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CIMA Gallary

Investment is about the future… you need to have trust that the engagement pays off

Michael Steiner, the German ambassador in India, was in Calcutta this week. Steiner, who was foreign and security policy adviser to then Chancellor Gerhard Schröder in 1998 and a head of the UN mission in Kosovo, spoke to Sambit Saha and Pratim D. Gupta of The Telegraph on a range of subjects, including the investment potential in Bengal. Excerpts from the interview:

What are your first impressions of Calcutta?

Calcutta is a very dignified city. You smell capital. Right from the architecture. Somehow, you immediately feel that there is a conscience to the city. It’s a real capital. We met a number of people here… the chief minister, the governor. We also went to the German Doctors project. They are working with tuberculosis patients and it was fascinating to see the motivation of the doctors — there’s a team of seven — and also the trust from the patients. I believe these grassroots projects need all our support. It is striking to be here, especially at a time when we have all these challenges before us.

I am here also to talk about the economic issue. The German economic companies have a lot to offer in what India, and Bengal, are in search of. In principle, they are ready to engage themselves. Of course, the conditions must be right. The set-ups of the German and Indian economies, although they are in completely different stages of economic development, have similarities.

A German CEO cannot say anymore that he goes to a place to win the big, quick buck. Because he would be ousted; he needs to be socially responsible. And this is not just true in Germany but also where they invest.

But now comes the problem… globalisation! Globalisation means they have the choice. These guys have to tell their shareholders that this is a good place for investment. That the conditions are right there…the infrastructure, the legal condition, the bureaucratic condition. They can go to Korea, go to Indonesia, to Vietnam. They can also go to Gujarat.

So what has changed in relation to 30 years ago is that today you have a beauty contest. Every country in the world, including Germany, wants to have reliable long-term investment because that’s the way you produce growth. So everybody strives to have the right investment condition.

The chief minister (of Bengal) is going on 17th to New Delhi to meet India Incorporated. That’s good to do but you need to do more. You need to attract also foreign investment. Not the quick guys who hop around. The grasshoppers. But those who want to do long-term investment.

I am saying like a mantra: three numbers tell it all. India is going to become the largest country in the world; it’s already the second largest. India has 20 per cent of the world population. But the participation of India in global trade is not even 2 per cent. And what you are looking for is 8 per cent growth. If you really want that growth to happen over a long time, you need to narrow the gap between 2 and 20. Because you will never do this out of your own strength. You need trade and investment.

Germany is a relatively successful economy. This is because framework needs to work.

A lot is also psychology. Fifty per cent is reality, how the legal system is, how is the infrastructure, how the legal system works… and the rest 50 per cent how it is perceived. Investment is about the future. Because future you cannot foretell. You need to have trust that the engagement pays off. So it’s a trust thing and psychological thing. So you trust the place and the perception of the place must be right one.

India in the last years has had problems in that department. Of course, the government has been trying to overcome that with recent reform measures. That has been seen by international investors, including German CEOs. Now they want to know if it’s sustainable.

The point is that 50 years ago you could say that I have a national plan and I want to develop my country on the basis of national considerations. That’s gone! With globalisation, we are all dependent on each other….

India depends on the perception the world has of India. And everyone needs to know the real picture. There is a gap between reality and myth, positive and negative. For instance, Germany is more open than the past. Also it is less punctual than the past.

It’s important that we know about each other because we are interconnected and distances do not play a role anymore. That’s why it’s good to be here in Bengal, in Calcutta because West Bengal matters to us, whether we like it or not. And of course, we like it, given the relations we have had in the past.

You mentioned that German companies are ready to come but the condition needs to be right….

Well, 50 per cent is reality and 50 per cent is perception. So what you need to have is success stories. The best incentive is that if a new company come freshly here and say that if I have a problem, I can talk to the administration, the mood is open.

Second, I know it was disputed the recent reform, the efforts in the Parliament. I understand that every chief minister… parties decide for themselves. I will not comment on the position taken. But it’s simple. You need to be open to the outside. If you want to go on a growth path, you need to be open.

I know land is more difficult to provide in a state like Bengal. But you need land for a production site. You need to do it somewhere. You cannot have it in the sky. Or you will go to some other places, other state or country. So if you want production site here, land facility must be there. There must be uncomplicated relationship with the bureaucracy for licences. We all are in competition.

You talked about the chief minister going to meet industry?

I would recommend to go one step further. I am talking about strategic long-term investors. That is what you will find in Germany. In the past, you could sit there, and they would come. Gone! You have to convince these guys. I have seen several times in Germany how responsible leaders go the extra mile to convince people. You need to send your finance minister or a minister who looks after the economic portfolio. You need to send people, because these guys have choice.

What about trade unions?

You have come out of a long period of communist rule. That is quite a transformation. So there is no easy solution. If there is inclusive role, everyone — state, industry and workers — must play a role. State is there to provide right condition. To ensure that it is a fair game. That market can work. And not much more. Provide the framework, avoid excesses. But one can’t the replicate our model here. That will be too imperialistic.

Vocational training is at the heart of our success. In India, people are focused on university education. What is missing here is the respect for people working at the shop floor. Someone who went through vocational training who repairs washing machine or lays the floor and is master in that has the highest esteem in the society. People must know their work is respected and recognised. If you can do that, you can fix this problem of 8 per cent growth.

You need to train millions of people. There are many areas where we can work together. This is not only good for you but for also us. This is not a charity. We also require a large number of skilled labour, looking at the demographic of Germany, ageing population.

Are you going to visit Metro Cash & Carry, the German establishment here?

No. Won’t have time. Maybe we will go there with the chief minister. (Laughs) This is not my last visit. It is a very successful company globally and here in India and Bengal.

What about Lufthansa. When is it coming back?

Lufthansa is not a state company any more; it is a private company. They take decision on the basis of business situation. I am pretty sure once the economic condition is there, I am sure they will come back.

What about cultural exchanges?

We have the German year in India at the moment. The motto of that is ‘cityspaces’, which concentrates on the issues of urbanisation. We have many companies which specialise in infrastructure in the city. We had a road show through the country and want to focus on the question — what can we offer to answer the problems which come with the growing urbanisation trend in India. Yesterday, we launched the project Parallel Cities, which is not addressing the outer framework but the inner content. How do human beings live in these spaces? How do they live in hotels? And how do you compare that with other city spaces of the world? It will also come to Delhi but it is starting here. And for very good reasons because Calcutta is really the prototype of the needs and the questions and the peculiarities of people living and working under these urbanised conditions.

You visited Jorasanko…

There is a long German connection with Tagore. He was in Germany three times. When he was there for the first time in 1921, there was a real Tagore hype in Germany. They all loved him. That had to do with his appearance and also with the content of his pieces and how he talked to people.

He came across as this personality who has so many fields of interest. He brought an exhibition to Calcutta the next year from this trip.

In fact, my first stop in Calcutta was his house. It was wonderful and impressive. To see these traditions in which he was brought up… being born in that house and dying in that house… being at home in that house.