German company subsidiary in India

How German Companies Can
Expand into India

India Is Germany\'s Largest Trading Partner in South Asia

Mittelstand-Friendly Setup, Make-in-India Alignment, Concessional 15% Manufacturing Tax

Germany is consistently among the top five European sources of FDI into India, anchored by deep automotive, capital-goods, chemicals and pharmaceutical investment. The Indo-German bilateral trade exceeded EUR 30 billion in 2023, with over 1,800 German companies already operating in India. The legal frameworks — Companies Act 2013 and Aktiengesetz / GmbH-Gesetz — share civil-law roots in many areas, though commercial practice differs.

For Mittelstand and large enterprises alike, India offers something rare today: a young workforce, growing domestic consumption, and a manufacturing-incentive policy (PLI plus Section 115BAB) that, properly used, can make Indian production economics competitive with traditional German EM destinations. This page covers the India-Germany DTAA, GmbH-specific document requirements, PLI scheme fit for German verticals, and the typical 8–10 week setup timeline accounting for German apostille and translation. The cross-country playbook lives in our pillar guide on Foreign Company Registration in India.

India-Germany DTAA Highlights
  • Dividends (Art. 10): 10% withholding in India for German parent shareholders.
  • Royalty (Art. 12): 10% on industrial / scientific equipment use; copyrights of literary / artistic work follow source-country rules.
  • Fees for Technical Services (Art. 12): 10% — critical for German engineering / consulting flows.
  • Interest (Art. 11): 10% on intercompany / arm\'s length lending.
  • Independent personal services (Art. 14): taxed in India if > 120 days physical stay or > INR-equivalent threshold of fees.
  • MLI overlay: Principal Purpose Test (PPT) applicable; structures must show commercial substance.
Make-in-India + Section 115BAB — The Manufacturing Economics

For German automotive, machinery, electronics and chemicals companies considering Indian manufacturing, two regimes change the calculus:

  • Section 115BAB — concessional 15% corporate tax (plus surcharge and cess, effective ~17.16%) for new manufacturing companies incorporated and operational by stipulated date (extended for sectors). Compare with the standard 22% Section 115BAA rate.
  • PLI scheme — 4–6% cashback on incremental sales for 14 sectors including auto (PLI Auto Scheme, INR 25,938 crore outlay), auto components, advanced chemistry cells, telecom equipment, electronics, pharmaceuticals, specialty steel, textiles, white goods, food products, drone manufacturing, solar PV modules.
  • State-level incentives: Maharashtra, Tamil Nadu, Karnataka, Gujarat and Telangana each offer additional capital-investment subsidies, stamp duty waiver, and electricity duty exemptions for mega projects (commonly > INR 1,000 crore).
  • Customs duty optimisation: Phased Manufacturing Programme (PMP) duty differentials, FTAs (India-EFTA TEPA effective 2024) and FTWZ benefits.

We model the all-in economics — PLI inflow, tax rate, customs duty, state incentives, working capital — before you commit capex.

German-Specific Document & Setup Notes
  • Apostille: Germany acceded to the Hague Apostille Convention; documents apostilled at the competent state authority (regional Oberlandesgericht or designated authority) are accepted in India.
  • Sworn translation: All German-language documents must be translated to English by a sworn translator (vereidigter Übersetzer); the apostille covers the original German document, not the translation.
  • Commercial Register extract (Handelsregisterauszug): needed to evidence the parent\'s legal existence; typically valid for 3–6 months from issue.
  • Setup timeline: 8–10 weeks for German parents (vs 6–8 for US / UK) because the apostille + translation step adds 1–2 weeks.
  • Indo-German Chamber of Commerce (IGCC): Mumbai-based; we coordinate with their member-services team for first-time entrants.
Typical German Sectors in India
  • Automotive & auto components: VW, Bosch, Continental, Mahle, ZF, Webasto.
  • Capital goods & engineering: Siemens, KSB, Voith, ThyssenKrupp.
  • Chemicals & specialty chemicals: BASF, Lanxess, Henkel, Evonik.
  • Pharmaceuticals: Bayer, Boehringer Ingelheim, Merck KGaA, Fresenius Kabi.
  • Technology & software: SAP Labs, Software AG, Trumpf, RIB Software.
  • Renewable energy: wind (Senvion legacy / Siemens Gamesa), solar inverters (SMA), hydrogen.

Mittelstand or large enterprise — the structuring fundamentals (WOS, FDI route, PLI fit, transfer pricing) are the same. Talk to us about your India entry; we offer a no-obligation structuring session in English (or with a sworn German translator on call).