the Second World War. Diplomatic relations were taken up as early as 1951, but as Cold War politics unfolded and swept around the globe, ideological differences prevented the two countries from deepening and extending their relations and cooperation beyond trade, cultural exchange, and development assistance. For India and Germany it became necessary to revise its foreign policy and to think about the role it wanted to play in a post-Cold War world. The reforms of 1991 that included the liberalization of the economy, reduction of bureaucratic controls, and the opening of domestic markets and it was necessary to achieve and sustain economic growth and that great powers had to be sufficiently wealthy in order to act as a magnet of influence. Relations between India and Germany began to expand and changed rapidly in the last decade of the 20th century. German foreign policy realized the new potential of India and the 'Agenda for German-Indian Partnership in the 21st Century' finally created a formal framework for the future relations between the two countries. [11]
India and Germany are important partners on the international stage. They share a broad range of common values as well as common views on international issues and both are important countries in this increasingly globalised world. As more and more Indian companies are reaching overseas destinations to tap new markets and to acquire new technologies. German investment in India almost tripled in the first few years of economic reforms in 1991. India has achieved an impressive GDP growth of over 8 percent per annum in the last few years. Germany on the other hand enjoys the status of being Europe's largest economy. [12] The economic vitality, market size, geographical convenience coupled with the small bilateral trade shares implies that there is huge potential for enhancement of Indo-German trade.
There have been several ups and downs in the development of Indo-German trade over the last 50 years. While growth was steady at a much lower level before liberalization, Indo-German trade increased multi-fold post-liberalization. 1991, the year when the Indian markets opened up, was a significant year for Indo-German Trade as it marked a first-ever surplus for India. In the export following year (1992), imports grew more than exports, whereby exports and imports almost reached parity. From 1995 to 1997, imports from Germany overtook exports and trade volumes grew steadily with the impetus coming from import growth. From 1998 to 2002, the two-way trade increased significantly, however, India once again exported more to Germany than imported from the country.
Indo-German Bilateral Trade and Economic Relations:
Trade relations between India and Germany can be traced back to the 16th century. Due to India's dynamic economic growth, trade with India has increased considerably in the course of the last few decades. Indo-German trade cooperation's which have traditionally been close and expressive are particularly characterized by intensive co-operation in the fields of economy. Indo-German economic relations have taken shape as early as the 19th century with first German companies namely Krupp AG, Siemens and Bayer AG had entered into Indian market. Due to their high technological standards, efficient business, execution and long term commitment, German companies in India have earned themselves a good reputation. [13] Indo-German trade has increased multi-fold since reforms began in 1991 and the German exports to India have seen growth of about 16% yearly. [14] India offers a huge potential for foreign trade
