INTRODUCTIONBilateral relations between India and Germany are founded on common democratic principles and are marked by a high degree of trust and mutual respect. India was amongst the first countries to establish diplomatic ties with the Federal Republic of Germany after the Second World War. Visit us for more inquiry: https://www.market-xcel.com/contact.html

1. INDIA – GERMANY
TRADE RELATIONS
An Overview of
Today & Tomorrow

2. INTRODUCTION
Bilateral relations between India and Germany are founded on common democratic
principles and are marked by a high degree of trust and mutual respect. India was
amongst the first countries to establish diplomatic ties with the Federal Republic of
Germany after the Second World War.
Germany established its Consulate General in Mumbai in 1951, leading to the
establishment of a full-fledged Embassy in New Delhi in 1952.
Germany is India’s most important trading partner in the EU and its sixth most
important trading partner worldwide. India was ranked 26th
in Germany's global
trade during 2017.Post the economic reforms and liberalization of the Indian
market, it opened up its economy in 1991, the volume of trade between the two
countries has increased rapidly.
India and Germany maintain a 'Strategic Partnership' since 2000-01.
In May 2000, both countries adopted the ‘Agenda for the Indo-German Partnership
in the 21st Century’, which includes regular meetings of Heads of both Governments
as well as annual meetings of the Foreign Ministers.
INDIA-GERMANY
RELATIONSHIP

3. INDIAN ECONOMY
As the world’s third largest economy in purchasing parity terms, India aspires to better
the lives of all its citizens and become a high-middle income country by 2030.
Between 2011-15, more than 90 million people escaped extreme poverty & improved
their living standards thanks to robust economic growth. However, India’s growth rate
has decelerated in the past two years. India’s ability to achieve rapid, sustainable
development will have profound implications for the world. India’s success will be
central to the world’s collective ambition of ending extreme poverty and promoting
shared prosperity, as well as for achieving the 2030 Sustainable Development Goals
(SDGs). Indeed, the world will be able to eliminate poverty only if India succeeds in
lifting its citizens above the poverty line. Previously, the growth was projected to be
6.0 percent this fiscal year and expected to rise to 6.9 percent in 2020/21 and to 7.2
percent in the following year.
Given the challenges that businesses and people are facing currently, the Indian
economy is most likely to experience a lower growth during the last quarter of the
current fiscal. In case the spread of corona virus continues, growth may remain
subdued in the first quarter of FY 20-21 as well. Most international credit rating
agencies have therefore revised their 2020 and 2021 growth projections for India
keeping in view the negative impact of coronavirus-induced travel restrictions, supply
chain disruptions, subdued consumption and investment levels on the growth of both
global and the Indian economy. However India is not alone, rather there is a silver
lining to the cloud as many Rating agencies feel India will benefit in the short to long
term period.
INDIA’S GROWTH PROJECTIONS REVISED DOWN

4. The Economist Intelligence Unit (EIU)
in its Post-Covid-19-Outbreak revised the growth forecast for G20 countries in
2020. It downgraded the projected FY21 GDP growth of India to 2.1 per cent from 6
per cent before the outbreak. While this looked like a free fall but when compared
with the other G20 countries, India’s growth projection stood on the top while others
are set to dive deep into recession except for two other countries – China and
Indonesia, where both of these countries will grow at 1 per cent in 2020.
The biggest contraction in the GDP growth this year among the rest 17 of the G20
countries would be suffered by Italy (-7 per cent), Germany (-6.8 per cent) and
Argentina (-6.7 per cent) followed by Brazil (-5.5 per cent), Mexico (-5.4 per cent),
France (-5 per cent), Saudi Arabia (-5 per cent), and UK (-5 per cent). The US economy
may contract by -2.2 per cent in 2020.
Moody's Investors
slashed India’s growth forecast for the calendar year 2020 to 0.2%, from 2.5%
projected in March. For 2021, the rating agency expects India's growth to rebound to
6.2%. China is projected to grow 1 per cent in 2020 and 7.1 per cent in 2021.
The International Monetary Fund (IMF)
further slashed India’s growth estimate for FY21 to 1.9% from 5.8% estimated in
January, warning that the “worst recession since the Great Depression” will dwarf
the economic damage caused by the global financial crisis a decade back. It also said
that India and China would be the only two major economies likely to register
growth, with all others contracting.
As per -IMF’s latest estimate, the Covid-19 pandemic will shrink world output by 3%
in 2020.

