European carmakers explore India manufacturing as German firms plan investments

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German companies have announced $7.4 billion in investments in India over two and a half years, with further opportunities emerging across sectors.

By PTI

Updated - October 23, 2026 at 10:26 AM. | Berlin

FILE PHOTO: Commerce and Industry Minister Piyush Goyal says European companies are exploring investments in India, including manufacturing opportunities for automobile makers. | Photo Credit: th-online Administrator

Several European companies have expressed keen interest in investing in India, with many carmakers exploring manufacturing opportunities in the country, Commerce and Industry Minister Piyush Goyal said on Friday.

The minister, who is here on an official visit, said that German companies are interested in investing in areas such as healthcare, pharmaceuticals, and research and development.

“With all the regulatory overhang that they (EU) are creating upon themselves, European manufacturing will have to look for trusted partner countries where at least many of the things that are becoming very expensive in Europe can be produced. So I see tremendous potential for India and huge job creation in India,” he told reporters here.

The EU is implementing a number of regulations such as CBAM (carbon border adjustment mechanism) and deforestation. He noted that the Indian steel industry is investing heavily in green steel and that the use of clean energy sources is increasing in the country.

“Many automobile companies from here are also looking at manufacturing in India,” Goyal said, adding that European firms are also exploring business opportunities in India in sectors such as precision engineering, aerospace, defence, shipbuilding and ship repairing.

Several European automobile manufacturers have established manufacturing facilities in India, using the country as a base to serve the domestic as well as export markets.

German carmakers such as Volkswagen, Mercedes-Benz, BMW and Audi have operations in India, while Czech automaker Skoda also has a presence in the country.

“We export about one million cars from India, soon you will see cars made in India will start coming into Europe, so I think in high-tech (sectors), India’s entry is increasing,” Goyal said, adding German companies had indicated plans for substantial investments in India during his bilateral meetings with them.

Without naming a firm, he said a company with a turnover of about 4 billion Euros in India is planning to go to 10 billion Euros.

Speaking at the briefing, Ambassador of India to Germany Ajit Gupte said that in the last two and a half years, German companies had announced investments of USD 7.4 billion in India.

India-EU trade pact expected to boost investment

Goyal added that the India-EU trade pact would provide huge opportunities to businesses on both sides to boost trade and investments.

The minister added that the India-European Union (EU) free trade agreement will further ease the movement of goods and services.

The pact is expected to be signed by the end of this year and may come into force in the first quarter of 2027.

“A free trade agreement is not just (about) reducing (import) duty rates or preferential duty rates or offering market access, it’s a symbol of certainty, continuity and predictability. It’s the confidence that supply chains will be open.

“It’s the confidence that this set of countries will have good friendly relations, and therefore, if you have seen, usually when imports increase, investments happen. When imports of a certain product increase, it shows that there is a demand in the country, and that’s when the investors will want to invest, when they see the demand,” he said.

He termed the FTA a comprehensive partnership for the future.

“In the backdrop of the uncertainty in the global economy, I think trusted partnerships will define the future. Diversified supply (chains) and predictable trading relationships are important,” Goyal said adding Indian scale and European technology together would make an unbeatable combination.

Government working to reduce compliance burden

On a question about cutting down red tape in India, Goyal said the Indian government is taking a series of measures such as decriminalising a number of minor offences and removing or easing about 40,000 compliance burdens.

Speaking at the event on Thursday, Katherina Reiche, Federal Minister for Economic Affairs and Energy of Germany, suggested that the two countries consider doubling bilateral trade and reducing red tape.

“So this is a government which is an action to support ease of doing business, and we recognise that we have inherited a lot of red tapism and our effort is that from every meeting, we take back what is the issue or what we can do to make the investment process faster and better. And from that, we do a root cause analysis, and out of that root cause analysis, we do a systemic change to support industry,” he said.

India and EU reach settlement on CBAM

When asked about CBAM, the minister said India and the European Union had reached an amicable settlement on the issue.

“What I was talking about is the larger European future. The question was not about India or the impact of CBAM on India, we will be okay. We ourselves are decarbonising our economy so fast that we will in fact have an advantage because our competitors will suffer the cost of CBAM,” he said.

Goyal said India would support industries exporting to Europe in accelerating their decarbonisation, while Europe would also help Indian industries decarbonise faster.

“So we have a very robust arrangement with them,” he said.

The minister on Thursday has said that the European Union (EU) is “inviting disaster” by imposing a carbon tax on its steel products.

Germany offers job opportunities for Indian workers

When asked about job opportunities for Indians in Germany, Goyal said there were huge opportunities, with German companies looking to hire thousands of people. He added Indian students aspiring to work in Germany should learn the German language and familiarise themselves with the country’s culture.

“Huge opportunities (are here) for our talented youth, trained technical manpower, caregivers and nurses. They’re asking us to send people to Germany and are actually keen that some of the universities, some of the ITIs should run programmes on German language and culture training, so that when the person comes, they are ready to work,” he said.

He said the Ministries of External Affairs, Skill Development and Entrepreneurship, and Commerce and Industry are working together on setting up more centres for teaching the German language.

Over 2,000 German companies currently operate in India. Germany is the tenth largest investor in India and the country received USD 495 million FDI in 2025-26.

Between April 2000 and June 2026, India attracted USD 15.84 billion foreign direct investments from Germany.

Published on October 23, 2026

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