Germany is the largest economy of Europe and fifth largest in the world in terms of Purchasing Power parity (PPP). Germany was one of the least affected nations during the sovereign debt crisis in Europe and managed it well through slower spending and higher tax revenue to see a budget surplus of 0.7% in 2017. Real GDP growth however slowed down to 0.5% in 2019 and then contracted by 4.9% in 2020 due to the Pandemic effect but domestic consumption, investment, and exports have driven German GDP growth to 2.7% in 2021. The economy is projected to grow by 4.1% in 2022 as per OECD
Germany is one of the top five destinations for India’s engineering exports and the largest in Europe. Engineering exports to Germany was recorded at USD 3.24 billion in 2018-19 and then, after declining in the next two fiscals due to Pandemic, it reached its all-time high at USD 3.86 billion in 2021-22. The scenario looks even brighter in this fiscal as engineering shipment to Germany was 8% higher on a year-on-year basis during the first five months of the ongoing fiscal despite of a decline in shipment in the EU region as a whole. 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.
The product profile of GIFA are segments of Industrial machinery, the largest product group of engineering exported to Germany. Following the broader trend of overall engineering exports, Exports of industrial machinery to Germany was also at its record high of USD 889 million in 2021-22 and further recorded 18% growth during Apr-Aug 2022-23 over the same period last year. It is evident from the figures that the demand for India’s industrial machinery products in Germany is growing impressively after the Pandemic even on the back of an apprehended economic slowdown in the EU region.
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 the demand of engineering products are growing in the largest economy of Europe. 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 engineering exporters to explore the market of Germany.
Germany is an industrially developed nation having all the updated technologies required for sustained industrial growth. On the other hand, India’s export figures reflect that demand for India’s industrial machinery and related products are increasing in Germany. The time therefore is right to response to the demand of the industry of Germany and enhancing exports of Indian industrial machinery segment in turn.