5. India’s share in global trade
(merchandise and services) was 2.1% ( USD
481.74 billion out of total USD 23,044
billion) for exports and 2.6% ( USD 600.62
billion out of total USD 23,112 billion) for
imports in 2017.
Total exports from India (Merchandise &
Services) registered a growth of 2.13 per
cent year-on- year during April 2019
February 2020 to USD 491.64 billion,
while total imports are estimated at USD 559.45 billion, according to the data from
the Ministry of Commerce and Industry. While India’s share in Japan is only 0.83% for
import and 1.3 % for export.
MACROECONOMIC INDICATORS 2016 2017 2018 2019 2020
Gross domestic product 153.6 7.2 6.8 5.8 6.2
Total domestic demand 156.3 9.9 7.7 5 6.1
Exports of goods and services 29.5 4.7 12.5 5 4.4
Imports of goods and services 32.2 17.6 15.4 2.2 4.4
Net exports -2.7 -2.8 -1.1 0.5 -0.2
AN OVERVIEW OF THE INDIAN ECONOMY
INDIA’S SHARE IN GLOBAL TRADE
Prices (INR trillion)

6. Germany is the world's fourth-largest economy following the United States, China,
and Japan. Gross Domestic Product of Germany grew 0.6% in 2019 compared to
last year. The GDP figure in 2019 was USD 3,846,591 million. The GDP per capita of
Germany in 2019 was USD 46,334 i.e.- USD 1,328 higher than in 2018( USD 47,662).
Germany is a leading exporter of machinery, vehicles, chemicals, and household
equipment and benefits from a highly skilled labor force.
Iron, Steel, Coal, Cement, Chemicals, Machinery, Vehicles, Machine Tools, Electronics,
Food and Beverages, Shipbuilding and Textiles are the top industries in Germany.
Germany has been flourishing over the past 12 years, as Chancellor Angela Merkel has
led the country to robust economic growth and record low unemployment rates.
Germany has a mixed economy. It allows a free market economy in consumer goods
and business services. But the government imposes regulations even in those areas to
protect its citizens. Germany has a command economy in defence since everyone
receives the benefit, while those with higher incomes pay more in taxes. The
government provides health care insurance and education. That means you pay into
the system according to your income and receive benefits according to your needs.
GERMAN ECONOMY
TOP 3
TRADE
PARTNERS
2018
TOP 3
EXPORTED
GOODS
2018
China
United States
Netherlands
Industrial Machinery
Motor Vehicles & Parts
Electrical Machinery

7. AN OVERVIEW OF THE GERMAN ECONOMY
GERMANY IMPORT AND EXPORT
As the third-largest export economy in the world, Germany exports more than
USD 1.3 trillion and has a positive trade balance of USD 273 billion (after taking
into account imports worth USD 1.05 trillion). Germany’s total nominal GDP is 3.4
trillion, making it the fourth-largest economy worldwide and GDP per capita is
USD 48,700. The country is divided into 16 mainly autonomous states with each
one having its own constitution. Germany is also a land that enjoys a high level of
natural resources, mainly coal, copper, natural gas, nickel and uranium. It is also
one of the dominant manufacturers in the world of cars, boats and a number of
electronic products.
MACROECONOMIC INDICATORS 2015 2016 2017 2018 2019
Working day adjusted GDP 1.5 1.9 2.5
2.4
5.3
5.6
0.3
2.4
2.4
3.8
1.5
4.7
2.1 2.1
2.2
4.5
4.3
Total domestic demand 1.8
Exports of goods and services 4.5
Imports of goods and services 5.2
0.1
5.1
Net exports -0.3 0.4 0.1
Prices (billion EUR)

