Looking ahead to the next five years, expectations are even more positive: 82 per cent of respondents anticipate an increase in turnover, and 74 per cent foresee higher profits. By 2029, 37 per cent of German companies expect sales growth of more than 20 per cent, while 25 per cent anticipate profit growth of over 20 per cent, as per the German Indian Business Outlook 2024.
India’s booming economy is drawing more German companies, with nearly 60 per cent planning increased investments this year, according to KPMG and AHK India’s survey.
By 2029, 82 per cent respondents expect higher turnover and 74 per cent foresee greater profits.
Key attractions include low wage costs, political stability, and skilled specialists.
The survey highlights the growing relevance of India as an investment destination for German companies. This year, 59 per cent of companies surveyed plan to expand their investments in India, a significant increase of 23 percentage points from 2021. With a five-year perspective, 78 per cent of companies aim to increase their investments, compared to just 36 per cent in 2021.
Only 7 per cent of respondents are considering reducing their investments in 2024. Among the top location factors favouring India, 54 per cent of German companies cite low wage costs, followed closely by the country’s political stability at 53 per cent. The availability of highly qualified specialists, cited by 47 per cent of respondents, has also increased by 12 percentage points compared to the previous year.
However, companies expect wage costs to deteriorate over the next five years. By 2029, only 36 per cent of companies still expect cost advantages in this respect. In comparison with other Asian countries, 69 per cent of German companies appreciate the steady growth of India’s economy, particularly in light of the weakening Chinese economy.
India, the world’s most populous country, offers German companies enormous potential. Currently, 33 per cent of German companies use India as a production location for the local market, with this figure expected to rise to 45 per cent by 2029. Additionally, 27 per cent of German companies are attracted by India’s impressive potential as a sales market, a figure projected to increase to 40 per cent by 2029.
Two-thirds of respondents (67 per cent) hope for simplified regulations, a fight against corruption, and greater legal certainty in the country. Expanding and modernising infrastructure is also a priority for 55 per cent of companies, while 48 per cent hope for trade liberalisation and export promotion.
Despite the positive outlook, German companies also see challenges in India. Bureaucratic hurdles are considered particularly burdensome by 64 per cent of respondents, an increase of 11 percentage points from the previous year. Corruption is cited as an issue by 39 per cent, although this is a decrease from 47 per cent last year. The tax system is another significant challenge, cited by 27 per cent of companies.
Rising import duties are seen as a risk by 52 per cent, and non-tariff trade barriers by 43 per cent. When asked about exogenous risks, 40 per cent of German companies highlighted potential cyber-attacks, while 37 per cent perceive high levels of air pollution in India’s major cities as a concern. Increasing protectionism and bloc formation are considered significant risks by 36 per cent of respondents.
Fibre2Fashion News Desk (DP)