Last updated in February 2017
After the Second World War, India was one of the first countries to establish diplomatic relations with the Federal Republic of Germany. 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. 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 in 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 Chancellor was accompanied by twelve federal ministers, ministers of state and state secretaries. The next consultations are scheduled to take place in Berlin at the end of May 2017. In April 2015, India’s Prime Minister Modi visited Germany to attend the Hanover Trade Fair, at which India was the Guest of Honour. In 2016, there were visits to Germany by India’s Railways Minister Prabhu, Urban Development Minister Naidu and Science and Technology Minister Vardhan. Federal Transport Minister Alexander Dobrindt visited India in October 2016.
Germany is India’s most important trading partner in the EU and (in absolute figures) its sixth most important trading partner worldwide. Since India embarked on a course of reform and opened up its economy in 1991, the volume of trade between the two countries has increased very rapidly. Bilateral trade between India and Germany grew in 2015. German imports from India increased by seven percent compared with the previous year and German exports to India by ten percent. This trend seems to have continued in 2016.
India ranks 25th overall among Germany’s trading partners, 28th in terms of imports and 27th 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 one percent of Germany’s total foreign trade. Germany’s continuing trade surplus of around 2.2 billion euros (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:
- agreement on social security of 2011, entering into force on 1 May 2017
- 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
German direct investment
For decades, Germany has been among the ten principal foreign direct investors in India. In 2015, German direct investment totalled 9.2 billion euros. 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 percent, followed by the construction and automotive industries. In the 2015-2016 financial year, new German direct investment amounted to 986 million US dollars, compared with 1125 million US dollars 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, Habitat III). India is also a country of extreme economic and social disparities and has the largest number of people worldwide, around 450 million, living in absolute poverty. On the other hand, India’s rapid economic development means that in the last two decades several hundred million people have been able to escape poverty. At the same time, industrialisation and urbanisation are also causing serious damage to the environment: India is now the world’s third largest emitter of greenhouse 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 percent 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, and uses nearly all the instruments available in implementing its development cooperation policy. German development cooperation with India also promotes private-sector engagement, e.g. through the DEG - Deutsche Investitions- und Entwicklungsbank, development partnerships with business (develoPPP) and partnerships between chambers and associations.
In 2016, it was agreed to focus bilateral development cooperation on the following priority areas:
- energy: energy efficiency, renewables and access to energy to reduce poverty
- sustainable urban development: improving urban and industrial environmental protection and urban infrastructure, climate change adaptation and emissions reduction, improving living conditions for the poor population
- environmental protection and the conservation of natural resources, strengthening climate change adaptation capacities and increasing productivity and income in rural areas; helping achieve this are measures being conducted under the special initiative One World – No Hunger, in which India is the first country in Asia to participate
In addition, German development cooperation supports the setting up of a practice-oriented (dual) vocational training system and provides stimulus for innovative approaches, e.g. in social policy or promoting start-ups.
Bilateral development cooperation measures are implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and KfW (development bank of the KfW Bankengruppe (KfW banking group)) on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ) and are closely coordinated with other federal agencies. In addition, the BMZ supports projects by civil society institutions such as political foundations, churches and private organisations. Both Weltwärts (Worldwards) volunteers and Senior Experten Service specialists are deployed in India.
Development policy dialogue at government level takes place at the annual intergovernmental consultations and negotiations on development policy. The current portfolio is around 7.5 billion euros. For 2017, too, the Federal Ministry for Economic Cooperation and Development envisages billions of euros of new commitments. The high volume of commitments in Financial Cooperation is made possible by KfW’s favourable refinancing terms on the capital market, which allows greater leverage. However, the unresolved tax exemption issue is currently blocking implementation and flow.
Particularly worthy of mention are the mutual agreements concluded as part of the Green Energy Corridors, the German-Indian solar partnership and in vocational training as well as German engagement in support of the Smart Cities initiative and the Ganges clean-up campaign.
Education and culture
There are six branches of the Goethe-Institut in India. They are called Max Mueller Bhavans after the founder of Indian studies, Max Mueller (1823-1900). The institutes carry out 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 18,000 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-Institut and the Central Agency for Schools Abroad (ZfA) have succeeded in recruiting 60 schools in India at which German is taught as a foreign language. There are approximately 15,900 students learning German at these schools. The Goethe-Institut has for years also cooperated closely with the national chain of schools operated by Kendriya Vidyalaya Sangathan (KVS), where more than 50,000 pupils are taught. Moreover, other schools in India are offering German as a foreign language with great success within the context of the Goethe-Institut’s German Educational Alliance.
At the intergovernmental consultations in October 2015, a joint declaration of intent was signed to promote the teaching of German as a foreign language in India and instruction in modern Indian languages in Germany. Both sides are working to implement this.
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 2015-2016 winter semester, some 13,740 Indian students were enrolled at German universities, an increase of nearly 16 percent on the previous year. The number of German students at Indian universities is estimated to be around 1000.
There are currently four lectors working in India 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).
As part of the Federal Foreign Office’s Cultural Preservation Programme, Germany’s diplomatic 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.
Ongoing projects include the Ziegenbalg Museum in Thanrangambadi, southern India, and the Qutb Shahi Heritage Park in Hyderabad, both of which are being supervised by the Consulate General in Chennai. Contacts between the National Museum in New Delhi and the Berlin museums with the goal of longer term cooperation are developing positively.
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 Indian cities 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. The countries enjoy long-established and intensive scientific cooperation in many different fields. 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. A follow-up meeting was held in June 2016.
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 forge 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.
Together with India, Germany supports a bilateral research promotion centre – a unique model for Germany. 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 initially contributing an annual sum of 2 million euros. Since 2017, the funding has been doubled to an annual 4 million euros. 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. It has contributed some 30 million euros 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 is reflected in the large number of joint Indo-German scientific publications.
The more than 1000 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 4.3 million euros, the programme, which is being implemented by the German Academic Exchange Service (DAAD), is specifically designed to strengthen the India competence of young German scientists.
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 2015, more than 830 researchers from India arrived to work at Max Planck institutes, a sharp increase over the previous years. In terms of the international exchange of young researchers, India has become one of the Max Planck Society’s biggest 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 an office in New Delhi since 2006. As part of research cooperation between the DFG and the Indian National Science Academy (INSA), around 500 Indian researchers have so far spent time in Germany.
The Fraunhofer-Gesellschaft opened a permanent office in Bangalore in November 2012. In 2015, the Indian Ministry of Heavy Industries and Public Enterprises concluded an agreement with the Fraunhofer-Gesellschaft, under which Fraunhofer provides comprehensive advisory services.
The University of Heidelberg’s South Asia Institute has had a base in New Delhi since 1962 and serves as an important bridge for India scholars from German and Indian research institutions. In the past few years other German universities, including the FU Berlin, the University of Göttingen, the University of Cologne and the Technical University of Munich, have also opened branches in India. The Jülich Research Centre also has an office in New Delhi.
India faces huge challenges in terms of urban and industrial environmental protection, largely as a result of its economic development. Long-term, sustainable protection of soil, noise reduction as well as the preservation of water and air quality and biodiversity are crucial to safeguarding health and quality of life in the country. They are also issues of global importance. India and Germany are working together to attain internationally agreed environmental goals.
To meet these environmental and climate-related 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 meet to discuss topics such as climate protection, sustainable urban development, water and waste management. A fourth group on biodiversity is due to begin its work shortly.
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 (ICI), which was launched in 2008. The main focus of these projects is also on renewable energy and biodiversity as well as sustainable urban development. 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. On 2 October 2016, India ratified the Paris Agreement on climate change.