How Danish Companies Can Invest in India: FTA, Manufacturing, and Entry Strategy

India offers Danish investors a dual opportunity: export access under the India–EU FTA and long-term manufacturing scale through multi-state industrial ecosystems.

Why should Danish companies invest in India?

India’s economic trajectory, combined with the imminent India–EU Free Trade Agreement (India-EU FTA) and strengthening Denmark–India institutional ties, is creating a high-conviction entry window for Danish businesses.

Bilateral engagement is no longer exploratory – it is scaling. The launch of a Denmark–India business chamber underscores a clear shift toward structured trade and investment collaboration.

For Danish stakeholders, the opportunity lies at the intersection of:

• FTA-driven trade expansion
• Supply chain diversification into India
• State-led manufacturing ecosystems such as Tamil Nadu

For Danish businesses, India should no longer be viewed as just a market but also a production base, innovation hub, and export platform.

India–Denmark trade and investment landscape

Source: Denmark Statistics

• Services trade grew from US$3.5 billion (2023) to US$4 billion (2024) (~14 percent increase).
• India continues to run a services trade deficit with Denmark, widening slightly in 2024.

Source: Tradestat, Department of Commerce, GoI.

*Please note that the trade figures for FY 2025-26 are provisional and available between April 2025 and February 2026. The figures are expected to be updated in the coming weeks.

Trade composition

Denmark → India (High-value industrial exports)

• Machinery and industrial equipment
• Electrical systems
• Medical and optical devices
• Chemicals and enzymes

India → Denmark (Manufacturing and consumer supply)

• Textiles and apparel
• Engineering goods
• Steel and fabricated products
• Pharmaceuticals

Strategic interpretation for Danish investors

• India is a net services exporter but goods importer from Denmark, indicating:
  • Strong scope for technology and industrial exports from Denmark
  • Simultaneous opportunity for localized manufacturing in India to serve EU and global markets
• Around 200 Danish companies are already present in India, primarily in:
  • Renewable energy
  • Shipping and logistics
  • Food processing
  • Urban infrastructure

Key Danish companies in India

Maersk: Building India as a logistics and supply chain hub

Maersk’s India presence illustrates why the market matters beyond pure consumption. On its India pages, Maersk says it offers services to and from 15 major Indian ports, along with 45 inland acceptance depots and 25 sales offices. That scale signals India’s role as a logistics and distribution platform, not just an import market.

For Danish exporters and manufacturers, the implication is clear: India can be used as a base for integrated supply chain design, including port-led exports, inland freight, and regional distribution. This is especially relevant for companies evaluating India as part of a China-plus-one or Europe-Asia diversification strategy.

Vestas: Scaling renewable manufacturing in India

Vestas’ footprint is a strong signal for Danish industrial investors. Among the world’s largest wind turbine manufacturers – Vestas – lists production operations in Ahmedabad (Gujarat state) and has previously announced that it would expand its Indian manufacturing footprint through a new converter factory in Chennai, expansion of its blade factory in Ahmedabad, and a new nacelle and hub assembly facility in Tamil Nadu.

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This matters strategically because it shows how India can serve both sides of the renewable energy equation: as a major domestic demand market and as a scalable manufacturing base for decarbonization technologies. For Danish clean tech companies, the practical takeaway is that India’s manufacturing geography supports a multi-node strategy rather than a single-location bet. Tamil Nadu is important, but Gujarat is equally relevant in a wind and equipment context.

Novonesis’s subsidiary Novozymes: India as a biosolutions and applied-industrial market

Novonesis has an established presence in Bengaluru, Karnataka, building on the long footprint of Novozymes in India since 1983. Through M&A, it has also expanded into Maharashtra, with subsidiaries in Mumbai (Chr. Hansen Pvt. Ltd. and Riata Life Sciences Private Limited) and Thane (Synergia Life Sciences Private Limited).

This footprint highlights India’s role beyond conventional manufacturing—as a key market for biosolutions across food processing, agriculture, and sustainable industrial applications.

For Danish companies in life sciences, enzymes, and industrial technologies, Karnataka offers a different value proposition than Tamil Nadu or Gujarat. The focus is not just on cost-efficient manufacturing, but on access to skilled talent, proximity to R&D ecosystems, and integration with India’s technology and innovation landscape.

How does the India–EU FTA benefit Danish firms?

Strategic relevance

The India–EU FTA is set to significantly reshape bilateral trade flows and investment strategies.

• The EU is India’s second largest trading partner after North America, with bilateral trade reaching €120 billion (~US$136.5 billion) in FY 2024-25
• Trade is projected to scale toward US$200 billion by 2030 following FTA implementation
• The agreement is expected to reduce both tariff and non-tariff barriers, improving ease of doing business

Once ratified, the FTA will act as a supply chain realignment tool, enabling European companies to reposition production and sourcing closer to high-growth markets.

