India and Germany: A Strong Strategic Partnership

03 Mar 2020

The relationship between India and Germany goes back a long way. Post-World War II, India was the first country to establish diplomatic ties with Germany, and today the two countries enjoy a strategic relationship based on common values and principles of democracy, free and fair trade, mutual trust and respect. 

Germany has always been a strong ally to the Indian economy.  Being India’s most important trading partner in the European Union, it is a preferred source for machinery and electrical equipment, automotive and plastics and is an important part of India’s manufacturing ecosystem.

India is now considered among the top five ‘priority countries’ by Germany. Growing two-way trade, investments and partnerships in collaborative manufacturing and technology transfer mark the economic engagement today.

India’s total trade with Germany increased from USD 21.9 billion in 2017-18 to USD 24.1 billion in 2018-19, making Germany India’s 6th most important trading partner in the world. Exports have increased from USD 8.7 billion in 2017-18 to USD 8.9 billion in 2018-19 and imports have increased to USD 15.2 billion from USD 13.3 billion. 

Garments and textile products, chemical products, leather and leather goods, iron, steel and metal goods, electronic components, electrical components, pharmaceutical products and auto components are major items of exports from India to Germany. Germany’s exports to India include electrical generation equipment, auto equipment, complete fabrication plants, bearings, gear equipment, measurement and control equipment, primary chemical products, synthetic material, machine tools, aircrafts, iron, and steel sheets, among others.

An increasing number of Indian companies are investing in Germany. A recent Confederation of Indian Industry (CII) study of Indian companies operating in Germany finds that they gain access to high-quality German technology, build innovation capability, and leverage Germany as a gateway to Europe.

Furthermore, Germany is home to more than 213 Indian subsidiaries, of which about 74 Indian companies, each with an annual turnover of more than €10 million, generated combined annual revenues of approximately €11 billion. These companies are responsible for a combined workforce of more than 23,300 employees. 

Going forward, the two countries can work together in the following key areas:

Advanced Manufacturing: With the Indian government rapidly simplifying procedures, instituting market reforms and implementing fair, effective, and transparent processes to attract foreign investments, cooperation and investment from Germany will create a win-win situation for both. Industries such as Industrial Automation and Robotics, Automotives and Pharmaceuticals will provide good opportunities for German companies in India.
Small and Medium Enterprises (SMEs): The contribution of SMEs in trade engagement as well as cross border M&A is increasing. Promoting SME cooperation from both sides will help in achieving bilateral trade targets. It is against this backdrop that the Embassy of India in Berlin recently launched the Make in India Mittelstand initiative to facilitate the entry of German SMEs in to India. Institutions like CII can specifically host these potential investors for B2B meetings on need-basis in India.
Joint R&D: There is a need for broader and deeper cooperation between India and Germany in science and technology, R&D, frugal engineering and innovation, since efforts in these areas will increasingly define the path of economic development in the coming years.
Smart Cities Infrastructure Development: Siemens Limited has signed a Memorandum of Understanding (MoU) with CII to form a consortium that would create pilot projects to design smart cities and replicate them throughout the country. Other German companies could consider taking a similar approach and take advantage of this opportunity.
Skill India: German companies are already investing in skill development in India and a lot more can be done. Companies like Bosch, ABB, Siemens and others are taking over ITIs for providing state-of-the-art vocational training in advanced areas such as Robotics, Electricals and Automation.

CII has been promoting bilateral relations through several key initiatives. During the State Visit of HE Dr. Angela Merkel, Chancellor of the Federal Republic of Germany in November 2019, CII organised an exclusive meeting between select CEOs from both countries to discuss ways to enhance bilateral economic ties in sectors of mutual interest.

A Skills Delegation was organized to Germany and Switzerland in October 2019 during which the delegation visited Steinbeis University: Steinbeis International School of Business, and an international trade fair for production and assembly automation in Stuttdart.

CII partnered with the Ministry of Information and Broadcasting and organised the India Pavilion at the 69th Berlin International Film Festival in February 2019 in which it showcased Indian Cinema. 

India and Germany together have great potential to grow and work together to promote strong and multilateral cooperation for peace, stability and affluence.

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