8. The import destinations are listed below (%):
Export
Destination
China
10 8.3 6.4 5.7 5.4 5 4.8 4.6 4.5 3.9 0.90Products %
France
United
States
United
Kingdom
Italy PolandNetherland Belgium SwitzerlandAustria India
Machines 54 13 18 26 22 24 37 7.1 20 29 20
Textiles 10 2.3 1.7 0.71 5.2 3.3 2.4 2.1 2.1 2 22
Metal 5.6 8 10 3.6 15 11 9 15 8.4 17 7.4
Chemical
product
4 19 14 22 11 5.4 2.9 23 34 6.4 15
Plastic and
Rubber 3 7 6.7 4.2 7.6 7.4 5.6 13 11 5.6 4.3
Instrument 3.9 2.2 2.9 13 2 1.8 2.1 1.3 5.4 2.3 1.8
Footwear and
Headgear
3.2 0.56 0.49 - 1.9 0.63 0.49 0.69 0.42 0.63 4.5
Transportation 2.8 4.8 28 16 13 14 24 10 3.5 16 6.2
Foodstuff 0.46 6.7 4.8 1.1 6.4 5.7 0.96 5.3 2.4 5.3 1.7
Mineral
Products
0.18 15 1.5 2.9 0.83 1.9 1.1 9.8 0.23 1.1 0.35
Vegetable
Product
0.69 7.1 2.7 2.8 4.1 2.3 1.3 2.8 0.48 1 6.3
Precious Metal 0.37 1.4 0.58 2 0.83 0.27 0.43 1.8 7.4 1.2 1.4
Animal
Products 0.69 6.5 2.4 0.62 1.8 4.2 0.70 3.3 0.71 2.7 0.82
Wood Products 0.55 0.33 0.44 0.15 0.37 2.3 1.4 0.65 0.39 - 0.19
Animal Hides 1.1 0.26 0.52 - 1.3 0.31 0.44 0.15 0.15 0.32 4.6
Animal and
Vegetables Bi-
products
- 1.7 0.25 0.13 0.57 0.19 - 0.64 - 0.30 0.81
Stone and
Glass
1.3 0.59 1.1 2.3 1.9 1.8 1.5 1.5 0.69 1.3 1.2
Paper Goods 0.51 1.8 2.2 0.91 2.2 4.4 2 1.5 1.6 3.8 0.15

9. The export destinations are listed below (%):
Import
Destination
China
10 8.3 6.4 5.7 5.4 5 4.8 4.6 4.5 3.9 0.92Products %
Netherlands France
United
States
Italy Poland
Czech
Republic
Belgium Switzerland Austria India
Machines 28 21 36 22 22 24 26 17 26 19 44
Textiles 0.69 1.9 0.65 2 3.7 2.2 4.3 2.4 3.6 2.2 1
Metals 4.9 8.3 5.6 6 8.3 9.4 12 11 12 9 8.3
Chemical
product 17 21 9.1 12 17 13 8.9 15 10 22 14
Plastic and
Rubber
4 6.7 4.2 5.4 6.1 8.2 6.4 7.8 9.7 5.8 6.8
Instrument 8.5 3.5 9.1 3.7 4.9 4.6 2.9 2.7 2.6 5 9.6
Footwear and
Headgear 0.16 0.56 - 0.65 1 0.39 0.65 0.51 0.84 0.48 -
Transportation 30 29 30 34 10 21 15 28 14 13 10
Foodstuff 0.98 3.8 0.76 3.9 5.4 4 4.4 4 4.2 2.4 0.32
Mineral
Products 0.46 2.9 0.34 0.83 3.5 2 4.5 4.5 2.2 5.6 0.40
Product 0.49 1.1 - 1 2.7 0.85 1.3 1.6 1.6 0.76 0.21
Precious Metal 0.80 0.59 0.22 2.3 1.5 1.3 0.56 0.58 0.33 4.1 0.79
Products 0.24 1.4 1 1.3 5 3.8 2.3 1.6 2.1 0.64 -
Wood Products 0.43 0.78 0.31 0.48 0.86 0.52 1.6 0.86 0.53 1.5 0.69
Animal Hides - 0.18 0.11 0.20 0.31 0.44 0.37 0.15 0.36 0.21 0.14
Animal and
Vegetables Bi-
products
- 0.26 - 0.18 1.3 0.33 0.21 0.65 0.83 0.14 0.11
Stone and
Glass
0.80 1.2 0.86 0.97 1.3 1 1.6 1.3 1.4 1.7 1.3
Paper Goods 0.85 2.9 0.50 1.9 2.7 2.3 3.3 2.8 4.3 3.3 1.6

