Germany and India: A Partnership Whose Time Has Come

Germany and India have maintained diplomatic relations for almost 75 years and entered into a strategic partnership 25 years ago. Yet for a long time their bilateral ties remained superficial; only now is India coming sharply into focus for Germans and Europeans alike. Recent high-level visits to the world’s most populous nation attest to this: the recently departed Chancellor Scholz travelled to Delhi with several ministers for intergovernmental consultations; EU Commission President von der Leyen followed suit, as did a delegation from Bavaria’s state government, one of Germany’s most economically powerful regions. The German media, too, are paying increasing attention to a rising India.

This renewed interest is no coincidence. The global political landscape is growing ever more uncertain: the erratic trade policy of the new US administration, a possible security rift with Europe and a retreat from multilateral cooperation are shaking confidence in the trans-Atlantic alliance. Additionally, tensions in the Indo-Pacific region, the loss of the Russian market owing to the war in Ukraine, and declining sales in China have put Germany, the EU, policymakers, and businesses under considerable pressure to act.

In such a fragile geopolitical environment, Germany is more than ever required to forge new strategic partnerships, both politically and economically. While India’s foreign policy has long been guided by realism and pragmatism, the EU and Germany have until recently been driven more by idealism. The global promotion of their own “values” and the refusal of many decision-makers to acknowledge the new multipolar order increasingly isolated Europe. Only now is a cautious shift towards an interest-based policy emerging—both at EU level and in Germany under its new federal government. This return to realpolitik offers hope for fresh impetus in relations with India and other countries of the Global South.

For Germany, India represents an important alternative to China as a trading partner. Few EU states are as economically dependent on China as Germany. Heightened geopolitical risks and supply-chain problems underline how urgently Germany must reduce dependencies and diversify its trade relations. As a rising economic power with a growing domestic market and stable political landscape, India plays a key role.

For many Germans, India long appeared either as a romanticised dream destination or a cluster of social and environmental problems. Overcoming such clichés and fostering realistic knowledge of the partner country is one of the greatest hurdles to expanding bilateral ties. India, meanwhile, must recognise that Germany is currently in deep crisis: the economy is shrinking and public sentiment is poor. The country is grappling with recession, neglected infrastructure spanning decades, mass redundancies in industry, a chronic skills shortage in other sectors, and stifling bureaucracy. Yet crisis also breeds opportunity. Following last month’s change of government, a new spirit of optimism is emerging. Politics, business, and society are displaying a renewed determination to tackle these problems and, through reforms and innovation, fulfill their economic aspirations. It is therefore almost self-evident that an “old” economic power such as Germany and a “new” one like India should rise—or rise again—hand in hand. In many respects, the two countries complement each other.

Germany is already India’s most important trading partner within the EU, while India is Germany’s leading partner in South Asia. Germany chiefly exports machinery, chemicals, and automobiles, whereas India excels in textiles, pharmaceuticals, IT services, and increasingly, technology products. Bilateral trade reached an impressive €31 billion last year, compared with €246 billion between Germany and China—a gap that highlights the vast potential of German-Indian commerce. More than 1,800 German companies operate in India, many with production sites, research facilities, and joint ventures. Conversely, Indian investors are increasingly discovering the German market, particularly in digitalisation, medical technology, and start-ups. Academic and scientific links are also expanding: in the past two years, over 30,000 Indian students have been enrolled at German universities, providing a solid basis for shared knowledge and innovation.

Digitalisation could assume a pivotal role. Germany lags far behind—even by EU standards— and risks losing ground in an increasingly digital world. From infrastructure to cutting-edge applications, the need for action is urgent. India could prove an essential partner: it adopted digitalisation early and has established itself as a global IT power. With its dynamic tech sector and tech-savvy population, India offers valuable input and important stimuli that can help Germany master the digital transition.

Germany and India already enjoy a stable political tradition and impressive trade figures, yet the real momentum is only now gathering pace. The challenges of a multipolar world, a growing awareness of each other’s strengths, and the imperative to diversify economically present a unique opportunity to build a strong, sustainable partnership—one whose full potential is far from exhausted.

Christopher Oliver Herrmann, M.A. is the Germany Vice Chair of EICBI

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.eij.news)