In 1959, as smoke billowed from the blast furnaces of the newly inaugurated Rourkela Steel Plant, India’s then prime minister, Jawaharlal Nehru, walked through rows of German-built machinery alongside engineers from West Germany.
The plant, one of the South Asian nation’s first large-scale industrial ventures, was more than a steel factory — it was a symbol of post-independence ambition and international collaboration.
Nehru called it a “temple of modern India,” a place where German technical expertise met Indian determination, forging a legacy of industrial partnership that has endured for over six decades.
Ties between India and Germany have come a long way since then.
Both sides are now strategic partners and seeking to further bolster their partnership, in areas as wide ranging as trade, migration, climate and foreign policy.
German FM travels to India
German Foreign Minister Johann Wadephul is traveling to India this week, where he will meet with both political and business leaders to explore further avenues for bilateral cooperation.
“India is a strategic partner for Germany across the board in the Indo-Pacific and plays a crucial role in the system of global partnerships,” Wadephul said ahead of the trip.
“We want to further deepen our relations across the entire spectrum,” he added, noting cooperation on economic matters, security and defense is mutually beneficial for both countries.
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The foreign minister will begin his two-day trip in the southern city of Bangalore, where he is aiming to “take the pulse of what makes India’s innovative strength so powerful, and explore even greater opportunities for cooperation.”
On the agenda for Wadephul in the high-tech metropolis will be topics such as research, science and migration.
His talks in the capital New Delhi on Wednesday are expected to center on relations with China and Russia.
Trade expands, but dwarfed by that of China
Bilateral trade has grown significantly over the past decade, hitting a record high of around $33 billion (€28 billion) in 2024.
Germany was also India’s top trading partner within the European Union last year, and India is a major market for German goods, including machine tools, vehicles and chemicals.
Anandi Iyer, director of the Fraunhofer Institute’s India office, said, “For far too long Germany has hyphenated India with China.”
She stressed that Germany instead “needs to view India for its own strengths and opportunities,” pointing out that India’s “long-term stability and growth outweigh the low entry barriers once offered by China.”
Still, India’s current trade with Germany is dwarfed by that of China — total German-Chinese commerce stood at about €246 billion last year.
China continues to be the key focus of German firms in Asia.
While the Indian market is becoming increasingly important for them, many also complain about bureaucratic hurdles, corruption and a complex tax system, among other issues, in the South Asian nation.
“The German Mittelstand [small and mid-sized businesses] can thrive in India if backed by clear value propositions, ease of doing business, and supportive policies, while areas like AI and health tech highlight how Germany’s engineering depth and India’s agile digital ecosystem can create a truly reciprocal innovation partnership,” Anandi stressed.
Labor market shortages
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Sticking points hinder free trade
Ahead of the visit, Wadephul also called on the European Union and India to complete a planned free trade deal as soon as possible.
Both Brussels and New Delhi have been negotiating to strike a deal this year to reduce customs duties and ease trade barriers, but sticking points remain, particularly over access to agriculture and dairy markets.
“Certain Indian interests such as the dairy industry… are stumbling blocks where India cannot really come down from because it’s such a big country with so many people who are small producers,” Britta Petersen, director of the Rosa Luxemburg Foundation South Asia Office, told DW.
Despite the challenges, Iyer said, there’s clear momentum toward reaching an agreement. “Absolutely, we need a framework for economic prosperity for both countries. India is a heterogeneous country with a highly differentiated market and economic strata,” she underscored.
“This needs to be factored in by Germany while discussing the terms and conditions of the framework.”
A key pillar of ties
Climate cooperation has been a central pillar of bilateral ties.
Germany has invested heavily in India’s renewable energy sector, with the 2022 Green and Sustainable Development Partnership mobilizing billions for clean projects.
Both sides are betting on green hydrogen as a critical future fuel.
But S.E. Sudheendra, chairman of the Bioenergy Development Board in Karnataka state, said that the absence of an India-EU free trade agreement “complicates investment, trade, and access to the Indian market for German companies.”
Among the challenges, he underlined, are regulatory discrepancies, complex bureaucratic procedures, financial and currency risks, and infrastructure gaps.
Furthermore, Sudheendra added, technologies like green hydrogen and offshore wind remain expensive in India, with vulnerable supply chains for electrolyzers and solar PV, hindering closer bilateral cooperation.
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Defense gains prominence
In a significant strategic change, however, defense is emerging as an area of growing engagement, with Germany signaling an interest in boosting military relations with India.
German Defense Minister Boris Pistorius’ visit to India last year provided a major thrust to the defense partnership.
During the trip, German and Indian companies signed an agreement envisioning the possible construction of six advanced stealth diesel-electric submarines.
The Indian government recently gave a green light to authorities to begin formal talks with Germany’s ThyssenKrupp Marine Systems for building the submarines.
Petersen noted that there is a change in mood regarding doing business in this field. “It’s much more open now, and I think that is also something that India is looking at.”
Can Indian workers fill gaps in Germany’s labor market?
Labor mobility has also emerged as one of the most promising areas between India and Germany.
Confronting shifting demographics in an aging society, Germany has long looked abroad for skilled workers to fill gaps in its labor market.
Meanwhile, India — the most-populous country on the planet — has a huge, young workforce, and the nation’s economy and jobs market have been unable to keep pace with the sheer number of potential workers.
This has allowed both sides to ink a Comprehensive Migration and Mobility Partnership in 2022, designed to make it easier for Indian workers and students to work and live in Germany.
Why are skilled workers from India coming to Germany?
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Global tensions impact ties
Not all is well in the India-Germany relationship, however.
“Nobody in Europe was particularly happy about the Indian position on the war in Ukraine, but they have pretty much accepted that this is India’s position and this is not going to change,” said Petersen.
The partnership between New Delhi and Berlin is also shaped by wider geopolitical and economic crises.
US President Donald Trump’s erratic trade policies, wars in Ukraine and the Middle East, and global economic fragmentation raise uncertainty and volatility, threatening the rules-based global order.
Against this backdrop, both India and Germany are opting for pragmatic, interest-driven cooperation over grand strategy, say experts.
“It is quite obvious now that actually Russia has become subservient to China, so it is also important for India to stay in touch with these neighbors because eventually China is a neighbor,” Petersen said. “And as long as the Europeans keep that in mind, I think there’s a lot that can be done between the two sides.”
Edited by: Srinivas Mazumdaru