10. INDIA-GERMANY ECONOMIC
RELATIONS
India was amongst the first countries to establish diplomatic ties with the Federal
Republic of Germany after the Second World War. India and Germany have a 'Strategic
Partnership' since 2001, which has been further strengthened with the inception of the
Intergovernmental Consultations (IGC) in 2011 at the level of Head of Governments
which allows for a comprehensive review of cooperation and identification of areas of
engagement. India is amongst a select group of countries with which Germany has such
a dialogue mechanism. Economic Cooperation is one of the main pillars of the
Indo-German relationship. India and Germany share a multifaceted relationship across
a diverse range of areas including political, defense and security, economic, science and
technology, education, cultural and people to people exchanges.
India and Germany have had regular exchange of visits at the highest level. PM Shri
Narendra Modi undertook his first official visit to Germany in April 2015, when India
was the Partner Country at the Hannover Messe-2015. PM Modi visited Germany
twice in 2017: the first was a bilateral visit on May 29-30, 2017 to Berlin for the 4th
Intergovernmental Consultations and was followed by a visit on July 6-8, 2017 to
Hamburg to attend the G20 Summit. At the invitation of Chancellor Merkel, PM Modi
also visited Berlin for a short official visit in April 20, 2018, on his return journey from
CHOGM Summit in London. The PM and Chancellor also met on Dec 01, 2018 on the
sidelines of G20 Summit in Buenos Aires. German President Dr. Frank-Walter
Steinmeier paid a 5 day State Visit to India in March 2018. Chancellor Merkel visited
India in 2007, 2011 and in October 2015.
Germany is India's largest trading partner in Europe. India was ranked 26th
in
Germany's global trade during 2017. Bilateral trade increased to USUSD 21.98 bn
(2017-18), a growth of 17.15%. In 2017-18, India’s exports were worth USUSD 8.68
billion to Germany and imports were worth USUSD 13.29 billion. Germany is the 7th
largest foreign direct investor in India. Germany's total FDI in India from April 2000
until June 2018 amounted to USUSD 10.99 billion. There are more than 1700 German
companies active in India and over 600 Indo-German Joint Ventures in operation.
German investments in India are mainly in the sectors of transportation, electrical
equipment, metallurgical industries, services sector (particularly insurance), chemicals,
construction activity, trading and automobiles. Indian Corporate entities have invested
over USUSD 7 billion in Germany. There are around 200 Indian companies operating in
Germany. Important sectors in Germany for Indian investments are IT, automotive,
pharma and biotech. Germany has been an important development cooperation
partner since 1958. Total bilateral Technical and Financial Cooperation, amounts to
USD 18.37 billion. Energy, sustainable economic development and environment and
management of natural resources are priority areas under development cooperation.

11. INTER GOVERNMENTAL CONSULTATIONS (IGC)
German Chancellor Angela Merkel visited India on 1st
November, 2019
foron a scheduled meeting with Prime Minister Narendra Modi at the fifth
biennial Inter-Governmental Consultations (IGC) in New Delhi.
The discussions between the two sides touched upon foreign and security policy
issues, as well as how the two countries would work together towards climate
protection and sustainable development. This prime focus was on economic & trade
relations, innovation and digitalization, and climate protection and sustainable
development.
The discussions also touched upon renewable energy, smart cities, and new forms of
mobility. The German Chancellor said that she was impressed by the developmental
dynamics of India and how the country has rapidly developed over the past few years.
She also added that India has great potential. Therefore, it is important that the
Germanys, being the largest trade partner of India in the EU (European Union), would
work further for the strengthening of itstheir relationship with India,and learn from
India it and is also are able to use their its technological development in India. The two
countries signed pacts in the fields of space, civil aviation, maritime technology,
medicine, education, agriculture and Artificial Intelligence (AI).
German Chancellor Angela Merkel brought her trip to India to a close with a pledge for
German investment of €1 billion (USD 1.12 billion) into new green mobility projects
under a German-Indian partnership.

