Why German CEOs Are Betting on India: The India-EU FTA Opportunity

January 29, 2026 Posted by India Briefing Written by Archana Rao Reading Time: 6 minutes

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India and Germany have recalibrated their bilateral trade and economic engagement in parallel with India’s accelerated push to conclude a Free Trade Agreement (FTA) with the European Union (EU). Now that the India-EU FTA negotiations have concluded, the agreement will represent India’s 19th trade pact and rank among its most economically consequential, reflecting the scale and strategic importance of the EU market.

The FTA is expected to significantly enhance India’s export access to the 27-member EU bloc, including Germany, while reinforcing supply chain resilience and fostering deeper, long-term economic integration between India and Europe.

Since 2014, India has concluded or implemented multiple trade agreements, including with Mauritius, Australia, the United Arab Emirates (UAE), Oman, the United Kingdom (UK), EFTA countries, and New Zealand, reflecting a clear push towards trade diversification and market expansion.

India-Germany economic alignment amid EU FTA negotiations

Germany’s growing economic engagement with India has gained renewed momentum alongside the India-EU FTA talks. German Federal Chancellor Friedrich Merz’s visit to India on 12-13 January 2026, accompanied by a delegation of leading German CEOs, reflected Germany’s strategic focus on India as a long-term economic partner in the Indo-Pacific.

The visit coincided with 25 years of the India-Germany Strategic Partnership and 75 years of diplomatic relations, reflecting a mature relationship increasingly shaped by trade, investment, industrial cooperation, and technology partnerships. These developments position India-Germany ties as a key bilateral pillar within the broader India-EU economic framework.

India’s Prime Minister Narendra Modi attends the India-Germany Business with the Chancellor of Germany, Friedrich Merz, in Ahmedabad, Gujarat, on January 12, 2026. Image Source: PIB

Business-centric engagements and market-oriented dialogue

On January 12, 2026, India’s Prime Minister Modi and Chancellor Merz jointly addressed the India-Germany CEO Forum in New Delhi, positioning it as a core platform for advancing bilateral economic engagement.

At the forum, leaders from both countries highlighted the need to translate policy alignment into tangible business outcomes. Discussions focused on expanding industrial cooperation, strengthening cross-border supply chains, and leveraging diversification strategies driven by global geopolitical and economic shifts.

For German companies, India offers a scalable manufacturing and innovation base. At the same time, Germany remains a gateway for Indian firms seeking access to European markets, an advantage that will be further amplified under the India-EU FTA.

Trade and investment: Expanding bilateral economic ties

According to data provided by the Ministry of Commerce and Industry, bilateral trade in goods and services between the two countries exceeded US$50 billion in 2024, accounting for over 25 percent of India’s total trade with the EU. The upward trend continued through 2025, reflecting resilient demand and expanding industrial linkages.

India-Germany Merchandise Trade Relations (Value in US$ Million)
Trade activities	FY 2022-23	FY 2023-24	FY 2024-25	*FY 2025-26 (April-Nov)**
India’s exports to Germany	10,134.55	9,839.63	10,628.61	7,470.92
India’s imports from Germany	16,601.53	16,644.27	18,947.62	12,779.92
Total trade	26,736.08	26,483.90	29,576.24	20,250.84

Source: Department of Commerce, Ministry of Commerce and Industry, GoI

Germany remains one of India’s most important export destinations in Europe, while German exports to India are closely aligned with India’s demand for advanced machinery, technology, and capital goods. This existing trade depth provides a strong base for further expansion once FTA-related tariff and regulatory barriers are eased.

India-EU FTA as a market access multiplier

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Both India and Germany have viewed the India-EU FTA as a catalyst for deeper India-Germany commercial integration. The agreement is expected to:

Reduce tariffs and non-tariff barriers
Improve regulatory transparency and predictability
Enhance market access for goods, services, and investments

