What makes Germany so attractive to India

LMG Manufacturing is an important employer in the Saxony-Anhalt town of Hoym. In 2023, Indian automotive supplier Jaya Hind Industries, which owns LMG, invested 50 million euros in a new production facility to make lightweight components for electric cars. This created 120 new jobs - a considerable number for this small town in the structurally weak Harz foreland region. 

Hoym exemplifies a trend: there are nearly 900 Indian companies across Germany, employing more than 38,000 people in total. “For some years we have been seeing a steady increase in Indian investment in Germany,” says Seema Bhardwaj, who is responsible for promoting investment from India at Germany Trade & Invest (GTAI), the country’s economic development agency. Between 2019 and 2024 there were nearly 160 direct investment projects involving Indian firms setting up or expanding offices or production facilities in Germany. This figure does not include investments in mergers or takeovers. 

Strategic investment on the rise

A number of factors have contributed to this development. From the mid-2010s, the Indian government relaxed its restrictions on direct investments abroad. And the Covid-19 pandemic resulted in India becoming more important to German companies wishing to diversify their supply chains - which in turn led to growing interest in Germany among Indian firms. Furthermore, the goals of Indian investors have shifted as they have acquired more international experience, explains Bhardwaj: “In the past, Indian investors in Germany would focus on buying up ailing companies, though they often failed to turn them around again. Nowadays, Indian firms increasingly make strategic long-term investments.” 

A good two fifths of Indian direct investment in Germany are made in the digitisation sector. Major IT service providers such as Wipro and TCS, a Tata Group subsidiary, have had branches in Germany for many years and partner German companies undergoing a digital transformation. The electronics and automation sector is in second place. As Seema Bhardwaj explains, “pursuing research and development in cooperation with German partners is increasingly important for Indian companies”. Renewable energy is another area offering great potential, she adds. For example, Reliance New Energy Solar Limited (RNESL), a subsidiary of India’s biggest corporation Reliance Industries, invested around 25 million euros in Freiburg-based NexWafe GmbH in 2021. The goal is to jointly develop highly efficient green solar wafers on an industrial scale - ultra-thin wafers of crystalline silicon that form the basis for photovoltaic cells.

BorderPlus is active in a quite different field: this recruitment services and e-learning provider paid nearly ten million euros to take over a Düsseldorf company in 2025. By providing training and arranging for skilled Indian professionals to come to Germany, BorderPlus is helping ease the skilled labour shortage in the healthcare sector.

“Made in Germany” is a highly respected mark of quality in India

Germany is very attractive to Indian investors for a variety of reasons, says Seema Bhardwaj: “Germany offers access to a large market and excellence in technology; the ‘made in Germany’ label is also a highly respected mark of quality in India.” Another factor is Germany’s central location in Europe, she adds. “The stability and reliability of Germany as a business location also play a very important role, especially against the backdrop of current US trade policy.” 

The two countries are roughly equal in terms of economic power, though the Indian economy is developing far more dynamically: it grew by 6.5 to 7 percent in 2025. This alone makes it virtually certain that Indian investment in Germany will continue to rise. The new free trade agreement between India and the EU is also likely to play an important part in this. The more German firms engage in India, the more attractive Germany becomes as a centre of innovation and point of access to the European market, says Seema Bhardwaj: “We are seeing growing interest not only from major Indian corporations but also among small and medium-sized enterprises (SMEs), which are the main target of our advisory services. There’s a lot happening at the moment in many sectors.”

„Made in Germany“ genießt in Indien hohes Ansehen

Aus mehreren Gründen sei die Bundesrepublik für indische Investoren hochattraktiv, sagt Seema Bhardwaj: „Deutschland bietet Zugang zu einem großen Absatzmarkt und technologischer Exzellenz, außerdem genießt das Siegel ‚made in Germany‘ in Indien sehr hohes Ansehen.“ Ein weiterer Faktor sei die zentrale Lage in Europa. „Eine sehr große Rolle, gerade vor dem Hintergrund der aktuellen US-Handelspolitik, spielt auch die Stabilität und Verlässlichkeit des Standorts Deutschland.“ 

Die Wirtschaftskraft beider Länder ist etwa gleich groß, wobei sich die indische Wirtschaft weit dynamischer entwickelt: 2025 wuchs sie um 6,5 bis 7 Prozent. Allein deshalb ist so gut wie sicher, dass die indischen Investitionen in Deutschland weiter steigen. Einen wesentlichen Beitrag dazu dürfte auch das neue Freihandelsabkommen zwischen Indien und der EU leisten. Je stärker sich deutsche Unternehmen in Indien engagierten, desto attraktiver werde Deutschland als Innovationsstandort und als Startpunkt für den Eintritt in den europäischen Markt, sagt Seema Bhardwaj: „Wir sehen, dass das Interesse nicht nur bei großen indischen Unternehmen wächst, sondern auch im Mittelstand, an den sich unser Beratungsangebot vorrangig richtet. In vielen Branchen ist derzeit sehr viel in Bewegung.“