12. Germany would invest in a number of environmentally friendly policies, such as more
than 500 electric buses to replace diesel-powered ones in urban areas in India. This
project will be carried out over the course of the next five years.
India has invited Germany to take advantage of opportunities in defense sector in the
upcoming defense corridors in Uttar Pradesh and Tamil Nadu.
The countries agreed to work on bilateral and multilateral platforms to counter
terrorism and extremism.
India and Germany agreed to deepen their efforts to resume stalled negotiations for a
free trade agreement between India and the European Union.
Germany agreed to continue cooperation to expedite reforms in the United Nations
(UN) Security Council.
The two nations also stressed on restoring full functioning of the World Trade
Organization (WTO) dispute settlement system and reforming the organization
without undermining its fundamental principles such as Special & Differential
Treatment etc.
Prime Minister Narendra Modi and German Chancellor Angela Merkel on 16th
April,
2020 exchanged views on the low availability of medicines and medical equipment to
fight the coronavirus pandemic as they agreed to explore avenues of cooperation in the
area.
The two leaders held a telephonic conversation and discussed COVID-19, the situation
in their respective countries, and the importance of international collaboration for
fighting the health crisis.
They shared views on the inadequate availability of medicines and medical equipment
required during the pandemic, and agreed to explore avenues of cooperation in this
regard.
RECENT DEVELOPMENT

13. GERMANY’S INVESTMENTS IN INDIA
GERMAN INVESTMENT INFLOWS SINCE 2000
Nearly 1,800 German companies have invested USD10.71 billion (Rs. 69,309
crore) in India from April 2000 to December 2017.
German FDI in India has increased in recent years. Germany’s FDI in 2016-17
increased by 8.5% and reached USD 1069.14 million from USD 985.68 million in
2015-16. The FDI in 2017-18 further increased by 7.2% and reached USD
1146.15 million. Cumulatively, since 2000 till March 2018, the investments in
India have been around USD 10844.56 million.
Year (April-March)
FDI Inflows from
Germany (in USD mil.)
% Change over
Previous Year
2000-01 123.34 -
2001-02 113.48 -0.8
2002-03 143.91 +26.8
2003-04 81.17 -43.6
2004-05 145.35 +79.1
2005-06 302.82 +108.3
2006-07 119.95 -60.4
2007-08 513.61 +328.2
2008-09 629.22 +22.5
2009-10 626.14 -0.5
2010-11 199.74 -68.1
2011-12 1621.95 +712
2012-13 859.62 -47
2013-14 1038.42 +20.8
2014-15 1124.86 +8.3
2015-16 985.68 -12.4
2016-17 1069.14 +8.5
2017-18 1146.15 +7.2
Total 10844.56 +11.8

14. Currently, about 1,800 German companies have business set up in India.
Automobile Industry
Services
Trading
Electric Equipment
Pharmaceuticals
Industrial Machinery
Chemicals
Miscellaneous Industries
Consultancy
Construction
Others
TOP 10 GERMAN COMPANIES IN INDIA
% OF SECTOR WISE GERMAN FDI INFLOWS
(APRIL 17- MARCH 18)
COMPANY’S NAME
1. DHL Express India Pvt Ltd The company is leader in global express shipping.
2. Metro Cash And Carry India
Pvt Ltd
The company is an international self-service
wholesaler.
3. Robert Bosch Engineering and
Business Solutions Pvt Ltd
It is operating across different business areas
including mobility solutions, consumer goods,
industrial technology as well as energy and
building technology.
4. SAP Labs India Pvt Ltd It is a leading provider of business software
solutions.
5. Volkswagen Group Sales India
Pvt Ltd
It majorly deals into automobile sector.
6. Audi India Ltd It deals into automobile sector.
7. BASF India Ltd BASF is world’s leading chemical company.
8. Daimler India Commercial
Vehicles Pvt Ltd
This company designs, manufactures, and sells
commercial vehicles
9. Deutsche Bank It is one of the leading banks on the basis of
total assets.
10. Mercedes-Benz India Pvt Ltd It deals into automobile sector.

