Germany is one of India’s most significant trading partners and India’s largest trading partner in the European Union. Bilateral relations between the two are based on common principles of democracy as well as common views on international trade. The two countries share strong business and economic ties, which date back to the early 16th century. The relationship strengthened in the 1990s following India’s economic liberalization, and received a major boost in 2015 with Prime Minister Narendra Modi’s visit to Germany, on the occasion of India’s participation as partner country in the Hannover Messe 2015.
India and Germany have a “Strategic Partnership” since 2000, which has further strengthened with the Intergovernmental Consultation (IGC) between the two governments, aimed at increasing cooperation and identifying potential areas of bilateral trade and investment. The third IGC was held in New Delhi in October 2015 with the fourth meeting to be held during Prime Minister Modi’s visit to Germany on 29-30 May 2017.
India-Germany Trade in the Last Ten Years
India’s total trade with Germany increased from US$ 15 billion in 2007-08 to US$ 19.2 billion in 2015-16, reaching a peak in 2011-12 at US$23 billion. Germany is currently India’s sixth largest trading partner, with total trade standing at US$ 18.73 billion in 2016-17.
India’s exports to Germany increased from US$ 5.1 billion in 2007-08 to US$ 7.2 billion in 2016-17 (Figure 1), accounting for 17.2 per cent of India’s total exports to EU countries. Indian exports reached a peak in 2011-12 with US$ 7.9 billion. Indian imports from Germany increased from US$ 9.9 billion in 2007-08 to US$ 11.5 billion in 2016-17, accounting for 30.35 per cent of India’s total imports from EU countries.
Figure 1: India’s Trade with Germany (US$ millions)
Source: Department of Commerce, Government of India
Major Exports and Imports
India’s trade with Germany is well-diversified and composed primarily of manufactured products.
Among India’s top imports from Germany, machinery and parts (HS Code 84) occupied the leading position in February-April 2016-17, accounting for 30 per cent of the total. Other major imports included electrical machinery and equipment, medical equipment and parts, vehicles and parts, and plastic and articles. The category wise percentage shares of key imports are given below (Figure 2).
Figure 2: India’s Major Imports from Germany as % of Total Indian Imports from Germany
Note: HS Codes: 84: Machinery & Parts; 85: Electrical Machinery & Equipment; 90: Medical Equipment; 87: Vehicles; 39: Plastics & articles
Source: Export Import Data, Ministry of Commerce and Industry, Government of India
In February-April 2016-17, the major Indian exports to Germany included machinery and parts, followed by apparel and clothing accessories (knitted), organic chemicals, apparel and clothing accessories (not knitted) and vehicles and parts. The category wise percentage shares of key exports are given below (Figure 3).
Figure 3: India’s Major Exports to Germany as % of Total Indian Exports to Germany
Note: HS Codes: 84: Machinery & Parts; 61: Clothing and Accessories (Knitted); 29: Organic Chemicals; 62: Clothing and Accessories (Not Knitted); 87; Vehicles
Source: Export Import Bank of India, Ministry of Commerce, Government of India
India’s Investment Relations with Germany
Germany is India’s 7th largest foreign direct investor in cumulative terms since 2000. FDI inflows during April 2000-March 2017 were placed at US$ 9.7 billion. The major German investments in India are in the sectors of transportation, electrical equipment, metallurgical industries, services sectors, chemicals, construction activity, trading and automobiles. German auto industry giants such as Volkswagen, BMW and Audi have entered the Indian market and established major manufacturing plants in India. Other major German companies which have significant operations in India include Siemens, ThyssenKrupp, Bosch, Deutsche Bank, and Lufthansa, among many others.
At the 3rd IGC, the two sides agreed upon setting up the Make in India Mittelstand (MIIM) Programme for facilitating investments by German Mittelstand and family owned companies in India.
In the last few years, Indian investments to Germany have been steadily increasing. Indian corporate entities have invested more than US$ 6 billion in Germany as on December, 2016. Major Indian investments are in the sectors of IT, automotives, pharma and biotech. Indian companies such as Mahindra and Mahindra, Hexaware Technologies, Hindusthan National Glass, Graphite India Limited, and many others have penetrated the German markets and have either acquired German companies or started their own subsidiaries.
CII is actively engaged in organizing several trade fairs, business seminars and international business delegations for further expanding the scope of economic and industrial relationship between the two countries.
CII organized a CEOs’ delegation to Germany, coinciding with the Hannover Messe, held during April 2015. The fair was inaugurated by the Hon’ble Prime Minister of India, Shri Narendra Modi and HE Ms. Angela Merkel, Chancellor of Germany. CII organized the Indo-German Business Summit and also organized sectoral seminars and coordinated the industry participation at the exhibition.
CII along with other business associations, organized the “India-Germany Business Roundtable” on 5th October 2015 in New Delhi, coinciding with the visit of the German Chancellor to India. The roundtable was attended by the German CEOs’ delegation and select members of the Indian industry with the objective of exploring new avenues for cooperation and discussing bilateral economic engagement issues.
Most recently, a CII CEOs’ delegation to Germany, led by Ms Shobana Kamineni, CII President Designate, visited Berlin during January 2017. The delegation met with several senior government officials, leaders of industry and prominent German think tanks with a view to promoting economic and trade ties between the two countries. This was the largest CII delegation to visit Germany since India’s participation in the Hannover Messe during 2015.