Last updated in March 2016
Following the Second World War, India was one of the first countries to grant the Federal Republic of Germany diplomatic recognition. Today, India regards Germany as an important partner in its quest for a new political role in the region and the world, and above all for its ambitious economic reform programmes such as developing the country’s industrial sector. Relations here are based on the May 2000 Agenda for the Indo-German Partnership in the 21st Century, which has since been updated by further joint declarations.
Continuing mutual visits have given relations considerable impetus. Of particular importance in this context are the Indo-German intergovernmental consultations, where the two countries Cabinets hold joint sessions every two years, alternately in Germany and India. Germany is the only country with which India maintains this particular form of dialogue. Federal Chancellor Angela Merkel travelled to New Delhi in May 2011 to attend the first round of consultations. In 2013, Germany hosted a similar meeting with the Indian side in Berlin. The third bilateral intergovernmental consultations were held on 5 October 2015 in New Delhi. At the meeting, 18 bilateral agreements were concluded in sectors such as energy, business, vocational training, culture and research, security and agriculture. The Federal Chancellor was accompanied by 12 federal ministers, ministers of state and state secretaries. Prior to this, in April 2015, India’s Prime Minister Modi visited Germany to attend the Hanover Trade Fair, at which India was the Guest of Honour.
Germany is India’s principal trading partner in the EU and (in absolute figures) its sixth most important trading partner worldwide. Since India embarked on a course of reform in 1991, the volume of trade between the two countries has increased rapidly. In recent years, however, there has been a slight decline in bilateral trade owing to the Indian’s sluggish economic growth. In 2014 and 2015, bilateral trade shrank by 0.87 per cent compared with the previous year, to EUR 15.97 billion.
In the first 11 months of 2015, bilateral trade increased by 8.1 per cent compared with the same period in 2014. German exports to India grew by 9.8 per cent and German imports from India by 6.4 per cent.
India ranks 25th overall among Germany’s trading partners, 27th in terms of imports and 25th in terms of exports. Conversely, Germany ranks eighth as a supplier of goods to and fifth as a buyer of goods from India. However, trade between Germany and India accounts for less than 1 per cent of Germany’s total foreign trade. Germany’s continuing trade surplus of around EUR 3.3 billion (2014-2015) is due to the strong Indian demand for German goods, especially capital goods (machinery, which accounts for around a third of Germany’s total exports to India, electrical engineering products, metal goods, chemical products, motor vehicles and vehicle parts).
Indian exports to Germany focus on the textile sector, followed by chemical products, electrical engineering products, metal and leather goods and foodstuffs.
The principal bilateral economic agreements include:
- social security agreement of 2009
- double taxation agreement, which came into force on 19 December 1996
- agreement on the promotion and protection of investments, which came into force in July 1998
- trade agreement of 31 March 1955
- agreements on cooperation in scientific research and technological development dating from 1971 and 1974
At the third Indo-German intergovernmental consultations in October 2015, the Federal Chancellor was accompanied by a high-ranking business delegation. Four declarations of intent were signed, in which German and Indian companies undertake to cooperate bilaterally.
German direct investment
For decades, Germany has been among the ten principal foreign direct investors in India. With investments totalling more than USD 8 billion since April 2000, it currently ranks seventh, after Mauritius, Singapore, the United Kingdom, Japan, the Netherlands and the United States. Investments have focused on the transport, electrical and metal sectors. Over the past years, the service sector (in particular insurance) has headed the field, with a share of some 26 per cent, followed by the construction and automotive industries. In the 2013-2014 financial year, new German direct investment amounted to around USD 1 billion, compared with USD 860 million in the previous year. These figures only take into account direct money flows, not indirect investment, and thus in no way reflect the real engagement of German companies there.
Germany’s development cooperation with India is a major component of bilateral relations. India is a Global Development Partner, playing a key role in global development issues, the protection of global public goods, the attainment of sustainable development goals (SDG) as well as in international processes (WTO Doha Round, climate negotiations). India is also a country of extreme economic and social disparities and has the largest number of people living in absolute poverty worldwide: 800 million people there live on USD 2 and 450 million on less than USD 1.25 a day. The country’s rapid economic development in the past decades, along with a process of industrialisation and urbanisation, has caused serious environmental damage: India is now the world’s third largest emitter of climate-damaging gases.