15. TRADE RELATIONS
Indo-German trade story dates back to the 16th
century when the German companies
started manufacturing in India. Some notable names are Krupp AG & Demag, who
set-up the Rourkela Steel plant, while, Bosch set-up its 1st
unit to make spark plugs in
1953, followed by Siemens, Bayer, Daimler-Benz, etc. India has more than 1,600
German companies and over 600 Indo-German joint ventures in operation which
include big names like, BMW, Volkswagen, SAP, Siemens AG, and Merck. FDI from
Germany has increased more than 41% from 2013-14 and has reached a
umulative amount of USD 4.50 billion till 2017-18. Government of India is seeking
investments from German companies in areas including smart cities and construction
of airports to increase economic cooperation between themselves.
India does not rank in the list of top 10 trading partners of Germany, but has
significant trade with Germany. The exports by India to Germany amounted to USD
8.2 billion, while imports by India from Germany stood at USD 12.6 billion, resulting
into a trade deficit of USD 4.4 billion for India in 2018. This underlines that there
remains a big potential.
Year
India's export to
Germany (EUR million)
YoY growth%
2014
7087
-
2015
7584
7.01
2016
7653
0.90
2017
8473
10.71
2018
13750
62.28
India's import from
Germany (EUR million)
YoY growth%
8894
-
9734
9.44
9784
0.51
10685
9.21
12800
19.79
Bilateral Trade
(EUR billion)
YoY growth%
Machinery, nuclear reactors, boilers USD 1.10 billion
Organic chemicals USD 1.03 billion
Articles of apparel, knit or crocheted USD 933.99 million
Articles of apparel, not knit or crocheted USD 818.59 million
Electrical, electronic equipment USD 685.45 million
15.98
-
17.31
8.32
17.44
0.75
19.16
9.87
21.17
10.49
MAJOR GOODS INDIA EXPORTS TO GERMANY

16. Footwear, gaiters USD 484.22 million
Pharmaceutical products USD 432.77 million
Articles of leather, animal gut, harness, travel good USD 427.72 million
Vehicles other than railway, tramway USD 381.98 million
Articles of iron or steel USD 361.54 million
Other made textile articles, sets, worn clothing USD 300.39 million
Machinery, nuclear reactors, boilers USD 4.47 billion
Electrical, electronic equipment USD 1.73 billion
Optical, photo, technical, medical apparatus USD 1.32 billion
Vehicles other than railway, tramway USD 1.06 billion
Plastics USD 681.78 million
Organic chemicals USD 485.19 million
Miscellaneous chemical products USD 366.18 million
Articles of iron or steel USD 354.73 million
Iron and steel
Commodities not specified according to kind
USD318.97 million
Pharmaceutical products USD220.32 million
USD282.80 million
MAJOR GOODS INDIA IMPORTS FROM GERMANY
2014-15 15.98
2015-16 17.31
2016-17 17.44
2017-18 19.16
2018-19 21.17
Year Bilateral Trade (USD billion)

17. IMPACT OF COVID 19
China remained Germany's most important trading partner for the third consecutive
year with a total trade volume of 199.3 billion Euros (225.7 billion U.S. dollars) in 2018.
China's economic slowdown and trade tensions between the world's top two
economies have dampened German businesses' spirits. Many German firms operating
in China report a "gloomy" business outlook.
Nearly a quarter of German companies operating in China are planning to relocate all
or part of their business out of the Asian country, according to a study released by the
German Chamber of Commerce.
The annual survey of 526 member firms in China found that 23% of them have either
already decided to withdraw production capacity from the country or are considering
it. A third of those companies have planned to leave China entirely.
The rest say they will transfer part of their business and production overseas, largely to
lower-cost countries in Asia.
Operating costs in China have been rising as the country seeks to rebalance its
economy from an export and investment-led model to one driven by services an
consumer spending.
Of the 104 companies that have decided to leave or are considering doing so, 71% cite
the rise in production costs — particularly of labor.
As stated above, Germany was already planning to relocate its factories from China to
Vehicles other than railway, tramway USD 28.44 billion
Machinery, nuclear reactors, boilers USD 24.15 billion
Electrical, electronic equipment USD 17.51 billion
Optical, photo, technical, medical apparatus USD 9.33 billion
Aircraft, spacecraft USD 4.76 billion
MAJOR GOODS GERMANY IMPORTS FROM CHINA
Pharmaceutical products USD 3.33 billion
Plastics USD 2.77 billion
Articles of iron or steel USD 1.86 billion
Commodities not specified according to kind USD 1.75 billion
Organic chemicals USD 1.56 billion
Miscellaneous chemical products USD 1.27 billion
Iron and steel USD 1.04 billion
Rubbers USD 1.02 billion

