Roughly 2,000 German companies already operate in India, and India's commerce minister says most of the ones he just met plan to double or triple that footprint within two to five years. The shift, per BigGo Finance, is from treating India as a sales destination to building manufacturing, research and design operations there.
That is the news. The useful part for anyone tracking industrial capacity is the pattern underneath it: how a foreign market becomes a factory location, what a government says to speed that along, and which claims deserve scepticism. This guide walks through it, using the manufacturing questions the German-India case raises.
What actually changed in Berlin?
Piyush Goyal, India's commerce and industry minister, wrapped a two-day visit to Berlin in late October 2026. He told reporters that executives from Siemens Healthcare, Bertelsmann Investment, Volkswagen and Skoda delivered a consistent message: India is now a partner base for manufacturing, research and development, and innovation, not only a market.
His framing is worth reading closely. Goyal said the motivation is partly defensive. "Today the greatest imperative before German industry is to cut costs and become more competitive in global markets," he said. In other words, the pull is not just India's appeal. It is Europe's cost pressure. This connects to our earlier piece, Reshoring a plant costs more than the sticker.
Why does a market become a manufacturing base?
The usual sequence runs in three stages, and the German-India case sits between the second and third.
- Sell. A company exports into the market. No local plant, no local engineering.
- Assemble and support. Local production or back-office operations appear, usually to cut costs or serve the market directly.
- Co-create. Design, engineering and product development move in. The location stops being a branch and becomes part of the core.
Goyal pointed to India's network of more than 2,100 global capability centres, which he said employ millions of workers and range from a few hundred staff to several hundred thousand. Design and engineering work increasingly sits in these centres, he said, and the next stage is joint product development rather than back-office support alone. He wants German research institutes to set up operations in India so the relationship moves from execution toward co-creation.
What does the trade data show?
Germany is India's largest trading partner within the EU. Bilateral trade rose to $31 billion in the last fiscal year from $29.57 billion a year earlier, a gain of about 4.83%, according to India's ministry of commerce and industry figures cited in the report.
| India-Germany trade | FY25 | FY26 | Change |
|---|---|---|---|
| Total bilateral trade (USD) | 29.57 bn | 31.00 bn | +4.83% |
Modest growth, but the composition matters more than the total. A trading relationship built on exports to India looks different from one built on Indian plants feeding European supply chains. The data above does not break that out, which is exactly the kind of gap to watch as the shift proceeds.
What is the trade pact's role?
New Delhi and the 27-nation EU are preparing to sign a free trade agreement by the end of this year, with implementation expected in the following months after negotiations concluded in January. Goyal called the accord "a symbol of certainty, continuity and predictability" for supply chains.
That word, certainty, is the operating point. Companies do not move production on tariffs alone. They move when the rules stay still long enough to justify fixed capital. A signed and ratified deal would lock in preferential access to a market of 27 countries with a combined GDP near $20 trillion.
One wrinkle: the EU's Carbon Border Adjustment Mechanism, a levy on carbon-intensive imports. Goyal said Brussels has given New Delhi a most-favoured-nation assurance, meaning any flexibility or exemption extended to a third country would automatically apply to India. He had earlier told the Berlin Global Dialogue the EU was courting "disaster" with the levy, remarks he later called "completely factual."
How should you read pledges like these?
Apply the same test to any minister's investment tour, including this one. The report itself flags the limits: the investment pledges Goyal cited are corporate intentions rather than contracted capital, and ratification timelines have slipped before.
So separate the layers:
- Counted facts: 2,000 German companies in India; $31 billion in bilateral trade; 2,100-plus capability centres. These come from the minister and India's commerce ministry.
- Intentions: doubling or tripling footprints in two to five years. Stated plans, not contracted spend.
- Forecasts: the IMF projects 1.3% GDP growth for the EU in 2026 against a 7% forecast for India in FY27. Those are named institutions' projections, not outcomes.
Goyal also cited roughly $200 billion in planned data centre investment in India and expansion by electronics and semiconductor companies, sectors he said tend to locate only in jurisdictions they consider reliable. Planned, again, is the operative word. Anyone who has read a plant opening announcement knows the gap between a ribbon-cutting speech and a running line. Readers following this should also see How to read a plant opening announcement.
What happens next?
The pivotal variable is the FTA. A signed deal converts intent into preferential access; a slipped ratification leaves the cost logic doing all the work. On the Indian side, Goyal said the government's 25,060 crore rupee Export Promotion Mission will cover certification costs for micro and small enterprises and help larger exporters with compliance.
Germany's own economic affairs minister, Katherina Reiche, speaking at the opening of an India Centre at the German Council on Foreign Relations, put the receiving view plainly: "India already has talent and it works."
What remains unknown is whether the co-creation stage arrives on schedule. Execution risk cuts both ways, and the next honest data point will be contracted capital, not another round of meetings.
