the automotive sector.

    Jochen Flasbarth, State Secretary in the Federal Ministry for Economic Cooperation and Development (BMZ), said during a visit to New Delhi, "The promotion of environmentally and climate-friendly mobility is closely tied to the energy transition. Here, too, we are facilitating social involvement and a contribution to reducing air pollution can be made in the big cities, too."

    India plays a key role in global issues, such as climate change and achieving the Agenda 2030 for Sustainable Development. With a population of more than 1.3 billion people, India is the world’s largest parliamentary democracy. It is thus all the more challenging to promote social involvement and national economic growth. This is where the German federal government comes in, having approved a record sum of 1.614 billion euros for India in 2019. The two equal partners are cooperating with a focus on structure-forming programmes, and have thus agreed on the following focus areas:

    1. Renewable energy and energy efficiency
    2. Sustainable urban development
    3. Environment and resource protection

    Partnerships with ACMA and SIAM

    India is an important and reliable partner for the German automotive industry. German manufacturers and suppliers are represented at over 100 locations and production sites in India. Since 2005, the Verband der Automobilindustrie has worked together with the BMZ to ensure successful cooperation with the two Indian automotive associations Automotive Component Manufacturer Association (ACMA) and Society of Indian Automobile Manufacturers (SIAM).

    Angela Mans, Director of Foreign Trade at the VDA, has been overseeing the cooperation. "The formation of our memorandum of understanding with ACMA and SIAM in 2005 was a milestone in our partnership." This success was followed by the founding of the communication platform Indo-German Working Group on Automotive (IGWG), with support from the German and Indian governments.

    Hildegard Müller und Angela Mans begrüßen den indischen Botschafter S.E. Herr Haris Parvathaneni im VDA-Sitz in Berlin im Januar 2022
    January 2022: Hildegard Müller, President of the VDA (second from right), and Angela Mans welcome the Indian Ambassador H.E. Mr. Haris Parvathaneni (second from left) at the VDA headquarters in Berlin

    Indo-German Working Group on Automotive

    The goal of the IGWG is to promote intensive exchange of information and cooperation among the association members and their member organisations. This is done through joint conferences, workshops, studies, regular delegations, and cooperation at trade fairs, among other things. The focus is on core topics like electric mobility, autonomous driving, and free, fair trade between both countries.

    "We see a sustainable transfer of expertise with new technology, and more intensive industry dialogue, as the main results of this partnership," says Marius Ochel, who is in charge of the "International Association Partnerships Africa & India" cluster at the VDA. "Furthermore, we have furthered the industry dialogue on the aspects of electric mobility, digitisation, and Industry 4.0 with more than 25 digital events in the last year alone." The Indian partner associations also further developed more than 20 new services in 2021 alone, he says.

    Teilnehmende der indischen Verbände ACMA und SIAM sowie des VDA beim Projektplanungsworkshop im Mai 2019
    Participants of the Indian automotive associations ACMA and SIAM and the German Association of the Automotive Industry at the project planning workshop in May 2019

    Around 54.2 million vehicles were driving on Indian roads by late 2019. Only around 3 per cent of the Indian population currently owns a car.

    In the past year, India became the world’s fourth largest car market. 3.6 million cars were produced. With just over 4 million cars sold, the market reached its pre-coronavirus pandemic levels. There was a relatively low decrease of one per cent in the first quarter of 2022.

    Germany imported 505 million euros worth of automotive components such as parts, equipment, and motor parts from India in 2021, 44 per cent more than the previous year. Based on cost of goods, India is thus ranked 25th among importing nations.

    Export: Germany exported 657 million euros worth of automotive goods to India in the past year, 45 per cent more than in 2020 when the coronavirus pandemic began. Indian ranks 38th among the most important export destinations.

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    Programme for electric mobility

    The BMZ is also supporting the expansion of the network infrastructure in India – a boost for rural and urban power supplies. The strengthening of the distribution networks opens up new development opportunities for electric mobility. These inducements are important so that the Indian government can improve the charging infrastructure and market for electric cars.

    The VDA helps India through the transfer of knowledge with its electric mobility experience gained in Germany and around the world.

    Marius OchelDirector of the cluster "International Association Partnerships Africa & India"
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    "India has particularly ambitious goals for electric mobility: The government has established special programmes to support the ramp-up of electric mobility and to establish battery cell production," explains Ochel. "The VDA helps India through the transfer of knowledge with its electric mobility experience gained in Germany and around the world."

    Challenges: import customs and international standards

    Challenges must also be overcome in this regard. There are currently plans in India for protectionist measures to support the national Electric Vehicles Strategy. In order to simplify the cooperation, the VDA recommends funding for imports of electric vehicles as "completely built units" in the future. The import customs for electric vehicles should also be reduced, and all regulations for standardising electric mobility must be made as internationally uniform as possible.

    The EU is currently India’s third most important trade partner. The VDA thus supports the EU in the resumption of negotiations via a free trade agreement (FTA) with India. The negotiations, which commenced in 2007, were disrupted due to different interests on both sides. A finalised free trade agreement could remove obstacles for trade and provide an additional boost to bilateral cooperation. Initial discussions are planned for June 2022.

    In this regard, the VDA advocates the removal of all customs on vehicles and components. For context: Import customs for vehicles in India are currently very high. Including other national customs, the maximum charge for imports can be up to 125 per cent.

    The VDA also supports acceptance of the EU certifications, the content of which is largely identical with the Indian standards. "One example: The current quality control regulations for safety glass and rims require a labelling and audit procedure that doubles the certification work in India," Ochel explains. "These and similar regulations pose a technical obstacle for trade, and seriously impair the automotive industry up to the point of production standstills. It thus helps to remain communicative: Governments, authorities, and associations have to engage in dialogue with one another."

    The situation is also made more difficult in that various ministries are involved in quality control and other regulations for the automotive industry – resulting in a mish-mash of competency areas and edicts. The VDA believes that, in the future, only one ministry that issues regulations for the automotive industry should be responsible for this.

    Das Bild zeigt Marius Ochel beim Austausch mit den indischen Partnern zum Projektbeginn im Juli 2017
    Marius Ochel in conversation with Indian project partners

    Market with great chances of success

    Despite these requirements, the VDA greatly appreciates the advances made by the Indian automotive industry, and sees further great potential for both partner countries. The cooperation with the Automotive Component Manufacturer Association and Society of Indian Automobile Manufacturers is in its second project phase until late 2022. 

    The VDA is working closely on a continuation of the project in order to further advance the association partnership with India, and to work with partners in India on technological advancement and counteracting climate change.

    Marius Ochel
    Contact person India

    Marius Ochel

    Head of Cluster International Association Partnerships Africa & India