In a rapidly evolving global geopolitical landscape marked by supply chain vulnerabilities and shifting alliances, Germany has deepened its strategic partnership with India. German Chancellor Friedrich Merz views India as a ‘preferred partner,’ offering vast opportunities amid worldwide uncertainties.
According to insights from Miriam Bauman’s article in ‘One World Outlook,’ this alliance brings multiple benefits for Europe’s economic powerhouse: enhanced market access, reduced dependence on China, boosted defense exports, and innovation-driven growth. Germany’s ‘Focus on India’ strategy, adopted in 2024, positions India to become the world’s third-largest economy by 2027. India’s burgeoning middle class and digital prowess make it an irresistible collaborator.
Bilateral trade surpassed 35 billion euros in 2025, reflecting a 15% year-on-year surge. From 2000 to March 2025, Germany’s cumulative FDI in India reached $15.11 billion. Over 2,000 German firms operate in India, employing nearly 400,000 people and fostering collaboration in automobiles, chemicals, and renewable energy.
The proposed EU-India free trade agreement could amplify these gains, slashing average tariffs on EU goods by 12% in India and unlocking an additional 20 billion euros in trade potential. During Chancellor Merz’s recent visit, 19 memorandums of understanding were signed on defense, technology, critical minerals, and green energy.
Defense ties have evolved from consultations to robust industrial partnerships. A joint declaration paves the way for co-development, technology transfer, and joint production of advanced platforms. ThyssenKrupp Marine Systems stands to gain significantly from India’s ‘Project 75I,’ a 5 billion euro initiative to build six air-independent propulsion submarines with Mazagon Dock Shipbuilders.
This deal promises high-value defense exports for Germany, job creation, and a key role in India’s naval modernization, while reducing India’s reliance on Russia amid Western sanctions. Strategically, it bolsters Germany’s presence in the Indo-Pacific, aligning with its 2020 regional guidelines. Enhanced maritime awareness and logistics cooperation counter China’s assertiveness, safeguarding trade routes—90% of which pass through the Indian Ocean.
Trade remains the bedrock of Germany-India relations. As India’s largest EU trading partner, Germany accounts for 25% of India’s total EU trade. Bilateral goods and services trade exceeded $50 billion in 2024 and held steady in 2025. Germany’s exports to India hit $18.3 billion, led by machinery, electrical equipment, and chemicals, while India’s exports—pharmaceuticals and auto components—reached $10.54 billion.
Under the ‘India First’ policy, Germany aims to double bilateral trade to 50 billion euros by 2030 through diversified supply chains, signaling a new era of mutual prosperity.
