Over the past years, Germany has made significant strides in strengthening its economic partnership with India, recognizing the country’s rapid growth and strategic importance. Bilateral trade has reached new heights, with Germany now firmly established as India’s largest trading partner in Europe. German businesses are increasingly investing in India, especially in sectors like automotive, defence, renewable energy, and high-tech manufacturing. Initiatives such as the 2024 Skilled Labour Strategy for India and streamlined business processes have facilitated smoother collaboration and talent mobility, further deepening ties.
High-level political engagement—including multiple visits by Chancellor Scholz and key cabinet members—reflects Germany’s commitment to this partnership. The revival of EU-India Free Trade Agreement negotiations and the focus on sector-specific cooperation in areas like artificial intelligence, green technology, and digital infrastructure demonstrate a forward-looking approach345. Germany’s efforts to leverage the growing Indian diaspora and foster people-to-people connections are also creating new opportunities for mutual growth.
However, when compared to the scale and intensity of Germany’s longstanding engagement with China, there remains untapped potential in the Indo-German relationship. China has historically dominated Germany’s trade and investment strategies, benefiting from deep economic integration and policy prioritization. As Germany seeks to diversify and reduce reliance on China, India stands out as a dynamic market with a young population, expanding infrastructure, and a robust innovation ecosystem.
What Germany Must Do to Fully Seize Opportunities in India
To target India with the same strategic focus as China and avoid missing out on its vast economic opportunities, Germany should:
- Accelerate the EU-India Free Trade Agreement: Fast-track negotiations and conclude a comprehensive FTA to unlock greater market access and investment flows.
- Prioritize Sectoral Partnerships: Deepen cooperation in future-oriented sectors such as green hydrogen, semiconductors, digitalization, and smart manufacturing, aligning with India’s economic modernization.
- Expand SME and Mittelstand Engagement: Encourage more German small and medium-sized enterprises to enter the Indian market, leveraging India’s competitive wages, large consumer base, and appetite for technology transfer.
- Streamline Regulatory and Bureaucratic Processes: Work with Indian counterparts to address challenges like complex taxation and bureaucracy, making it easier for German firms to operate and invest.
- Leverage Talent and Migration: Scale up programs for skilled worker mobility, tapping into India’s surplus of talent to address Germany’s demographic challenges and labor shortages.
- Foster Deeper People-to-People and Academic Ties: Build on the growing Indian student and professional community in Germany to enhance business, research, and cultural exchange.
- Promote State-to-State and City-to-City Partnerships: Move beyond national-level engagement to forge direct links between German and Indian regions, unlocking localized opportunities and innovation.
- Enhance Supply Chain Resilience: Collaborate with India to diversify supply chains away from China, especially in critical sectors like pharmaceuticals, electronics, and automotive components.
By adopting a holistic and proactive approach—mirroring the strategic depth once reserved for China—Germany can position itself as a leading partner in India’s growth story. This will not only secure new business opportunities but also ensure long-term economic resilience and global competitiveness for both nations.