(Commonwealth_India) As India stands on the threshold of becoming the fourth-largest economy in the world in the current fiscal year, there is a notable surge in interest from German companies seeking to collaborate with Indian partners, particularly in the manufacturing sector. These partnerships are not merely transactional but are rooted in a shared vision of shaping the future of advanced production technologies across various vital industries. Areas such as green energy, semiconductors, and pharmaceuticals are at the forefront of this new wave of cooperation.
German companies are increasingly positioning themselves as enablers of transformation in India’s industrial ecosystem. They are offering not just investment but also technological expertise, innovation, and long-standing experience in high-end production systems. Rainer Wittich, CEO of EDAG Production Solutions GmbH & Co. KG, emphasized this collaborative approach, stating that India is a critical market due to its rapid growth and deep talent pool. Wittich highlighted that EDAG, a company specializing in taking production ideas from concept to execution, is actively engaging with Indian stakeholders to introduce and support the development of next-generation production capabilities.
He further noted that customer demand is shifting toward areas with a higher technological intensity. There is a growing emphasis on building production infrastructure focused on sustainability and innovation—particularly in green technologies such as electrolyzers for hydrogen energy, cutting-edge semiconductor manufacturing processes, and advancements in medical and pharmaceutical production. In these domains, German firms see a significant opportunity to contribute their know-how and technical leadership.
To facilitate these emerging business relationships, the Indo-German Chamber of Commerce, in collaboration with EDAG’s Indian branch, recently hosted an event in New Delhi. This initiative was aimed at forged connections between German manufacturers and emerging Indian enterprises. It served as a platform for knowledge exchange and networking and reflected the growing synergy between Indian ambition and German precision.
Speaking at the event, Stefan Halusa, Director General of the Indo-German Chamber of Commerce, outlined the broader context behind this strategic interest from Germany. He pointed out that the concept of a “smart industry” is becoming increasingly important, incorporating elements such as smart factories, intelligent product development, and highly skilled talent. According to Halusa, this comprehensive approach is drawing strong interest from both sides and is indicative of what the future of global manufacturing might look like in the coming years.
When asked about the factors driving German investment into India, Halusa identified three key reasons. The first is India’s expanding local market. With its sustained economic growth, India stands out as one of the few major economies showing strong upward momentum. The second reason is the country’s sheer scale, which allows companies not only to access the local market but also to use India as a base for exports. The third, and perhaps most compelling, is India’s growing capabilities, particularly in the field of research and development.
India has become an important global center for R&D and engineering, attracting multinational companies to set up innovation and design hubs across various sectors. This development has transformed India into a unique destination where skilled talent, infrastructure, and market opportunity converge. Halusa emphasized that this rare combination is a decisive factor in attracting German companies that are looking to expand globally while also aligning with cutting-edge innovation.
He also spoke about the strategic significance of the ongoing negotiations around a Free Trade Agreement (FTA) between India and the European Union. At present, Germany does not have a dedicated FTA with India, unlike several other global partners India has formalized agreements with. This lack of an agreement puts European businesses at a potential disadvantage in terms of tariffs, regulatory ease, and market access. Halusa explained that German companies are keenly watching these negotiations and see the potential conclusion of an FTA as a critical turning point that could dramatically increase trade and investment flows.
The economic partnership between India and Germany is already robust. Trade between the two countries reached USD 26.10 billion in the fiscal year 2023–24. During this period, India’s exports to Germany totaled USD 9.83 billion, while imports from Germany amounted to USD 16.27 billion. As of April, to October 2024, Germany ranks as the tenth-largest trading partner for India in terms of exports.
On the diplomatic and policy front, leaders from both nations have acknowledged the strategic value of strengthening their economic ties. They have expressed mutual commitment to finalizing a comprehensive Free Trade Agreement, as well as parallel discussions around an Investment Protection Agreement and an Agreement on Geographical Indications between India and the European Union. These agreements, once concluded, are expected to significantly enhance the scope and ease of doing business between the two economies.
The ongoing developments underline a significant shift in the global industrial landscape, where countries like India are not only considered manufacturing destinations but also as co-creators of innovation and technological progress. German companies are recognizing this shift and are increasingly investing their resources, technology, and trust in the Indian market, aiming for long-term collaboration and mutual growth.
