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.


Sharjah sells $1bn sukuk

Updated 03 June 2020

Sharjah sells $1bn sukuk

  • Gulf states seek to bolster finances hit by pandemic and historic slide in oil prices

DUBAI: Sharjah, the third-largest emirate of the UAE, sold $1 billion in seven-year sukuk, or Islamic bonds, on Tuesday, according to a document from one of the banks arranging the deal.

The debt sale comes as several governments in the Gulf seek to bolster their finances to face the economic fallout from the coronavirus pandemic and a historic slide in oil prices.

Sharjah set the final spread at 245 basis points (bps) over midswaps for the sukuk, which are Islamic sharia-compliant bonds, according to the document seen by Reuters.

It tightened the spread by 30 bps from where it began marketing the notes earlier on Tuesday.

Sharjah, rated Baa2 by Moody’s ratings agency and BBB by S&P, is a relatively frequent issuer of US dollar Islamic bonds.

HSBC was hired as global coordinator for the transaction. Other banks on the deal were Bank ABC, Dubai Islamic Bank, Gulf International Bank, Mashreqbank and Sharjah Islamic Bank.

In May, the emirate raised 2 billion dirhams ($545 million) in privately placed one-year sukuk to support its economy during the coronavirus pandemic, according to a statement by Bank of Sharjah, which arranged that deal.

“Issued as 12 month dirham-denominated paper in several tranches, the Sharjah Liquidity Support Mechanism (SLSM) sukuk represents the first rated short term local currency tradeable instrument in the UAE, which can be used for liquidity management by banks,” the Sharjah Finance Department said in a statement on Tuesday, confirming that deal. It said that it was a first tranche and that further tranches with one or more other banks were expected to expand the SLSM to 4 billion dirhams.

S&P Global Ratings in April revised its outlook on the emirate to negative from stable due to lower oil prices and the impact of the new coronavirus.

“Although we expect GDP growth to recover in 2021, lower-for-longer oil prices and a protracted lockdown period could pressure the emirate’s fiscal position,” the agency said.