A Look at India-Bavaria Trade and Investment Relations
India shares close trade and investment ties with the German State of Bavaria due to its central location, technology sector, skilled workforce and world class universities, research and development focus, excellent transport and infrastructure, and easy access to Europe.
Introduction to Bavaria – Germany’s largest and southernmost state
Bavaria is Germany’s southernmost and largest state and borders Austria, the Czech Republic, and across Lake Constance, Switzerland. Its neighboring states are Baden-Württemberg, Hesse, Thuringia, and Saxony.
Bavaria is home to 13 million inhabitants, second most populated after the state of North-RhIne Westphalia (17.93 million). Munich has over 1.5 million inhabitants (2020).
In terms of geography, the Bavarian state can be subdivided into four major regions – the Alps (Zugspitze mountain); the Alpine foothills with its numerous lakes; the Bavarian forest; and the Swabian-Franconian Forest. Two major rivers run through the state, namely the Danube (Donau) and the Main.
Bavaria is among Europe’s strongest economic regions and its GDP per capita is €46,498 (German GDP per capita is €40,088).
India – Bavaria business community and emerging opportunities
Over 100 Indian companies have their offices in Bavaria, including leading information technology (IT), automotive, electrical, and pharmaceutical firms like Infosys, Wipro, Mahindra & Mahindra, Graphite India, Samvardhana Motherson Group, Hero Motocorp Ltd., Tata Consultancy Services, HCL, L&T InfoTech, Dr. Reddy’s Lab, Torrent Pharma, Aurobindo Pharma, Glenmark Arzneimittel, Quest, etc.
As of 2019, over 350 Bavarian companies have ventures in India, including Siemens, BMW, Audi, MAN, Adidas, Allianz AG, Munich Re, EADS, Infineon, and Linde. According to the State of Bavaria India Office, there are about 1,500 business relationships established between Bavarian companies and India and over 300 Indo-Bavarian joint ventures have been set up.
Indian community in Bavaria and connectivity
Indians are among the largest groups of Germany’s EU Blue Card (main residence permit for university graduates from abroad) holders – many of whom live in the State of Bavaria. Around 30,400 Indian citizens live in Bavaria, and just under half of them live in Munich as per official 2020 figures.
The Indian community in Bavaria includes IT professionals, businesspersons and traders, restaurant operators, students, and researchers. As per recent data, there are 4600 Indian students in Baden-Württemberg and Bavarian higher education schools / universities.
Before the pandemic, there were daily direct flights from Munich to Delhi and Mumbai. As of writing this article, India has an air bubble transport arrangement with Germany as regular international flight schedules are still suspended under India’s pandemic mitigation efforts.
Trade contacts between India and Bavaria can be traced back to the 16th century when Bavarian business families from the cities of Augsburg/Nuremberg sponsored German trade missions to India as part of a Portuguese voyage in 1505.
Since 2001, Bavaria has been linked to key Indian sectors and regions through its representative office in Bangalore; in 2013, the Invest-in-Bavaria in Bengaluru upgraded to full representative office.
Institutional cooperation can be illustrated by the setting up of the Bavarian-Indian Centre for Business and University Cooperation (BayInd) by the Hof University of Applied Sciences in Bangalore in July 2009; MoUs in 2013 in the areas of vocational training and educations involving entities from Bavaria like the Hof University of Applied Sciences and Bavarian Employer’s Association; and MoUs in 2015 between the Fraunhofer Society and Ministry of Heavy Industries, HMT Limited, and the Automotive Research Association of India (ARAI).
Economy, industry, and trade
Sectoral distribution – services sector accounts for 71.3 percent, industry 27.2 percent, and agriculture and forestry 1.5 percent (2020 data).
Natural resources – sand and gravel, natural stone, clay, silica sand, etc.
Agricultural products – dairy products, meat and meat products, sugar, beer, hops, etc.
Major industries in Bavaria – automobile, bioeconomy, biotechnology, chemicals, heavy engineering, power, electronics and electrical engineering, energy technology, financial services, communications technology, logistics, aerospace and satellite navigation, mechanical engineering, mechatronics, medical technology, nanotechnology, new materials, photonics, environmental technology etc.
Cross-industry areas – fintech and insurance tech, IoT and Industry 4.0, mobility, and AI.
Major Indian exports to Bavaria – articles of leather and leather clothes; bearing, gears, gearing, and driving elements; cotton apparel (knitted or crocheted fabrics) and silk apparel; machinery and apparatus for electricity production and distribution; paint and varnish; furniture footwear.
Major Bavarian exports to India – machinery and apparatus for electricity production and distribution; automotive components, bearing, gears, and driving elements; machinery and tool; plastics; measuring and automatic control instruments and appliances, pumps, and compressors; medical and surgical equipment and orthopaedic appliances.
India-Bavaria trade ties – Bavaria is a driving force in growing trade and economic ties between India and Germany. Bavaria’s capital Munich is a gateway to Central and Eastern Europe.
German trade fair authorities have expanded their presence in India in the last decade. Messe München organizes eight fairs in India followed by Messe Nuremberg, which organizes two trade fairs in India.
The below figure shows two-way trade between India and Bavaria over the past two decades. Due to the pandemic, bilateral trade plummeted to €2.48 billion in 2020 as Indian exports to Bavaria dropped to €1.213 billion (-10 percent) and imports from Bavaria were €1.274 billion (-22.8 percent). It represented 12.64 percent of the total Indo-German trade of €19.65 billion that year.
India-Bavaria trade figures: 2000 to 2020
Start-ups and entrepreneurial networks
Indian entrepreneurs, businesses, and graduates can take advantage of Bavaria’s business-friendly ecosystem that caters to a spectrum of enterprises from growth stage start-ups to large-scale corporations, particularly in the technology and life sciences industries.
In 2019, Bavaria’s government initiated massive investments into expanding R&D into artificial intelligence (AI), higher education reforms, sustainable development for small and medium-sized enterprises (SMEs), among others. These are areas where Indian IT firms and tech entrepreneurs can participate.
Munich, the Bavarian capital, has over 100 start-up incubators, accelerators, and entrepreneurship programs. There are over 50 technology incubators in Bavaria offering start-ups working spaces, mentorship, and networking opportunities.
Meanwhile, India has registered over 50,000 start-up enterprises (June 2021 by DPIIT) and, as of April 2021, had 38,815 active start-ups. Despite the 70 percent decline in new start-up launches in 2020 due to the COVID-19 pandemic, in 2021 (Q1-Q3), as per data from consultancy firm INC42, Indian start-ups raised US$28 billion in total funding. Further, 26 Indian start-ups entered the Unicorn club, with the financial technology sector (insurance tech, fintech SaaS, investment tech, payments, lending, etc.) attracting maximum deals. Bengaluru (formerly Bangalore) remains India’s top start-up hub. Other key segments attracting deals are in enterprise tech, e-commerce, logistics, health tech, ed tech, consumer services, and travel tech.
The Department for Promotion of Industry and Internal Trade (DPIIT), which acts as the nodal authority for start-ups in India recognizes that the maximum registered start-ups in India were in food processing, product development, application development, IT consulting, and business support services. India offers multiple schemes and incentives for entrepreneurial development.
For more information and business support, please feel free to contact the Dezan Shira & Associates German Liaison Office at Munich. For business support in India, Dezan Shira & Associates have offices in Delhi, Mumbai, and Bengaluru.
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