India- Germany Bilateral Ties

Prime Minister Narendra Modi and German Chancellor Olaf Scholz held talks and agreed to diversify bilateral cooperation on January 5, 2022.

Highlights

• Both sides also agreed to focus on collaborations in the field of green energy and climate action.
• They reviewed the potential of ongoing cooperation initiatives, including for promoting trade links and investment.
• They further agreed on the potential to diversify cooperation and exchanges in new areas as well as agreed that, there is significant synergy in governance priorities announced by new German government and India’s economic vision.

Background

Olaf Scholz sworn in as chancellor of Germany, and ended the 16-year tenure of Angela Merkel. For the past 40 years, only three individuals have occupied this position. Thus, new ruling coalition in Germany opened new scope for enhancing India-Germany relations. Germany is a significant contributor to manufacturing FDI in India. hence, actions in trade, supply chains and green finance by new chancellor will directly impact on investment and growth in India.

India-Germany Bilateral Trade Relations

• Germany is India’s largest trade partner among European countries. Indian mainly exports in textile sector, chemical products, electrical engineering products, food stuffs, metal & leather goods to Germany
• German goods like metal goods, chemical products, electrical engineering products, motor vehicles and vehicle parts are highly demanded in India.
• As per Ministry of External Affairs data, bilateral trade in India and Germany was nearly 21 billion Euros in 2019.

FDI from Germany in India

• Germany has been among ten important foreign direct investors in India. Investments from Germany focus on transport, electrical & metal sectors and service sectors.
• In between 2000-2019, FDI from Germany was nearly USD 12 billion.
• Around 1700 German companies are active in India and provide around 400,000 direct and indirect jobs.