German companies optimistic about prospects in India: Survey

Internationally, at least, there is ‘a certain sense of optimism’, it noted. In the Asia-Pacific region, companies particularly recognise positive developments in India.

Despite challenges associated with a generally cooled economic climate German companies are now facing at their international locations, they are expanding their global engagement in many markets, the report said.

"We are currently experiencing a very intense phase with a lot of light and shadow in international business," said DIHK chief executive of foreign trade Volker Treier.

"The Indian economy is developing remarkably well. Our member companies are very optimistic and have significant investment plans for the coming years," said Stefan Halusa, director general of the Indo-German Chamber of Commerce.

"Even though the Indian market is not easy, companies see many opportunities here due to robust economic growth and high government investments in physical and digital infrastructure, and they are significantly expanding their engagement here," he added.

The survey by DIHK and the German Chambers of Commerce Abroad covered more than 3,600 German companies at their respective locations.

"Unlike in Germany, we see a certain sense of optimism among German companies abroad," Treier was quoted as saying in a release by DIHK.

"Companies are also grappling with challenging economic conditions at other locations, albeit with fewer structural challenges than at home. In some locations, they even benefit greatly from favourable investment conditions. However, they also face additional burdens, primarily due to the persistently high interest rates. This is particularly the case in the Eurozone and the USA," Treier said.

"The pronounced demand weakness in China as well as geopolitical risks are negatively affecting the businesses of globally operating German companies," he added.

The business situation of the German companies remains mediocre, but it varies by region.

While companies in Europe currently report a relatively good business situation, their expectations for future business are significantly more pessimistic.

The weakening German economy and structural challenges such as a shortage of skilled workers and high bureaucracy are weighing on the mood of companies on the continent.

In contrast, companies at their North American locations consistently express optimism, with positive business conditions and even improved expectations. In the Asia-Pacific region (excluding Greater China) and in South and Central America, companies are very optimistic about their business development.

In China, German companies report predominantly poor business performance, and their expectations for the coming months are also subdued, especially due to anticipated weaker consumption.

Globally, low demand is the central business risk for companies, with 46 per cent of mentions. Risks related to restrictive monetary policies, such as fluctuating exchange rates and financing challenges, have also slightly increased and pose significant risks.

Supply-side constraints such as supply chain disruptions and high energy and commodity prices have receded to the background.

One-third of German companies operating abroad plan to increase their investments in the next twelve months compared to 36 per cent in spring, while a fifth plan to reduce their investments compared to 17 per cent in spring).

Particularly in North America, the Middle East and North Africa region, and the Asia-Pacific region (excluding Greater China), companies are planning higher investment budgets.

However, companies in Europe and China are more cautious. The global investment intentions of companies are significantly different from those in Germany.

While the market size and market entry are the main reasons for investments at their international locations for over half of the companies (55 per cent), proximity to customers and localisation (35 per cent) also play an important role for a significant portion of companies in their foreign investments.

Diversification (18 per cent) and investment incentives (16 per cent) were also recognised as important factors in foreign investments for some companies.

ALCHEMPro News Desk (DS)