India is a self-assured development partner and by no means financially dependent on official development assistance (ODA), which accounts for only 0.1 per cent of gross national income. Despite the huge challenges the country faces, it now only accepts assistance from a few donors. Germany is the second largest bilateral donor, after Japan.
In an effort to deploy German development cooperation as efficiently as possible, work concentrates on the following sectors:
- energy: energy efficiency, renewables and access to energy to reduce poverty
- environmental protection and the conservation of natural resources: adapting to climate change, biodiversity, industrial and urban environmental protection
- sustainable economic development: employment promotion, social security systems, (rural) financial system development
Bilateral development cooperation measures are implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and the KfW Development Bank (KfW Bank Group) on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ). In addition, the BMZ supports projects by civil society institutions such as political foundations, churches and private organisations. India is a popular destination for many Weltwärts (Worldwards) volunteers; they numbered 334 in 2015 alone.
Development policy dialogue at government level takes place at the annual intergovernmental consultations and negotiations on development policy. German spending on development cooperation with India reached an all-time high in 2015, with new commitments worth some EUR 1.5 billion. In 2015, Germany also signed an agreement of solar energy partnerships with India. The high volume of commitments in Financial Cooperation is made possible by the KfW’s favourable refinancing terms on the capital market, which allows greater leverage. India is also the first country in Asia to be included in the special initiative One World, No Hunger. In addition, German development cooperation with India promotes private-sector engagement there, for example through the Deutsche Investitions- und Entwicklungsbank (DEG).
Education and culture
There are six branches of the Goethe Institute in India. They are called Max Mueller Bhavans after the founder of Indian studies, Max Mueller (1823-1900). The institutes conduct language and programme work and offer information services in New Delhi, Kolkata, Chennai, Bangalore, Mumbai and Pune. The network of institutes is complemented by five Goethe Centres – in Ahmedabad, Chandigarh, Coimbatore, Hyderabad and Trivandrum. Besides the organisation of cultural programmes, the main focus is on language work. Each year, some 17,000 people currently attend the German courses offered by the Max Mueller Bhavans and Goethe Centres.
As part of the Schools: Partners for the Future initiative (PASCH), the Goethe Institute and the Central Agency for Schools Abroad (ZfA) has succeeded in recruiting 60 schools in India, at which German is taught as a foreign language. There are approximately 14,674 students learning German at these schools. The Goethe Institute has for years cooperated closely with the national chain of schools operated by Kendriya Vidyalaya Sangathan (KVS). German is currently taught at some 130 KVS schools, which are attended by around 15,000 students.
The branch office of the German Academic Exchange Service (DAAD) in New Delhi supports bilateral university and research cooperation programmes and provides scholarship programmes and student advice. The DAAD offers all its regular support programmes in India as well as a number of special India-specific programmes, some of them co-funded. In the 2014-15 winter semester, some 11,860 Indian students were enrolled at German universities, an increase of nearly 24 per cent over the previous year. The number of German students at Indian universities is estimated at around 1,000.
There are currently five academic teachers working in India and two language assistants for German as a foreign language. There is an officially recognised German School Abroad in New Delhi, which offers instruction up to 12th grade (German International Abitur Examination).
The University of Heidelberg’s South Asia Institute has had a local office in New Delhi since 1962. It plays an important role as an interface for Indian studies experts from German and Indian research institutions.
As part of the Federal Foreign Office’s Cultural Preservation Programme, Germany’s foreign missions in India are helping to restore India’s cultural heritage. In recent years, funding has been provided to restore the Mughal-era Chausath Khamba mausoleum in New Delhi, the Avalokiteshvara Temple in Ladakh and the Black Pavilion in the Shalimar Bagh Mughal garden in Srinagar.
The Indian government attaches great importance to promoting study programmes on Indian language and culture (indology) outside India. It has repeatedly reaffirmed its wish to further strengthen indology studies in Germany.
Acting in close cooperation with the Federal Foreign Office, the German Embassy and Consulates-General in India, the German Football Association’s national student team went on a tour of several cities in India in January 2016.
