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Germany and India: bilateral relations India

17.04.2019 - Article

Political relations

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 for its ambitious economic reform programmes and for the development of 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.

President Steinmeier last visited India in March 2018, and Prime Minister Modi met the Chancellor in Berlin one month later. Of particular importance are the Indo-German intergovernmental consultations, where the two countries’ Cabinets have held joint sessions every two years since 2011, alternately in Germany and India (most recently in May 2017 in Berlin). Cooperation takes place in areas such as energy, business, vocational training, culture and science, security and agriculture. Germany and India share a common interest in maintaining the rules-based international order, particularly in the maritime domain. The joint fight against global terrorism is becoming more and more important. Cyber security is an area in which Germany and India frequently hold similar views. Tried and tested forms of cooperation have developed in the United Nations and other multilateral forums, such as working with Japan and Brazil in the Group of Four (G4) to reform the United Nations and the Security Council. Due to its population size and its very rapid economic growth, India sees itself not only as a regional power but also increasingly as a global Player.

Economic relations

Germany is India’s most important trading partner in the EU and 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 rapidly. In 2018, bilateral trade between India and Germany increased further to a volume of around 18.2 billion euros in the first ten months of the year. German exports totalled 10.5 billion euros (+ 22 percent), compared to total imports from India of around 8.5 billion euros (+ 5 percent).

India ranks 26th overall among Germany’s trading partners, 27th in terms of imports and 25th in terms of exports. Conversely, Germany ranks tenth as a supplier of goods to and sixth as a buyer of goods from India. Trade between Germany and India accounts for less than one percent of Germany’s total foreign trade. Germany’s continuing trade surplus of around 2.9 billion euros (January to October 2018) 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, in force since 5 April 2018
  • double taxation agreement, which came into force on 19 December 1996
  • trade agreement of 31 March 1955
  • agreements on cooperation in scientific research and technological development dating from 1971 and 1974.

Direct investment

For decades, Germany has been among the ten principal foreign direct investors in India. In December 2018, German direct investment totalled 11.4 billion US dollars. 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 first nine months of the 2018-2019 financial year, new German direct investment amounted to around 600 million US dollars, compared with 1069 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. Conversely, direct investment in Germany by Indian firms (Estimated Stock of FDI) has now reached 4.2 billion euros.

Development cooperation

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 (G20, WTO Doha Round, climate negotiations, Habitat III). India has the largest number of people worldwide living in absolute poverty. Around 22 percent of the population live below the poverty line, on less than 1.90 US dollars per day, while 58 percent have less than 3.10 US dollars per day at their disposal. 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). 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. The quality of German development cooperation is highly regarded. With a current total volume of 959 billion euros and around 174 programmes (as of January 2019), Germany has considerable scope for influence in its partner ministries and institutions. The agreements of the Federal Ministry for Economic Cooperation and Development play a particularly relevant role in the intergovernmental consultations at cabinet level, which take place every two years.

 Bilateral development cooperation focuses on the following 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, with the help of measures in the areas of food security, green innovation centres and soil protection and rehabilitation, 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 economic participation of women and 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.

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), 48 Indian schools at which German is taught as a foreign language are currently receiving support from the Goethe-Institut and the Central Agency for Schools Abroad (ZfA). There are more than 15,000 students learning German at these schools. The Central Agency for Schools Abroad also supports six other schools which have not yet obtained PASCH status, two of which have now reached candidate status in the PASCH admission procedure for schools offering the German Language Certificate. Three further schools have been nominated for candidate status in the context of the 2019 admission procedure. Last school year, six girls from the Carmel Convent School were able to sit the German Language Certificate examinations as a matter of course for the first time. Previously, special permission from the Standing Conference of the Ministers of Education and Cultural Affairs of the Länder in the Federal Republic of Germany had to be obtained. The country also has two German schools, one in New Delhi and the other in Mumbai.

