With the Indian economy on the rise, nearly 60% of German companies plan to increase their investments in India during 2024-25, according to a recent survey conducted across several German cities. The survey, carried out by KPMG in Germany and the Indo-German Chamber of Commerce (AHK India) between April 9 and May 20, focused on the economic outlook, challenges, and business opportunities for German companies in India. A total of 85 companies participated this year, compared to 99 last year.
The key findings from the “German Indian Business Outlook 2024,” presented today, indicate a strong positive sentiment among German firms about India’s market. Of the 85 companies surveyed, 78% expect an increase in sales, and 55% forecast higher profits. Additionally, 82% predict a rise in turnover, and 74% foresee higher profits, with 37% anticipating sales growth of over 20% and 25% expecting profit growth of more than 20% by 2029. This highlights India’s growing importance as an investment destination, with 59% of companies planning to expand their investments this year, a significant increase from 36% in 2021. However, 7% of the surveyed companies intend to scale back their operations.
The survey also identified the primary factors that make India an attractive investment location for German companies: low labor costs, political stability, and a skilled workforce. Compared to other Asian countries, 69% of German firms value India’s steady economic growth, especially in light of the slowing Chinese economy. Despite the optimistic outlook, challenges remain, with 64% of companies citing bureaucratic hurdles and 39% mentioning corruption as significant issues. The complex tax system also poses a problem for 27% of the companies. German firms are hopeful that Prime Minister Modi’s re-election will address structural issues such as infrastructure deficits and regulatory complexities, further enhancing India’s investment appeal.
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