Science and technology
Scientific and technological cooperation with India dates back to the late 1950s and is based in part on two intergovernmental agreements, signed in 1971 and 1974. Indian science (particularly space research, IT and biotechnology) enjoys an excellent reputation in Germany, and vice versa. Since the 1990s, there have been regular meetings at state secretary level, at which important projects and cooperation priorities are discussed. The most recent meeting was held in August 2015 in New Delhi. The first meeting of the Joint Working Group on Higher Education was also organised in November 2014.
The German House of Research and Innovation (DWIH) was officially opened in New Delhi in October 2012. The idea of bringing together German scientific and research institutions under one roof is designed to make it easier for Indian and German scientists, researchers and students to establish contacts with one another and to raise Germany’s profile as a science and research location. The Federal Foreign Office’s decision to set up one of only six German Houses of Research and Innovation /German Science Centres (DWIH/DWZ) worldwide in Delhi underlines the great importance accorded to India as a science and research partner. With its 15 consortium members, the DWIH in New Delhi is the largest of the six Houses.
Germany’s only bilateral research promotion centre worldwide is in India. The Indo-German Science and Technology Centre (IGSTC) in Gurgaon near New Delhi has been co-funded by Germany and India since 2008, each country contributing an annual EUR 2 million. The IGSTC promotes bilateral application-oriented research projects in cooperation with industrial partners from both countries.
India has a major stake in several large research institutions in Germany. India has contributed some EUR 30 million to the multinational FAIR particle accelerator in Darmstadt and has also invested substantial sums in licences for use of the DESY particle accelerator in Hamburg.
Germany is India’s second most important research partner worldwide, after the United States. This fact is reflected in the large number of joint Indo-German scientific publications.
The more than 1,000 Indian postgraduate students in Germany constitute the second largest group of foreign PhD students after the Chinese. To further step up academic exchange between Germany and India, then Federal Education and Research Minister Schavan launched the scholarship programme entitled A New Passage to India during her visit to India in 2008. Worth an annual EUR 4.3 million, the programme, which is being implemented by the German Academic Exchange Service (DAAD), is specifically designed to strengthen young German scientists’ India competence.
The Max Planck Society’s cooperation with India, based on an agreement with India’s Department of Science and Technology (DST), is gaining considerable momentum. In 2014, there were more than 800 research stays by Indian scientists at Max Planck institutes and 47 MPS projects were conducted in cooperation with Indian partners. The Max Planck Society operates two joint research centres: the Indo-German Max Planck Center for Computer Science (IMPECS) at the Indian Institute of Technology in New Delhi and the Indo-German Max Planck Center on Lipid Research at the National Centre for Biological Sciences in Bangalore.
In terms of Alexander von Humboldt Foundation scholarship programmes and prizes awarded to foreign researchers, India ranks among the leading countries, after the United States, Russia and China.
The German Research Foundation (DFG) has had its own office in New Delhi since 2006. As part of research cooperation between the DFG and the Indian National Science Academy (INSA), some 490 Indian researchers have so far spent time in Germany.
The Fraunhofer-Gesellschaft opened a permanent office in Bangalore in November 2012.
India faces huge challenges in terms of urban and industrial environmental protection. Long-term, sustainable protection of soil, water and air and preserving biodiversity are issues of global importance. India and Germany are working together to attain internationally agreed environmental goals.
To meet these urgent environmental challenges, Germany is seeking to step up political dialogue with India. At the second Indo-German Environment Forum, which was held in January 2015 and presided over by Federal Environment Minister Hendricks and her Indian counterpart, a number of joint working groups were set up that have since met regularly to discuss topics such as climate protection, sustainable urban development, water and waste management.
German development cooperation with India has traditionally focused on environmental and climate protection. Climate protection measures centre on projects to promote renewable energy and energy efficiency. Cooperation on environmental protection includes waste management and sanitation measures in major urban areas.
Projects in India are being supported as part of the Federal Government’s International Climate Initiative, which was launched in 2008. The main focus of these projects is also on renewable energy and biodiversity. The required funding comes from the auctioning of emission certificates in Germany.
In March 2009, India was the first major threshold country to join the International Renewable Energy Agency (IRENA). In addition to its IRENA membership, India is a founding member of the Renewables Club, which was launched in June 2013 in Berlin.