Germany Bets On India To Reduce Reliance On China

Chancellor Olaf Scholz is leading a high-level delegation to New Delhi this week, betting that increased access to the vast Indian market can reduce Germany's reliance on Beijing, even if India does not become the "new China," Christian Kraemer reported for Reuters.

Indian Prime Minister meets with Chinese President Xi Jinping at the sidelines of the recently concluded BRICS Summit in Russia. I Photo: Narendra Modi Facebook

From cars to logistics, German companies remain optimistic about India's growth potential, benefiting from a large pool of skilled young workers, a cheaper cost base, and economic growth of around 7%.

The visit comes at a sensitive time for Germany, whose export-oriented economy faces a second consecutive year of contraction, alongside concerns over a trade dispute between the European Union (EU) and China that could affect German businesses.

Having faced challenges from its dependence on Russian gas before the Ukraine war in 2022, Germany has worked to reduce its reliance on Beijing.

"India, the most populous country in the world, is a key partner of the German economy in the Indo-Pacific and plays a critical role in the diversification of the German economy," Economy Minister Robert Habeck said.

"We must reduce critical dependencies and strengthen the resilience of German companies and their supply chains in Asia," Matthias Williams also reported for Reuters.