Key benefits for Danish companies

1. Tariff rationalization

• Elimination or reduction of duties across industrial goods, machinery, and components
• Improved pricing competitiveness against non-EU exporters

2. Rules of Origin (RoO) clarity

• More predictable frameworks for value addition and sourcing
• Enables structured India-based manufacturing for EU re-export

3. Services market access

• Expanded access in:
  • Logistics and shipping
  • Renewable energy and engineering services
  • Financial and professional services

4. Regulatory transparency

• Greater alignment on standards and compliance
• Reduced friction in customs and cross-border operations

Advisory insight: Dual-market strategy

For Danish firms, the FTA creates a two-track commercial model:

Companies that combine both approaches – initial export-led entry followed by localized manufacturing – are likely to achieve faster scale and margin optimization.

Sector opportunities for Danish investors

India’s current growth trajectory aligns closely with Denmark’s industrial and technological strengths. The most immediate opportunities are in green energy, particularly wind and offshore wind, where India’s renewable targets are driving strong demand for technology and components. Examples include wind turbines and components, grid integration solutions, and green hydrogen infrastructure. This is reinforced by ongoing India–Denmark cooperation in the energy sector.

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The maritime and logistics sector also presents strong potential. India is investing heavily in port modernization and supply chain infrastructure, creating opportunities for companies with capabilities in integrated logistics, shipping, and digital supply chain solutions. The experience of Danish firms such as the global leader Maersk, which is also among the top three shipping companies in the country, demonstrates how India can function as both a logistics hub and a regional distribution platform.

Industrial biotechnology is another high-growth area. Demand for enzymes, biosolutions, and sustainable industrial processes is increasing across food processing, agriculture, and manufacturing. This reflects a broader shift toward sustainability-driven production, where Danish companies have a competitive advantage.

Advanced manufacturing and automation are also gaining traction, as Indian industry adopts robotics, digital manufacturing systems, and smart factory technologies. In parallel, rapid urbanization is driving demand for smart infrastructure, including water management, waste systems, and energy-efficient urban solutions.

Overall, these sectors offer a strong alignment between Denmark’s capabilities and India’s policy priorities, which reduces market entry risk and supports long-term scalability.

Market entry strategy

A structured entry approach is critical for success in India. In the short term, an export-led strategy allows companies to enter the market with relatively low risk. This involves leveraging FTA-related tariff reductions and building distribution or partner networks to establish market presence.

In the medium term, partnership models become more relevant. Joint ventures or supplier partnerships with Indian firms can accelerate market access, provide local expertise, and reduce operational complexity. This approach is particularly useful for companies looking to scale without committing immediately to full capital investment.

In the long term, establishing a manufacturing base in India becomes the most strategic option. This typically involves a multi-state location strategy, selecting industrial hubs based on sector-specific advantages. By aligning with established manufacturing clusters, companies can improve cost efficiency and integrate India into their global supply chains.

Risk and execution considerations

While the opportunity is significant, execution requires careful planning. India’s regulatory environment can be complex, particularly for new entrants. Engaging local advisory and compliance partners is essential to navigate legal and tax requirements efficiently.

There are also significant differences across states in terms of incentives, infrastructure, and operating costs. Location decisions should therefore be based on detailed benchmarking rather than broad assumptions. Supply chain localization is another key consideration, and companies should adopt a phased approach to sourcing in order to manage risk.

Infrastructure quality can vary depending on the region, making it important to prioritize established industrial corridors with strong logistics connectivity. Overall, a structured and well-informed entry strategy is critical to managing these risks effectively.

Additional execution considerations:

• Land and infrastructure costs vary significantly by state
• Policy incentives are often sector-specific and state-driven
• Talent availability differs across manufacturing vs R&D hubs

Where should Danish manufacturers set up in India? 

Danish investors should approach India as a multi-location manufacturing landscape, rather than a single-state opportunity. The optimal location depends on sector focus, cost considerations, and supply chain strategy. Each major industrial state offers distinct advantages.

Tamil Nadu stands out as a leading hub for advanced manufacturing, particularly in automotive, electric vehicles, and electronics. The state benefits from strong export infrastructure anchored by the Chennai port cluster, as well as a well-developed renewable energy ecosystem. It is particularly well suited for industrial machinery, electronics manufacturing, and wind energy components, making it a natural fit for Danish companies in engineering and clean energy.

Gujarat offers a strong value proposition for chemicals, engineering, and export-oriented manufacturing. Its established petrochemical base, combined with major ports such as Mundra and Kandla, supports efficient global trade. The state’s industrial policy framework is also considered among the most business-friendly in India. For Danish firms, Gujarat is especially relevant for chemicals, enzymes, and large-scale export manufacturing operations.

