EU-India Free Trade Agreement to Drive Growth for German Companies

• Strong growth expected: 73% anticipate rising revenues in 2026; over a five-year horizon, the figure is 92%
• India as an integrated business location: 69% view the country as a relevant sales market, 63% as a production location (+18 and +14 percentage points, respectively, compared to 2025)
• Growing competition: 46% expect Indian competitors to be superior to them in five years
• Location advantages persist: political stability (49%), low labor costs (49%), and availability of skilled workers (44%) are the most positively rated location factors
• Global risks are shifting: Volatility in U.S. trade policy (56%) and military conflicts (47%) dominate the risk assessment
• Regulatory challenges remain: bureaucracy (58%) and corruption (34%) remain key hurdles
• Conflict in the Middle East has significant implications

Düsseldorf/Mumbai, June 9, 2026
 

Despite geopolitical tensions and growing global uncertainty, German companies are significantly expanding their presence in India. For many, the market is increasingly becoming the focus of their international strategy. Already today, 68% count the country among their top five markets worldwide. 10% even rank India as their most important market. At the same time, India’s strategic role continues to grow as companies increasingly integrate the location comprehensively into their value chain.

At the same time, competitive pressure is growing significantly: While currently only 17% of the surveyed German companies consider local Indian firms to be superior, nearly one in two companies (46%) expects this to be the case in the next five years.

Consequently, German companies are intensifying their local engagement: More than half (52%) already plan to increase investments in India by 2026, and 80% plan to do so by 2031. At the same time, the scope and strategic depth of these engagements are increasing, underscoring India’s growing importance as a long-term investment location.

The economic outlook also remains extremely positive. For the current year, 73% of companies expect rising revenues. Looking ahead to 2031, this figure rises to 92%. Profit trends are also viewed predominantly positively, underscoring the market’s sustained attractiveness. 45% expect rising profits in 2026, while 74% anticipate this over a five-year horizon.

These are key findings from the “German-Indian Business Outlook 2026,” which was released today. The survey, conducted by KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG) and the German-Indian Chamber of Commerce (AHK India), took place between March 10 and May 1, 2026. It analyzes the business expectations of German companies in India.

India has established itself as a central component of German companies’ international business strategies. 69% of the surveyed companies view the country as an important sales market, while 63% use it as a production location for the regional market. This represents an increase of 18 and 14 percentage points, respectively, compared to last year’s survey. Furthermore, India is gaining importance as a location for service sourcing (55%) and global competence and shared service centers (44%).

A key driver for further development in the German-Indian corridor is the EU-India Free Trade Agreement, which is set to be concluded in early 2026. 96% of the surveyed companies expect this to have a positive impact on their business activities, with 34% anticipating very significant positive effects. Approximately one-quarter of the surveyed companies are already planning concrete measures, particularly the expansion of local production (26%), an increase in exports from India (25%), and new partnerships or joint ventures with Indian companies (21%).

“An ambitious EU-India Free Trade Agreement can become a decisive lever for German companies—for growth, diversification, and resilience. This makes it all the more important to decisively capitalize on the current momentum and implement the agreement swiftly so that potential can be turned into concrete opportunities,” says Jan Nöther, Director General of the AHK India.

At the same time, geopolitical tensions are increasingly influencing companies’ strategic decisions. In particular, volatile U.S. trade policy (56%) and military conflicts outside India (47%) are cited as the key external risk factors.

India remains an attractive location for German companies. Political stability (49% compared to 61% last year), low labor costs (49% compared to 53% last year), and the availability of skilled workers (44% compared to 53% last year) remain the top three location advantages, but have lost significance compared to the previous year.

At the same time, challenges persist: bureaucratic hurdles (58% compared to 65% the previous year) and corruption (34% compared to 33% the previous year) are cited by companies as the two biggest obstacles to their activities in India. Regulatory requirements such as Quality Control Orders also burden 27% of the surveyed companies (32% the previous year).

“The combination of attractive location conditions and structural challenges requires a clear strategic focus. Companies that focus on localization and partnerships early on can achieve decisive competitive advantages in the long term,” emphasizes Jan Nöther, Director General of the AHK India.

The survey was conducted primarily before the conflict in the Middle East. The resulting rise in oil prices and increased volatility in global energy markets are putting additional pressure on India as a major energy importer. This is reflected, among other things, in a depreciation of the Indian rupee, rising import costs, and increased political calls by the Indian Prime Minister for more efficient energy consumption.