Germany’s economic recession will impact India’s exports from various sectors including chemicals, machinery, apparel and electronics to the European nation. This was stated by Sanjay Budhia, the chairman of the CII committee on EXIM, according to a media report on Sunday.
The chairman underlined the impact of the German recession is too early on Indian exports.
Germany’s recession came in following its Gross Domestic Product (GDP) downfall in the first quarter of 2023 by 0.3 per cent and 0.5 per cent in the fourth quarter of the last year.
In 2022, India mainly concentrated to export organic chemicals, electronics, apparel, machinery, footwear, leather goods and articles of iron and steel to Germany, contributing to a total of 4.4 per cent. The sectors impacted greatly by the German recession, added Budhia. He said the rising energy prices in European Union (EU) are causing a recession in Germany from two consecutive quarters.
Around 14 per cent of India’s total exports are from the EU, with Germany being the top destination of Indian exports, followed by other countries like the Netherlands, Belgium, Italy, and France. With the largest economy facing a recession, the EU as a whole is bound to feel contractionary pressures, the chairman added.
Underlining the think-tank Global Trade Research Initiative (GTRI) he said, the report estimates a USD 2 billion impact on India’s export including products like smartphones, apparel, footwear and leather goods.
Commenting on the investments from Germany, he said the European recession might have an impact on its investments in India seeking cheaper alternatives for German companies during recessionary conditions.
This may lead to a minimised effect on German investments in India, Budhia added.