Economic recession in Germany may impact certain export sectors from India: CII

NEW DELHI: Economic recession in Germany is likely to impact India's exports from various sectors like chemicals, machinery, apparel and electronics to the Europeannation,ChairmanoftheCII Committee on Export-Import Sanjay Budhiahassaid.

He, however, said that it is too early to see the impact of the economic recession in Germany on India'sexports.

Germany, the world's fourthlargest economy, is facing recession as its GDP fell 0.3 per cent in the first quarter of 2023, following a decline of 0.5percentinthefourthquarterofthe lastyear.

“In2022,4.4percentofIndia'stotal exports were to Germany, concentrated mainly in sectors like organic chemicals, machinery, electronics, apparel, footwear, articles of iron and steel and leather goods.

“Even though it's too early to see theimpactof Germany'srecessionon India's exports, the sectors mentioned above will likely be the onesmostaffected,”hetoldPTI.

He said the entire European Union is dealing with the rising energy prices that have led to recession in Germany for two consecutivequarters.

“With its largest economy entering into a recession, the EU as a whole is bound to feel contractionary pressures as well. Around 14 per cent of India's total exports is to the EU, with Germany being the top destination of Indian exports, followed by Netherlands, Belgium, Italy,andFrance,”headded.

On investments from Germany, he said that a recession in the Europeannationmighthaveanimpact on its investments in India. However, it is likely that German companies may seek cheaper alternatives duringrecessionaryconditions.

“This can lead to minimal effects on German investments in India,” Budhiaadded.

LookingatIndia'sFDIfrom2000to 2022, Germany ranks 9th in the total FDI inflow, and it has cumulatively investedoverUSD13.6billioninareas like transportation, electrical equipment, metallurgical industries, services sector (particularly insurance), chemicals, construction activity,tradingandautomobiles.