India’s Exports to EU Countries (Value in US$ Million)
Country/region	FY 2023-24	FY 2024-25	% growth
EU countries	75,925.30	75,854.24	-0.09
Austria	1,136.41	1,405.72	23.70
Belgium	7,837.17	6,320.14	-19.36
Bulgaria	223.64	230.44	3.04
Croatia	233.30	335.76	43.92
Cyprus	94.92	89.92	-5.26
Czech Republic	1,389.79	2,062.69	48.42
Denmark	856.24	871.41	1.77
Estonia	77.29	69.66	-9.88
Finland	582.52	471.82	-19.00
France	7,141.09	7,960.06	11.47
Germany	9,839.63	10,628.61	8.02
Greece	1,055.17	1,056.17	0.09
Hungary	561.46	533.65	-4.95
Ireland	702.73	864.67	23.04
Italy	8,765.78	7,727.33	-11.85
Latvia	220.49	235.94	7.01
Lithuania	314.42	258.06	-17.93
Luxembourg	39.65	49.90	25.85
Malta	496.11	351.09	-29.23
Netherlands	22,366.86	22,763.41	1.77
Poland	2,436.27	2,618.61	7.48
Portugal	1,183.80	920.25	-22.26
Romania	1,778.05	1,036.01	-41.73
Slovak Rep	193.03	380.38	97.05
Slovenia	586.97	586.74	-0.04
Spain	4,793.70	4,763.75	-0.62
Sweden	1,018.80	1,262.05	23.88

Source: Department of Commerce, Ministry of Commerce and Industry, GoI

For Indian exporters, particularly in textiles, pharmaceuticals, engineering goods, electronics, and services, improved access to the EU could significantly enhance competitiveness. For German firms, the FTA is expected to facilitate greater reach into India’s fast-growing consumer and industrial markets.

New opportunities across manufacturing and technology

Industrial and defense manufacturing

While defense cooperation remains strategic, recent discussions have increasingly focused on industrial outcomes. A Defense Industrial Cooperation Roadmap aims to promote technology partnerships, co-development, and co-production, creating new manufacturing and sourcing opportunities for firms in both countries.

Technology, semiconductors, and research and development

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Progress under the Innovation and Technology Partnership Roadmap highlights opportunities in semiconductors, digital technologies, telecommunications, and health innovation. The newly announced Semiconductor Ecosystem Partnership and investments such as Infineon’s Global Capability Centre in GIFT City signal deeper integration of Indian and German firms into global high-tech value chains.

Supply chains, critical minerals, and Industry 4.0

A Joint Declaration on Critical Minerals reflects shared priorities around supply chain security for clean energy, electronics, and advanced manufacturing. Cooperation under the Indo-German Digital Dialogue (2026–27) further supports Industry 4.0 adoption, artificial intelligence, and digital governance, areas where businesses stand to gain from harmonized standards and collaborative innovation.

Green energy and sustainable business opportunities

Germany’s €10 billion commitment under the Green and Sustainable Development Partnership aligns closely with India’s renewable energy and climate goals. Joint initiatives in solar, wind, battery storage, and green hydrogen, supported by regulatory cooperation, are creating commercially viable opportunities for project developers, equipment manufacturers, and financiers on both sides.

Strategic connectivity and trade corridors

Support for the India-Middle East-Europe Economic Corridor (IMEC) highlights the shared objective of strengthening logistics connectivity and trade resilience. Improved infrastructure and connectivity are expected to complement the India-EU FTA by reducing trade costs and enhancing supply chain efficiency for businesses operating across regions.

India-EU FTA: Strategic context and business implications

Why the FTA matters

Amid global trade disruptions and rising protectionism, particularly high tariffs faced by Indian exports in certain markets, such as the US, the India-EU FTA is seen as a strategic tool to:

Diversify export destinations
Reduce supply chain dependence on a limited set of markets
Secure predictable access to a large, rules-based economy

For Indian companies, the FTA supports export diversification and deeper integration with European value chains. For German firms, it enhances access to India’s expanding market while reinforcing Germany’s role as India’s principal economic partner within the EU.

Expected trade and investment outcomes

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Once implemented after the legal review and ratification procedures are completed, the FTA is expected to improve competitiveness for Indian exporters in sectors such as textiles, pharmaceuticals, engineering goods, electronics, and services, while offering EU firms enhanced access to India’s expanding market. For Germany, the agreement should reinforce its role as India’s principal EU trade partner and investment conduit.

Outlook: Converging bilateral momentum and regional integration

With the next India-Germany Inter-Governmental Consultations scheduled for later in 2026, bilateral initiatives and the India-EU FTA are converging into a coherent market-opening strategy. For businesses, this alignment presents sustained opportunities across manufacturing, technology, renewable energy, infrastructure, defense production, and skills, positioning India-Germany cooperation as a central driver of India’s broader economic engagement with Europe.

Strengthening India-Germany trade and investment requires more than policy direction; it calls for actionable, on-the-ground support. With deep local insight and cross-border experience, our team supports Indian and German stakeholders in expanding market presence and executing growth strategies across Asia’s leading economies. To schedule a consultation, please click here.

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