German-Indian Business Outlook 2026

68 per cent of those surveyed already count the country among their five most important markets worldwide, whilst 10 per cent even rank it as their most important market. India’s strategic role continues to grow as companies integrate the location comprehensively into their value chain. At the same time, competitive pressure is mounting: whilst 17 per cent of the German companies surveyed currently regard local Indian firms as superior, almost one in two companies (46 per cent) expects this to be the case within the next five years. This is due to the high level of innovation and dynamism among Indian companies.

More than half (52 per cent) are already planning higher investment by 2026, and this figure will rise to 80 per cent by 2031. At the same time, the scope and strategic depth of these engagements are increasing. The economic outlook also remains positive: 73 per cent expect rising turnover for the current year; by 2031, this figure will rise to 92 per cent, and profit trends are also viewed as predominantly positive.

69 per cent view the country as an important sales market, whilst 63 per cent use it as a production base for the regional market. Both have gained significantly in importance compared to last year’s survey: The increases amount to 18 percentage points in terms of relevance as a sales market and 14 percentage points as a production site. Furthermore, India is also gaining relevance as a location for service sourcing (+11 percentage points to 55 per cent) and as a location for global competence and shared service centres (+9 percentage points to 44 per cent). Another key driver for further development in the German-Indian corridor is the EU-India Free Trade Agreement, due to be concluded in early 2026, from which 96 per cent of companies expect positive effects on their business activities.

Volatile US trade policy (56 per cent) and military conflicts in other regions (47 per cent) are seen as key risk factors. This reflects, in particular, the uncertainties surrounding a trade agreement between India and the US, as well as the conflict in the Middle East that began at the end of February 2026. Although India remains an attractive location, key locational advantages such as political stability (-12 percentage points), low labour costs (-4 percentage points) and the availability of skilled workers (-9 percentage points) are losing importance. Bureaucratic hurdles, corruption and regulatory requirements remain the most significant challenges.

Rising oil prices and increased volatility in energy markets as a result of the recent conflict in the Middle East are putting India, as a major energy importer, under additional pressure – evident in the depreciation of the rupee, higher import costs and a greater focus on energy efficiency.