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    Exports to India increase by 19 percent


    “Counterweight” to China?
    Exports to India increase by 19 percent

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    German exports to India rose sharply in the first half of the year. The country, which is now the most populous, traditionally sources primarily machinery and chemical products from Germany. Despite its rapid growth, India is still far from being as important a sales market as China.

    India, embraced by business and politics as an alternative to China, purchased significantly more goods from Germany in the first half of the year. German exports to what is now the world’s most populous country increased by more than 19 percent in the first half of the year compared to the same month last year to around 8.6 billion euros, according to calculations based on preliminary data from the Federal Statistical Office. India traditionally primarily purchases machinery and chemical products from Germany as well as other vehicles, as the statistics say, including trains, ships and airplanes.

    “India will not be able to replace China as a market,” said the chief economist of the Association of German Mechanical and Plant Manufacturers (VDMA), Ralph Wiechers. “But the China-bias of the business is a problem for some companies, a cluster risk. That’s why people are paying more attention to other markets – like India.” This can be seen in exports, but also in direct investments in mechanical engineering.

    “The USA and India are increasing,” said Wiechers. India still has a number of challenges ahead of it – from federalism to comparatively poor infrastructure. “It is also nowhere near as industrially developed as China – but it has what it takes,” added Wiechers.

    Chinese economy is growing more slowly

    Despite the rapid growth, India is still nowhere near as important a sales market as China: Although German exports to the People’s Republic were around 8.5 percent weaker in the first six months, they were still far higher at more than 49 billion euros the level of business in India. In June alone, German exporters sold more to China than to India in the entire first half of the year. And this despite the fact that the world’s second largest economy after the USA is suffering from poor exports, weak consumption and the crisis in the real estate market.

    The Chinese gross domestic product (GDP) therefore only grew by 0.8 percent from April to June compared to the previous quarter. This clearly missed the first quarter result of 2.2 percent. In addition, youth unemployment is at a record high.

    According to the Bundesbank, India has gained a foothold primarily in the world market production of electronic goods. “For the most populous country in the world, this brings with it hopes of a faster industrialization and convergence process,” says the current monthly report. “India could thereby form a certain counterweight to China in the next few years.”

    According to the International Monetary Fund (IMF) forecast, the Indian economy will grow faster than China’s both this year and next. GDP is expected to increase by 5.9 and then 6.3 percent, while China’s GDP will only increase by 5.2 and 4.5 percent.

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