By Mohammed Asif
Published On: December 25, 2021 at 18:30 IST
Introduction
Angela Merkel is the first woman to engross the office of Chancellor of Germany and the first postbellum chancellor to give away her office on her initiative, neither demitting under encouragement nor demitting in downfall.
India was the foremost country following World War 2 to begin a diplomatic relationship with the Federal Republic of Germany. For the last 10 years, the political and economic correspondence between Germany and India has exceptionally strengthened. To this day Germany is one of the most crucial companions both in the global state of affairs and bilaterally also.
Intergovernmental consultations are one of the prominent principles which are established in between Germany and India where the cabinets of both the countries held joint sessions every two years from 2011. India is also treated as one of the significant trading partners in the European Union which estimated more than 17.4 billion EU in 2016 and India is also one of the 6th most dominant partners throughout the world.
Not only bilateral trade is rapidly extended but German companies have established numerous investment openings and have established various other businesses, to this day beyond 1700 German Companies are operating in India providing around 400.000 direct and indirect employment opportunities in India.
What is FTA?
Free trade agreement (FTA) has established a fair set of rules for trade between the European Union and India, it provides each other favorable treatment by reducing trade barriers. In this agreement first, they cut down the duties on import of goods to and from the agreeing countries and they also work on easing out non-tariff barriers to exports like easing quantitative import restrictions, easing custom procedures, improving the market access for services, exports, and better investment rules.
Free Trade Agreements (FTA) are known by numerous other names such as Preferential trade agreement (PTA), Regional trade agreement (RTA), Comprehensive economic partnership agreement (CEPA), and Broad-based trade and investment agreement (BTIA). The difference among them is in their coverage CECA/CEPA/BTIA cover an integrated package of agreements on goods, services, investments and also on intellectual properties, etc.-. whereas the most traditional FTAs are limited to trade in goods only.[i]
Indo-German trade ties
Preferential Trade Agreements (PTAs) and Free Trade Agreements (FTAs) can be deemed as a measured and measured exposure of the Indian economy to international competitions.
India signed FTA to help in trade creation, job creation, and economic growth they also act as a diplomatic tool for improving intellectual relations. FTAs affect Indian imports and exports when India has FTA with European Union which is a trading country and if the goods being traded is covered by the tariff restrictions under the FTA, then the importer or exporter has to pay reduced import duty and not the standard duty which is applied to the other countries.
Effect of SDP and Green Party coming into power
It should come as no shock that after the initiation of India’s new farm bills, the Indian government has declared that it will restart Free Trade Agreement negotiations very soon but after the repealing of the farm laws now it is a question of diplomatic and also a nationwide issue as to what modifications India, as well as EU, is going to make in the agreement and whether it can bring any changes to the terms and conditions to the Free Trade Agreement. There might be changes in German affairs regarding this Free Trade Agreement, nevertheless, the specifications may differ according to the SDP party which now came into power in Germany.
But the conservative party Christian Democratic Union (CDU) does not propose any change in Germany’s foreign trade policies when they were in power. Economic relations were defined in their election program by making it easier for German companies to invest in modern and digital jobs in developing countries like India. While the Social Democratic Party (SDP) wants to build up institutions such as the United Nations and World trade organization and by increasing representation from the Global South, the Green Party focuses on including such deliberations directly into national policies.
One of such policies is the Supply Chain Law which was passed by parliament in June. This law mainly focuses on engrossing German companies responsible and wants them to follow basic labor regulations even if the workers are employed through contractors. Die Linke which is a democratic socialist political party in Germany, had averse the law in the first two read-outs in parliament, further demands that violations under the law should be able to put forward under the jurisdiction of German courts. This could be a first step of stopping inequities between out-contracted workers and directly employed workers in Indian factories in global value chains.
What kind of risks can be made by Supply Chain Law?
This Act is a very important source for the manufacturing sector when it comes to the labor-linked supply chain risks, as this legislation talks about multiple rights and regulations for the goodwill of the employees, promising a fair and safe labor environment.
Due to the supply chain law, there can be a large number of hazards in non-compliance with the present environmental and labor laws. If the companies stick to the Indian laws, then the risks like child labor and unequal treatment of employees can be sorted out. In 2016 with the enactment of the Child Labor (Prohibition and Regulation) Amendment Act, 2016 the problem of the risk of child labor was addressed. But when companies are established not only in one but when in multiple states, they can face the risk of shattering the Lamour laws, because of these laws which are being passed from the central government as well as from different states. Even though when such laws are drafted by the states themselves there can be still many differences.
So, it can be said that the foreign companies should evaluate and amylase the already implemented compliance structure about the observance of working hours, implementation and active engaging of commissions, and giving overtime wages whenever applicable.
