New Delhi: India and Germany continue to deepen their strategic partnership, with Germany holding its status as India’s largest trading partner in Europe and consistently ranking among India’s top 10 global partners. German Chancellor Olaf Scholz, currently on a three-day visit to India, met Prime Minister Narendra Modi on Friday. The two leaders are set to discuss strengthening bilateral strategic relations.
Germany recently granted India special status to fast-track military purchases. A German company is also awaiting India’s final decision on the P-75I submarine deal, highlighting the deepening military cooperation.
Trade between India and Germany
Data from India’s Department of Commerce (DoC) shows Germany was India’s seventh-largest trading partner in 2020-21, with bilateral trade volume reaching USD 21.76 billion, despite a slight 1% decline from the previous year. However, trade surged by 16% in 2021-22 up to October, with Indian exports increasing by 27% and imports by 10%, showcasing strong trade resilience.
German investments in India
German investments play a significant role in India’s development, with Germany ranking as India’s seventh-largest source of Foreign Direct Investment (FDI). Over USD 13 billion in German FDI entered India between April 2000 and September 2021, largely directed towards transportation, automotive, and construction sectors. Recent investments include USD 33.9 million from German automotive manufacturer Webasto to establish a sunroof manufacturing facility in Pune, while Bayer has invested USD 28 million in an agrochemical plant in Gujarat. ZF Friedrichshafen AG, another German industry giant, plans an investment of €200 million to support autonomous vehicle technology.
Indian companies in Germany
Indian companies are expanding their footprint in Germany, primarily through mergers and acquisitions in key sectors such as IT, pharmaceuticals, and manufacturing. Over 213 Indian firms, including Tata Consultancy Services (TCS), Infosys, and Hero MotoCorp, operate across Germany, with a strong presence in states like North Rhine-Westphalia, Hesse, Bavaria, and Baden-Württemberg.
To streamline investment flows and address corporate concerns, India and Germany established Fast Track Mechanisms in 2019 through India’s Department for Promotion of Industry and Internal Trade (DPIIT) and Germany’s Federal Ministry for Economic Affairs and Energy (BMWi).
Make in India Mittelstand
India’s “Make in India Mittelstand” (MIIM) programme has been instrumental in helping German SMEs and family-owned enterprises establish themselves in India. Currently, 152 companies benefit from the programme, which supports German firms in expanding manufacturing and operations in India.
During the 5th Intergovernmental Consultations (IGC), both nations identified key areas for further collaboration, including artificial intelligence, digitalisation, clean energy, urban development, and water management, as they continue to strengthen their partnership.
