Why India still has a shadowy existence as an export destination, but is now becoming increasingly important.
India and China in export comparison
Trade between India and the EU has doubled in the last ten years and is growing steadily at around seven percent per year. However, in both absolute and relative terms, India has so far played a relatively minor role in Germany's export economy. In 2015, India was only in 27th place in the ranking of trading partners in foreign trade.
Export India vs. China
In 2015, goods and services worth a little less than 10 billion euros were exported from Germany to India. Around a third of these were machines and systems, followed by chemical products (15%), electronic and electrical products as well as motor vehicles and motor vehicle parts (automotive).
In comparison: China is now the fifth most important export country for German foreign trade. The export volume to the People's Republic is seven (!) times as large as that to India. This gives an idea of what potential still exists for exports to India.
Impulses through industrial modernization & increasing consumer demand
India's economy is now growing - if you believe the official figures - even faster than the Chinese economy - and with it imports into the huge country are also growing. The economic catch-up potential in India is immense. The current growth is driven in particular by
- Lahore Industrial modernization, which the Modi government has put at the top of the political agenda. The manufacturing industry in India is expected to grow massively by 2025 (from the current 16% to 25% of GDP). Above all, this opens up enormous potential for Germany's plant and mechanical engineering companies, as they could provide the technical infrastructure for new factories and production sites.
- the rapidly increasing consumption: The consumer climate in India is currently better than it has been for ten years. Rising incomes and higher living standards are leading to increased demand for imported consumer and luxury goods. “Made in Germany” is very popular with many Indian customers – and there are more and more people who can afford it. German brands could take advantage of this – and benefit from it.
In the current economic and political environment, German exporters in many sectors have better export opportunities than they have for a long time. We will leave the specific challenges of the market aside here. You can do this in numerous articles in this blog learn more.
A free trade agreement is intended to boost exports
India has always been a member of the World Trade Organization (WTO, previously GATT) and is therefore committed to its core principles: equal treatment of third-country goods at the customs border and equal treatment under competition law of imported goods in relation to domestic goods.
A free trade agreement between the European Union and India is intended to boost exports between the two trading partners. A comprehensive trade and investment agreement (Broad-Based Trade and Investment Agreement – BTIA) has been under negotiation since 2007. However, there has been a “de facto standstill” in the talks since the summer of 2013. Similar to TTIP, the fundamental negotiating points are miles apart. The points of contention are in particular
- the high import duties for alcoholic beverages and motor vehicles to India,
- the hurdles for Indian business people when entering the EU - as well as better access opportunities for Indian skilled workers to the European labor market,
- better protection of intellectual property,
- public procurement and,
- compliance with social and environmental standards.
Since the climate for free trade agreements has generally deteriorated significantly in recent months, this agreement planned with India is unlikely to be concluded any time soon. Therefore, our exporters will continue to have to contend with extensive trade barriers, high customs tariffs and complicated customs procedures in the coming years.
From WB market solutions ® – the department of Dr. Wamser + Batra GmbH, which specializes in all questions regarding the Indian market, exports and setting up a sales network in India.