18. lower-cost countries in Asia pre Covid 19, but after the current pandemic, several
countries are thinking and formulating strategies to reduce the over dependency
on only one country and have indicated that they would be moving their
manufacturing operations from China to other countries. These companies are
looking for reasonable prices with quality material, which can be made available
in India. Thus, the Indian manufacturers have the opportunity to establish them-
selves as manufacturing hubs and leverage the void created in Chinese
manufacturing. India was ranked 26th in Germany's global trade during 2017.
Therefore India has a very big opportunity to acquire higher rank in Germany's
global trade because it is emerging as a strong alternative to China for foreign
companies investing in manufacturing and sourcing.
The 10 major imports of Germany are as follows and India is not a major exporter
of any of the below items, therefore, this is an opportunity area for India.
Machinery 150 China, USA, Czech Republic and Italy are the biggest
import partners of Germany for machinery products.
Electrical
Machinery
147 China is the biggest market from where Germany is
importing electrical machinery equipments.
Mineral Fuels
& Oils
96 Russia, Netherlands, Belgium and Norway are the top
markets selling mineral fuels & oils to Germany
Vehicles 124 Czech Republic, Spain and France are the main
markets supplying vehicles and its accessories to
Germany.
Plastics 44 Germany is the third largest plastic importer in the
world.
Pharmaceutical 54 The top pharma import market of Germany are
Netherlands, Switzerland, USA.
Organic
Chemicals
34 Switzerland, Belgium, Netherlands, Singapore and
Ireland are the top countries selling organic
chemicals to Germany.
Optical 40 The country imports mainly optical instruments from
the USA, Switzerland, China and Japan.
Articles of Iron
or Steel
23 Italy, Poland, China and Czech Republic are
Germany’s top import partners of iron steel articles.
IronandSteel 28 The country is mainly importing Iron & Steel from
France, Belgium, Italy and Austria.
Product Value (USD Billion) Major Importing Countries

19. As every cloud has a silver lining, this pandemic can open doors for India to
increase its bilateral trade with Germany. With the ‘Make in India’ initiative by the
Government of India, the country is focusing majorly on machinery and ancillary
parts. At present, India exports machinery and equipment worth USD 35.8 billion
and Germany majorly depends on China for machineries.
Automobiles contribute 7.1 per cent to GDP and auto components contribute 2.3
per cent to GDP. The FDI equity flows in the sector (per cent of total) is 5.2 percent
(Apr 2000- Dec 2019). The key export markets for automotive includes US,
Mexico, Bangladesh, African region and Asia.
The other commodities/ sector where India have edge includes Metals, electronics
and pharmaceuticals etc. which can be exported in large scale to Germany to
increase its share which is at present only 0.92% of Germany’s import share.
The two countries will jointly be focusing on driving the digital transformation
through innovation and frontier technologies, especially artificial intelligence,
making economic growth sustainable by cooperating on climate change, creating
space for people to people contacts through legal mobility for skilled labour, and
contributing to a reliable international order by strengthening and updating
multilateral institutions.
Consul general of Germany in Mumbai, Jurgen Morhard had said in November
2019 that India is really a preferred investment destination for German companies
because India shares their values, their democracy and their rule of law, the
judiciary. India has mechanisms for facilitating problems. It is a young, growing
society which is a huge market and you don’t find this elsewhere. India might
complain about things but there’s a huge difference because the outlook of
German companies is always about the long run. The German companies are not in
India for a sprint but for a marathon. India has so far been a very reliable partner.
He also said that cooperation between Indian and German companies is very easy
to set up because small and medium sized German companies are family owned
and many manufacturing companies in India too are family owned. This makes a
huge difference because it is a different commitment. Family owners understand
the business much better as they have the same values, goals and targets.