Maharashtra, anchored by the Mumbai–Pune industrial corridor, combines manufacturing strength with financial and corporate depth. The state has a diversified industrial base spanning automotive, engineering, and pharmaceuticals, supported by India’s leading financial center in Mumbai. This makes it particularly attractive for regional headquarters, high-value manufacturing, and R&D-led operations.

Karnataka offers a different proposition, centered on technology and innovation. Bengaluru, India’s leading technology hub, provides access to a highly skilled workforce and a strong ecosystem in aerospace, electronics, and deep tech. For Danish companies, Karnataka is best suited for digital manufacturing, industrial software, automation, and R&D-intensive activities rather than cost-driven production.

Andhra Pradesh and Telangana are emerging as competitive manufacturing destinations, offering lower operating costs and rapidly developing industrial infrastructure. Both states are building strong clusters in electronics and pharmaceuticals, supported by proactive state policies. These locations are particularly suitable for greenfield investments and scalable production facilities.

Finally, the Northern Corridor, including the National Capital Region (NCR) and Uttar Pradesh, provides proximity to India’s largest consumer markets. The region has developed significant capacity in electronics and mobile manufacturing, along with strong logistics connectivity. It is best suited for consumer goods manufacturing and supply chain distribution hubs.

A multi-state strategy allows Danish investors to align location decisions with sector needs – combining cost efficiency, talent access, and market proximity – rather than relying on a single manufacturing base. – Ankur Munjal, Dezan Shira & Associates India Country Director

Strategic outlook: Denmark–India economic convergence

India and Denmark are entering a phase of deeper economic convergence, driven by three structural factors. First, the India–EU FTA is expected to accelerate trade and investment flows. Second, India’s industrial policy is actively supporting manufacturing growth and supply chain diversification. Third, Denmark’s strengths in green technology and advanced industry align closely with India’s development priorities.

As a result, India’s role for Danish companies is evolving. It is no longer just a cost-driven outsourcing destination. Instead, it is becoming a viable alternative manufacturing base, a partner in the global green transition, and a regional export hub serving Asia, the Middle East, and Africa.

Final takeaway

For Danish investors, India represents a multi-dimensional opportunity. The FTA will unlock trade expansion, while India’s industrial ecosystem offers significant manufacturing advantages across multiple states. At the same time, long-term value lies in aligning with high-growth sectors such as renewable energy, advanced manufacturing, and sustainable technologies.

The experience of companies like Maersk, Vestas, and Novonesis highlights a clear pattern. Danish firms that localize operations, build strong partnerships, and integrate into India’s industrial ecosystem are able to scale effectively – both within India and across global markets.

From an advisory perspective, the key is not simply entering the market, but positioning India as an integral part of global strategy.

Frequently asked questions: India for Danish investors

Q1. Why should Danish companies consider India now?
India offers Danish businesses a timely combination of market access, manufacturing scale, and policy alignment. The article positions India not only as a large domestic market, but also as a production base, innovation hub, and export platform, especially in light of the expected India–EU FTA.

Q2. How does the India–EU FTA benefit Danish firms?
The expected FTA is presented as a catalyst for tariff rationalization, improved Rules of Origin clarity, stronger services access, and greater regulatory transparency. For Danish firms, this can support both direct exports to India and India-based manufacturing for wider regional or EU-linked supply chains.

Q3. Which sectors offer the strongest opportunities for Danish investors in India?
The article highlights green energy, maritime and logistics, industrial biotechnology, advanced manufacturing and automation, and smart infrastructure as the most closely aligned with Danish capabilities and India’s policy priorities.

Q4. Should Danish companies enter India through exports or local manufacturing?
The article suggests a phased approach. Export-led entry can be effective in the short term for market testing, while localized manufacturing becomes more strategic over time for cost efficiency, scale, and export integration.

Q5. Which Indian states are most relevant for Danish companies?
The answer depends on business model and sector. Tamil Nadu is positioned strongly for advanced manufacturing and wind-related components; Gujarat for chemicals, engineering, and export manufacturing; Maharashtra for headquarters, high-value industry, and R&D; Karnataka for technology, automation, and innovation-led operations; and Andhra Pradesh, Telangana, NCR, and Uttar Pradesh for emerging or consumer-linked manufacturing opportunities.

Q6. What are the main risks in entering India?
The article identifies regulatory complexity, state-level policy variation, supply chain localization risks, and infrastructure variability as the key execution challenges. It recommends structured planning, location benchmarking, phased sourcing, and local advisory support.

Q7. Is India only relevant as a sales market?
No. A core argument in the article is that India should not be viewed only as a consumption market. It is also increasingly relevant as a manufacturing base, innovation center, and regional export platform serving Asia, the Middle East, and Africa.

Entering or expanding in India requires careful assessment of market conditions, regulatory frameworks, and sector competitiveness. Business intelligence insights help companies evaluate opportunities, benchmark competitors, and align investment strategies with India’s evolving economic landscape.

Koushan Das

Manager

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