The Goethe-Institut has for years also cooperated with the national chain of schools operated by Kendriya Vidyalaya Sangathan (KVS). There are more than 80,500 pupils learning German at this chain’s approximately 370 schools. The above-mentioned figures include numbers from currently four pilot schools from another state school chain, Jawahar Navodaya Vidyalaya (JNV). Once the pilot phase has been successfully completed, other JNV schools are to introduce German classes in future. The lack of training opportunities for German teachers at Indian universities remains an obstacle to more widespread instruction. GI further training programmes within the context of the international programme “Learn how to teach German” (DLL) are helping to solve the problem of the lack of teachers to a limited extent. Moreover, around 370 other schools in India are successfully offering German as a foreign language within the context of the Goethe-Institut’s German Educational Alliance. The number of students learning German at these German Educational Alliance Schools totals approximately 61,000.

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.

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. Indian students now comprise the second largest group of foreign students enrolled at German higher education institutions, totalling around 17,600, an increase of 13.14 percent in the past year.

Science and technology

Scientific and technological cooperation with India goes back to the late 1950s. The countries enjoy long-established and intensive scientific cooperation in many different fields.

The German House of Research and Innovation (DWIH) was officially opened in New Delhi in October 2012. It brings together German scientific and research institutions working in India, thereby making 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 five German Houses of Research and Innovation worldwide in New Delhi underlines the great importance accorded to India as a science and research partner. 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. India 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. 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 2017, more than 850 researchers from India arrived to work at Max Planck institutes.

India is the Alexander von Humboldt Foundation's most important partner country after the United States, Russia and China. The German Research Foundation (DFG) has had an office in New Delhi since 2006. Its main task is to make available information on establishing joint research projects and set up funding programmes for Indo-German research teams.

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 Fraunhofer-Gesellschaft is also actively involved in the Indian Smart City programme in cooperation with the cities of Kochi and Coimbatore, among others.

The University of Heidelberg’s South Asia Institute has had a branch in New Delhi since 1962 and forms an important link between India scholars from German and Indian research institutions. In the past few years other German universities, including Freie Universität Berlin, the University of Göttingen, the University of Cologne and the Technical University of Munich, have also opened branches in India.

Environment

India faces huge challenges in terms of urban and industrial environmental protection. The fight against air pollution, water protection, long-term, sustainable soil conservation, noise reduction and biodiversity preservation are crucial to safeguarding health and quality of life in the country. India is also taking efforts to adapt to the impact of climate change very seriously. India and Germany are working together bilaterally and in international organisations to achieve internationally agreed environmental goals and to learn from one another.

To meet these environmental and climate-related challenges, Germany is seeking to step up political dialogue with India. The Indo-German Environment Forum has set up a number of joint working groups that meet to discuss topics including climate protection, sustainable urban development, biodiversity and water and waste management/recycling. The third Indo-German Environment Forum took place at ministerial level in New Delhi in February 2019. The working groups on climate (last meeting in November 2018), water and waste management/circular economy (February 2019) and biodiversity (February 2019) also convened in Delhi at director-general level. The next meeting of the working group on sustainable urban development (urbanisation) is due to take place in autumn 2019. Future priorities for cooperation in the area of environmental protection include the fight against marine waste, implementation of the Strategic Development Goals (SDGs) and National Determined Contributions (NDCs), forestry and renewables. German development cooperation with India has traditionally focused on environmental and climate protection (see above). Projects in India are also being supported as part of the Federal Government’s International Climate Initiative (ICI), which was launched in 2008.

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. At the invitation of Indian Prime Minister Narendra Modi, the founding conference of the International Solar Alliance (ISA) was held in New Delhi on 11 March 2016.

Disclaimer:

This text is intended as a source of basic information. It is regularly updated. No liability can be accepted for the accuracy or completeness of its contents.

Additional content

India is a partner country of German development cooperation. For more information please visit the website of the Federal Ministry for Economic Cooperation and Development

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