Germany turns to India as their next bet to reduce China reliance

Scholz will be leading a high-level delegation for government consultations, but it is clear that the major forum will be to work out more business between Germany and India. It comes at a delicate time, especially with the German economy struggling and still largely being reliant on China demand for some key sectors.

German economy minister, Robert Habeck, has come out to say that “India plays a key role in the diversification of the German economy”. Adding that they must work to “strengthen the resilience of German companies and their supply chains to and from Asia”.

It’s still a long way to go though. For some context, German direct investments in India were seen at roughly €25 billion as per 2022. That’s only roughly 20% of what was invested in China.

In any case, it’s a small first step but one that might grow to be of much more influence in the next decade or two perhaps.

No doubt that India is a big market with lots of potential but bureaucracy and corruption are two things that present major hurdles for companies to enter and to capitalise on business there.

This article was written by Justin Low at www.forexlive.com.