New record: 79% of German companies plan to invest in India by 2030 in response to geopolitical tensions

Positive revenues and profit prospects: 68% expect rising revenues in 2025, 59% higher profits. By 2030, 93% expect turnover to increase and 79% expect profits to rise.

• Production in India for Asia: 56% of companies want to use the country as a production site for the regional market by 2030 (+25 percentage points compared to 2025)
• Expectation of increasing competitiveness of Indian companies: Nearly half of the surveyed German companies (47%) expect Indian competitors to be superior over a five-year period (+22 percentage points compared to the previous year)
• India benefits from geopolitical tensions: Every second company (50%) expects positive effects from the continued decoupling of the USA from China
• Location factors remain consistently positive: For 61% of companies, India's political stability is the most important advantage – ahead of qualified specialists and low wage costs (53% each)
• Expansion of service functions: 42% plan to establish shared services or global capability centers in India by 2030 (+20 percentage points compared to 2025)
• Environmental impact remains the biggest exogenous risk: 55% see high levels of air pollution in Indian cities as business-critical

Berlin/Mumbai, 25th June 2025

Considering ongoing global uncertainties and an increasingly fragmented global economy, India is increasingly becoming the focus of business location strategies: For 68% of German companies, the country is now one of the five most important markets – an increase of 14 percentage points compared to the previous year. For 6%, it is even the top priority market. At the same time, a significantly increasing number of German companies expect Indian companies to be superior to their own company in the next five years (47% compared to 25% in the previous year).

Consequently, more than every second company intends to expand its commitment – with investments at record levels. The trend is accelerating over the next five years: almost eight out of ten companies (79%) intend to invest in India by 2030. Larger investment of more than EUR 5 million in particular will see the strongest growth at +20 percentage points compared to 2025.

At the same time, the fundamentals of German companies in India are stable and positive. For the current year, 68% expect higher sales and 59% forecast profit growth. In the five-year perspective, these figures rise to 93% and 79%.

These are the key findings of the "German Indian Business Outlook 2025" presented today. The survey conducted by KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG) and the Indo-German Chamber of Commerce (AHK India) took place between April 15 and May 27, 2025. It analyzes the business expectations of German companies in India.

Due to growing protectionism and attacks on global free trade, German companies are intensifying their engagement in India – and the trend is rising. By 2025, 53% want to invest locally; over the five-year period, the figure is already 79%. More than a third (35%) are planning larger individual volumes of over five million euros by 2030.

"Investment volumes of German companies are gradually shifting from China to India, as the country is less affected by the global upheavals and the systemic rivalry between the USA and China. German companies are prioritizing the large growth market, even though it comes with operational challenges and the commitment is not without risks", concludes Andreas Glunz, Managing Partner International Business at KPMG in Germany.

India scores particularly well with German companies when it comes to digitalization: 74% of companies are planning to invest in the digitalization of internal processes in 2025. 43% are focusing on artificial intelligence – by 2030, this figure will rise the most, up to 60%. Robotic process automation (36%) and Industry 4.0 solutions (also 36%) are also seen as important areas of investment in 2025.

Every second German company (50%) expects the growing systemic rivalry between the USA and China to have a positive impact on their business activities in India. Only about one in five (18%) fears negative effects on their business in India – such as trade barriers or geopolitical volatility.

"India is not primarily the focus of US tariffs and is not affected by China's counter-tariffs. It is also expected that India will be subject to lower US tariffs within Asia and will therefore enjoy comparative competitive advantages over other regional production locations", comments Andreas Glunz, Managing Partner International Business at KPMG in Germany

Currently, nearly one-third of German companies (31%) use India as a production site for the local market. By 2023, this share is expected to increase by 25 percentage points to 56%, according to their estimates.

At the same time, the Indian sales market is becoming increasingly relevant. Compared to the previous year's study, the proportion of companies using India as a sales market has grown by 10 percentage points to 37%; over a five-year horizon by a further 16 percentage points to 53%.

German companies also aim to utilize India more as a "Shared Service" or "Global Capability Center": Currently, 22% of respondents operate such a center here. By 2030, 42% plan to expand corresponding structures – especially in finance, HR and IT sectors.

"More and more German companies are pursuing an integrated India strategy that includes not only sales and production but also procurement and R&D. India is thus becoming an integral part of the value chain. The importance of India for companies cannot be measured by its revenue share – it goes beyond that. This requires both a strategic and operational focus on India," emphasizes Stefan Halusa, Managing Director of AHK India.

Political stability remains the most important locational advantage of India for 61% of German companies, ahead of the availability of qualified specialists and the comparatively low labor costs (53% each).

Known challenges also remain: 65% (previous year: 64%) of companies complain about the complex and lengthy bureaucratic processes. 33% (previous year: 39%) see corruption as an obstacle to their business operations – particularly when it comes to permits and customs issues.

The so-called Quality Control Orders (QCOs) represent a burden. They require certification by the Bureau of Indian Standards. The number of products and components that fall under this has risen sharply this year and will continue to grow. 32% of respondents rate the associated administrative effort as considerable.

"The QCOs significantly increase the regulatory burden for companies. In particular, the short-term nature of the announcement and the extensive exclusion of certain countries of origin make them an obstacle, especially for SMEs," warns Stefan Halusa (AHK India).

The biggest exogenous challenge is seen by 55% of German companies in the severe air pollution in Indian cities.

"Air pollution in India has reached levels that are increasingly perceived by participating companies as a threat to business. Adding the expected impacts of climate change, such as extreme heat and drought, the need for action by Indian policymakers becomes clear. "There is an urgent need for action here," comments Stefan Halusa (AHK India).