India and Germany are set to engage in discussions as the European Union (EU) considers implementing new trade restrictions. German Foreign Minister Johann David Wadephul is currently in India for a two-day visit to discuss the conflict in Ukraine and to strengthen trade ties between the two countries. He is scheduled to meet with Indian External Affairs Minister S Jaishankar.

India-Germany Relations

India and Germany share a "Strategic Partnership" that dates back to 2000. This partnership has been further strengthened through Intergovernmental Consultations (IGC) at the level of Heads of Government since 2011. Germany is a key partner for India in Europe, and was among the first countries to establish diplomatic relations with the Federal Republic of Germany after World War II. In March 2021, the two nations celebrated 70 years of diplomatic relations.

Both countries share democratic values, support a rules-based international order, and are committed to multilateralism and the reform of multilateral institutions. They also recognize the need to deepen bilateral cooperation in security and defense to address global security challenges.

Economic and Trade Relations

Germany is India's largest trading partner within the EU. Bilateral trade reached $26 billion in 2022-23. In 2023-24, bilateral trade reached $26.10 billion, with Indian exports at $9.83 billion and imports from Germany at $16.27 billion. Germany is also a major foreign direct investor in India. From April 2000 to September 2024, cumulative FDI inflows from Germany reached $14.89 billion. Key areas of German investment in India include transportation, electrical equipment, metallurgical industries, the services sector, chemicals, construction, trading, and automobiles. There are approximately 1700 German enterprises operating in India, employing over 400,000 people.

Indian investments in Germany have also increased in recent years. Over 215 Indian companies operate in Germany, primarily in IT, automotive, pharmaceuticals, biotech, and manufacturing.

While India and Germany do not have a direct free trade agreement (FTA), Germany supports the ongoing EU-India FTA negotiations. The first round of negotiations for Bilateral Trade and Investment Agreements (BTIA), including Geographical Indicators (GI), concluded on July 1, 2023. The EU is India's second-largest trading partner, accounting for 11.5% of India's total trade in 2024, equivalent to €120 billion. India is the EU's 9th largest trading partner, representing 2.4% of the EU's total trade in goods in 2024.

EU's Proposed Curbs

The EU is considering new trade restrictions on several firms, including some based in India, for allegedly supporting Russia's war efforts in Ukraine. These restrictions would ban European firms from trading with the listed companies to prevent Russia from acquiring sanctioned goods through third countries. In July 2025, the EU adopted its 18th sanctions package, which lowered the price cap on Russian crude and placed restrictions on refined petroleum products from third countries, including India, effective June 2026. These measures challenge India's economic interests, especially its reliance on discounted Russian oil.

Potential Impact of EU Curbs

The EU's restrictions on Russian oil could impact India's fuel exports. India's petroleum product exports to the EU were worth $15 billion in 2024-25. However, a recent EU decision to ban imports of refined petroleum made from Russian crude via third countries could put $5 billion of those exports at risk.