Indo-German Environmental ties
The German Government is so proactive in the domain of climate and environment in India utilizing various ministries, involving- various ministries including Federal Ministry for Economic Development and Cooperation and Ministry for Economic Affairs and Energy and Ministry for the Environment, Nature Conservation, and Nuclear Safety (BMU).
the Federal Ministry for the Environment, Nature Conservation, and Nuclear Safety have been assisting projects in the country for more than 11 years as a member of the International Climate Initiative (IKI) in the four areas of lessening greenhouse gas emissions, habituating to the impacts of climate change, preserving natural carbon sinks & forests and biodiversity. In part of the International Climate Initiative, the Federal Ministry to achieve Environment, Nature Conservation, whereas Nuclear Safety is funding 11 bilateral projects which is a value of volume € 38.1 million, and 36 multi-country projects with India taking part. In addition, bilateral projects with the value of a total of € 45 million are planned.[ii]
BMU is funding two marine litter projects:
- The cities which are made part of numerous projects are highly fighting on the issues related to the Marine Environment for the need of holistic integrated solid waste management in the selected cities of Kanpur, Kochi, and Port Blair;
- And also, a project called Circular Economy Solutions for Preventing Marine Litter in Ecosystems focusing to indicate technological approaches to trace and keep eye on litter in marine ecosystems;
the BMU is also funding projects under the Export Initiative for Green Technologies (EXI) in India. Export Initiative for green technologies immensely focuses on transporting expertise available in Germany to assist sustainable development throughout the world, to encourage technology applications and methodized environmental standards, and at last to build up a suitable environmental condition for the successful and sustainable utilization of green technologies.
Effect on India due to Germany’s climate policies
In June, the country’s Supreme court had held that the CDU government’s policies concerning climate protection were unconstitutional as they would constitute inter-generational injustice if no proper measures were taken for future conservation. the supreme court of Germany has asked the German government to revise and correct the Climate Change Act to protect the rights of the future generation. This change will open against the backdrop of a pandemic response that is progressively being condemned for disadvantaged young people and children in particular. Given the overall impact of climate policies, the exposure of German policies would surely have an excess effect on India. This concerns especially the motion taken with regards to possible future agreements as well as propositions to solutions to prevent further climate disasters. This may already turn up as a matter in question during the COP26 UN Climate Summit on November 1-12 with regards to the Nationally Determined Contributions and Long-Term Strategies.
Indo-German Strategic ties
India and Germany have a strategic alliance and both the countries have been convoking Intergovernmental Consultations since 2011. Indo-German Defense Cooperation mainly enhanced the armament part. A new period in the bilateral military and tactical relations was attained in 2006 when German Defense Minister Dr. Franz Josef Jung and his Indian equivalent Pranab Mukherjee motioned for an Agreement concerning the Bilateral Defense Cooperation between the two Ministries of Defense (MoD).
The agreement has developed deeper coordination about security and defense issues which includes the exchange and training of military personnel, greater cooperation about the development of joint defense productions as well as increased technology transfer.
What new can it bring to India by leaving Merkel in terms of strategic ties?
The Green Party commits to the strategic alliance with India, encouraging it to continue an in-depth dialogue on freedom and security in the Indo-Pacific region that may sound very close to the policy guidelines and requirements for the Indo-Pacific set forth by their government this year. The only inconsistency from this perspective may be the Alternative for Germany party (AFD), which does not have notable diplomatic relations said that their main objective is to spread hatred inside the country and the Die Linke party (leftist party in Germany), who wants to see Germany out of the North Atlantic Treaty Organization.
And now it is a question as to how many defenses deal that German companies may be able to strike with India. challenging mostly with companies from other EU countries, the conservatives and the liberal party may want to impel for selling more military equipment to India
Conclusion
Germany should rectify its preference with India and it should give an upliftment to its alliance with India because from the last 10 years the diplomatic relationship between them is lessening up and there was not either considerable gain and not any considerable loss.
We need to inculcate reasonable presumptions and should not hope too soon. While Prime Minister Modi and Chancellor Merkel must hold diplomatic meetings five times in the past year, the more crucial numerical contrast is that this is Merkel’s visit on the occasion of the latest Intergovernmental Consultation (IGC) was her fourth in India during that time she has been 13 times in China. As India is of eight states with which Germany has a tactical alliance, it appears that Germany, but also the European Union as an important partner in fields of trade and aspects of global environmental politics, which have been so slow to recognize the political importance of India within Asian and global affairs.
Whereas to the supply chain law which is going to be implemented risk management systems which already do exist in India but the German companies should not impose a system that is not known to India but can impose the needs and new requirements in the present existing systems.
ABOUT THE AUTHOR
Mohammed Asif is a Third year Law student pursuing B. A. LLB(Hons) from ICFAI law school, Hyderabad. He is a future lawyer and Lifelong humanitarian who believes in consistency and hard work rather than talent.
Edited by: Aashima Kakkar, Associate Editor, Law Insider
References
- Foreign Relations with Germany
- Economic Relations
- What Sunday’s German Elections mean for India?
- Bilateral treaties
- Germany and India: Bilateral relations – Federal Foreign Office (auswaertiges-amt.de)
- Indian Embassy
I Foreign Relations with Germany