Germany is India’s largest trading partner in Europe and one of the top ten partners in the world. Total merchandise trade reached USD 22.4 billion in 2021-22 (Apr-Feb) but yet to reach the pre-pandemic level of USD 24 billion in 2018-19. India’s exports however is expected to cross USD 9 billion in 2021-22, which is above the pre-pandemic level from USD 8.12 billion seen in 2019-20.
Following the broader merchandise trade, engineering trade also declined to USD 12.1 billion in 2020-21 from USD 13.2 billion in 2018-19. Engineering exports to Germany was recorded at USD 3.86 billion in 2021-22 (Apr-Feb) which was above the pre-pandemic level. 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.
Germany is a nation witnessing rapid and continuous technological advancement and has achieved a prowess in manufacturing. 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. 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.