20. INDIA TO EMERGE AS AN ALTERNATE MANUFACTURING HUB FOR THE WORD
India offers land twice Luxembourg's size to firms leaving China.
India is developing a land pool nearly double the size of Luxembourg to lure
businesses moving out of China. A total area of 461,589 hectares has been
identified across the country for the purpose.
At present, investors keen on setting up a factory in India need to acquire land on
their own.
Making unused land available in special economic zones, which already have robust
infrastructure in place, is also being examined. A detailed scheme for attracting
foreign investments is expected to be finalized by the end of May, 2020.
The government has hand-picked 10 sectors--electrical, pharmaceuticals, medical
devices, electronics, heavy engineering, solar equipment, food processing, chemicals
and textiles -- as focus areas for promoting manufacturing. It has asked embassies
abroad to identify companies scouting for options. Invest India, the government's
investment agency, has received inquiries mainly from Japan, the US and South
Korea expressing interest in relocating to the Asia's third-largest economy.
States have been separately urged to evolve their own programs for bringing in
foreign investments. The Prime Minister held a meeting on 30th April, 2020 to dis-
cuss steps to fast-track strategies for wooing investors.
Andhra Pradesh, a southern Indian state, is in touch with several companies from
Japan, the US and South Korea.
The northern state of Uttar Pradesh is also developing an online system for land
allotment for all industrial and commercial purposes and is in talks with global com-
panies for attracting investments in sectors such as defence and aerospace.
COVID-19 CRISIS WILL OPEN UP OPPORTUNITIES FOR INDIA's PHARMA
INDUSTRY
As per recent estimates, India accounts for about 10% of world’s pharmaceutical
production by volume and 1.5% by value. The industry is the world’s largest supplier
of generic drugs and controls around 18% of the global market. It is also a leading
producer of vaccines in the world and caters to about 50% of global vaccine
demands.
This is due to an already high demand for Indian drugs because of cheaper pricing,
making these more affordable to both developing and developed nations.
India’s existing advantage of large-scale pharmaceutical production allows it to
significantly leverage its soft power by investing in the outward growth of the
RECENT DEVELOPMENTS

21. sectors of other nations by:
a) Ramping up exports in pharmaceuticals.
b) Becoming a preferred medical tourist destination for those seeking affordable
treatment in quality secondary/tertiary health services.
c) Pursue medical diplomacy by providing medical training and technical expertise to
many other developing nations whose healthcare systems are much worse than
India.
The country wise data on Indian pharmaceutical exports also indicates how many
nations – now most affected by COVID-19 – are the primary export destinations for
the Indian pharmaceutical industry. India had sent consignments of 85 million
hydroxychloroquine (HCQ) tablets to 108 countries to fight COVID-19 pandemic.
A media report quoted a top government official as saying that besides the HCQ
tablets, India also sent close to 500 million paracetamol tablets to the COVID-19
affected countries.
Not only states, but many international NGOs and public health non-state actors
have been using generic Indian drugs for affordable treatment in countries within
Africa, parts of Latin America over the last decade.
UNICEF and UNITAID too rely heavily on generic drugs manufactured in India for
their aid programs.
There is, therefore, a much greater potential for India’s pharmaceutical sector now
to increase trade partners both regionally and in other parts of the world. The
government can encourage this by investing in more R&D for drug and pharma
research within India (public medical colleges and universities can be used for this
purpose) and provide for more incentives to the private sector to enhance its
production for export channels.
In a post-coronavirus global order, India’s comparative advantage can rely heavily
on becoming a major provider for global public-goods and services (i.e. in healthcare,
education and tech-support capacity for innovation), given how the demand for
these are likely to go up in the years to come.
WAY FORWARD
Germany can invest in smart cities; modernization of railway networks and
stations to setting up of high-speed rail corridors; generation of renewable
energy to construction of transmission and distribution networks.

22. Digital India: German and Indian digital companies should
jointly work towards further enhancing the scope of market
opportunities and bilateral investments in each other’s
countries and creating greater bonds between their thriving
tech ecosystems.
India-EU free trade agreement: India and Germany should
go for the speedy conclusion to the agreement. India should
also safeguard its interest while negotiating bilateral
investment treaties.
DIGITAL
INDIA
e-Mobility: It is being envisaged as an important area of
collaboration, including under the already well-established
Joint Working Group on Automotive.
Embracing International Standards and Certifications:
This can strengthen the competitiveness of the Indian
industry and support the integration of India in global
and regional value chains.
Use Online Platforms for Easy and Early Access of
Information on Technical Regulations: The costs for collecting
required information are a major factor for companies when it
comes to technical regulations, which are complex and
frequently changing.
Leveraging soft power: India stands out as a leading liberal
democratic state. It can entice Europe with the values which
it espouses.

23. References
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