Merkel renews push for free trade pact with India

German Chancellor Angela Merkel visits Continental Automotive Components’ plant in the northern Indian state of Haryana on Saturday. (Reuters)
Updated 03 November 2019

Merkel renews push for free trade pact with India

  • €1 billion pledged to help Indian cities switch to green transport

NEW DELHI: German Chancellor Angela Merkel said on Saturday there was a need for a fresh attempt to restart talks on finalizing a free trade agreement (FTA) between India and the EU.

Merkel who is in India along with several Cabinet colleagues and a business delegation, began talks with Indian Prime Minister Narendra Modi on trade, investment, regional security and climate change.

A free trade pact with India has been a long-pending demand from Germany which is India’s largest trading partner in Europe. The pact has been in discussion for years.

“We need a new attempt for an EU-Indian FTA. We were already close once,” Merkel said in New Delhi, adding that she held an intensive discussion about the FTA with Modi. “With the new EU-commission there will be a new attempt,” she said.

With more than 1,700 German companies operating in India, a free trade pact could help minimize the uncertainty experienced by German investors after an investment protection agreement between the two countries ended in 2016.

While addressing an audience at the Indo-German Chambers of Commerce, Merkel said she had an open discussion with Modi about problems faced by German companies and difficulties reported by small and medium enterprises to find way around the “bureaucracy labyrinth.”

In recent months German firms have raised a few other concerns, including slowdown in India’s auto sector, lack of stable policymaking and ad-hoc decisions which they say have affected buyer sentiment and created uncertainty among carmakers.

HIGHLIGHTS

  • Delhi has faced a mounting pollution crisis over the past decade.
  • Fourteen Indian cities including the capital are among the world’s top 15 most polluted cities, according to the UN.
  • According to one study, smog kills a million Indians prematurely every year.

Merkel said Germany will spend €1 billion ($1.12 billion) in the next five years on green urban mobility projects conceived under the new German-Indian partnership. It includes €200 million to replace diesel buses in Tamil Nadu state.

“These diesel buses are to be replaced by electric buses and anyone who saw the pollution in Delhi yesterday would find very good arguments for replacing even more of these buses,” Merkel said in the widely reported speech.

German funds will be used to finance several environment-friendly projects such as the introduction of electric buses to replace diesel ones used for public transport in urban centers.

Fresh funds pledged by Germany come at a time when pollution made the air so toxic in New Delhi that officials were forced to declare a public health emergency.

Photos of Merkel’s official visit show the visible effects of smog at the presidential palace — though both Modi and Merkel ignored the declared public health emergency and did not wear masks.

Merkel urged greater efforts to clean up New Delhi’s toxic air. 

She became a rare foreign leader to speak out on India’s smog crisis after being exposed to the capital’s air on Friday, when authorities said the pollution had reached “emergency” levels.

Schools were ordered closed until Tuesday and all construction halted, while Delhi authorities started distributing millions of anti-pollution masks to children.

Much of the new peak in the most dangerous PM 2.5 pollutants — particulates smaller than 2.5 microns that get into the lungs and bloodstream — has been blamed on fires lit by farmers to burn off wheat crop residues outside of the capital.


Virtual certainty? Bankers ask if success of remote roadshows will last

Updated 22 min 56 sec ago

Virtual certainty? Bankers ask if success of remote roadshows will last

  • All over the world, companies and their advisers have given up on the traditional multi-city investor roadshow

HONG KONG: Who needs expensive lunches at glitzy hotels and fancy restaurants to court investors for bond deals or the sale of new shares on the stock exchange?

In a world governed by quarantine and social distancing rules, even lead managers on multi-billion dollar deals have had to curtail travel and drop the personal touch in favor of video conferences and phone calls to woo potential investors.

Warner Music Group is one of more than a dozen companies that launched an initial public offering (IPO) in the aftermath of the COVID-19 pandemic and saw its shares soar on the first day trading. “The wear from a virtual roadshow is much less than the wear and tear on the old normal roadshow. I was pleasantly surprised,” Warner Music Group CEO Stephen Cooper said following this company’s IPO this week.

Some investors were also happy with the switch, because they saved time traveling to meetings with companies and their IPO advisers.

“When you meet face-to-face, you have to get everyone together into the lift, some people need to get their Starbucks … that one hour turns into one-and-a-half hours,” said Khiem Do, head of Greater China investments at Barings in Hong Kong.

All over the world, companies and their advisers have given up on the traditional multi-city investor roadshow — lasting up to two weeks — in favor of virtual sessions that only last a few days.

So far the change has worked. US IPOs excluding those of special purpose acquisition companies have yielded average gains of 35 percent, according to data firm IPOScoop. The S&P 500 Index has risen only around 6.6 percent in that period.

“In New York City you would normally do six or seven one-on-one meetings plus a group event. Boston is about the same. Now you can do at least nine in a day with no travel time,” said Taylor Wright, co-head of US equity capital markets at Barclays.

However, Wright and other bankers questioned whether virtual roadshows will completely replace physical gatherings when the pandemic subsides. They said that many companies behind the IPOs of the last few weeks had warmed up investors in person before the pandemic, and younger companies may not be able to court investors only virtually.

“If roadshows cannot carry on, I feel some investors won’t be willing to invest as happily,” said Zhenro Properties chief financial officer Kenny Chan, speaking in mid-May.