Bilateral relations between the India and Germany have been traditionally strong. Germany is one of the most important partners for India in Europe, both bilaterally and in multilateral fora such as the UN. India therefore considers Germany as an important partner for economic tie who can contribute in the process of Indian economic development. Germany on the other hand also sees India as a regional and an aspiring global power, and a large market which provides an alternative to China.

Economic scenario of Germany

Germany is the largest economy of Europe and fifth largest in the world in terms of Purchasing Power parity (PPP). Its highly skilled labour force, continuous advancement in technology and well thought out development planning has made it one of the leading developed economies of the world. Real GDP growth slowed down to 0.5% in 2019 due to the Pandemic effect but domestic consumption, investment, and exports are likely to drive German GDP growth in the years to come.

Trade in Engineering

Germany is India’s largest trading partner in Europe. It has consistently been among India’s top ten global partners and was the seventh largest trading partner in 2020-21. Merchandise trade between India and Germany was recorded at USD 21.8 billion in 2020-21. India’s engineering exports to Germany for 2020-21 was US$ 2.6 billion. India’s major engineering exports to Germany include Electric Machinery and Equipment, Iron and steel and its articles, Auto Components/Parts and Industrial Machinery among others. India’s exports of construction and earth moving machinery to Germany for 2020-21 stood at US$ 37.8 million.

Opportunity for Indian Engineering Industry

Germany is witnessing rapid and continuous technological advancement and has achieved a prowess in manufacturing. As our largest trading partner in Europe and 7th largest source of FDI, Germany offers substantial opportunity for Indian businesses, especially in manufacturing. Engineering sector therefore has ample scope to tap the large market of Germany especially at a time when both India and Germany have been moving towards restoration of economic activities to the pre-COVID level or even better, leading to higher domestic demand and expansion of markets for different products. Moreover, India’s share in global engineering import of Germany is slightly over 0.50%. This necessarily reflects that trade is far below the potential level and ample scope is left for Indian exporters to explore the market of Germany.