India is emerging as a strategic partner for German and European mechanical and plant engineering industry, driven by rising demand, investment opportunities and efforts to diversify supply chains away from China, according to the German Engineering Federation (VDMA).

German machinery exports to India rose 11% to €2.2 billion in the first half of 2026. A VDMA business survey found that 65% of engineering firms operating in India expect order intake to increase, while 56% anticipate an improvement in their business situation.

Around 600 VDMA member companies are currently active in India, manufacturing or developing products locally and providing customer services. The country is gaining importance not just as a sales market but also as a destination for investment, innovation and production.

Geopolitical tensions and growing economic uncertainties have prompted companies to reassess their supply chains, with India emerging as an increasingly important location for strengthening the resilience of global value chains, the VDMA said.

Addressing the VDMA Mechanical Engineering Summit in Pune, VDMA president Bertram Kawlath said “India and Europe could form one of the defining industrial partnerships of the coming decade”.

The proposed free trade agreement between India and the European Union offers prospects for significant tariff reductions in the mechanical and plant engineering sector, potentially strengthening trade and investment ties.

“We need more trade, more investment, more technological cooperation and stronger industrial links,” Mr. Kawlath said.

The VDMA also called for greater reciprocal access to public procurement markets in India and Europe, arguing that wider market access could deepen industrial cooperation between the two economies.

For the small foundries in Coimbatore, the last six months have seen a revival of orders after a phase of sluggish demand.

“If the current trend continues, small foundries will start investing again,” said Coimbatore Tiny and Small Foundry Owners Association (COSMAFAN) president A. Shiva Shanmughakumar.

The foundries in Coimbatore district require about two lakh workers. The current availability of workers is just 1.5 lakh to 1.75 lakh. Hence, the foundries have reduced to 12-hour operation from three shifts a day.

Since the larger foundries were unable to cater to all their orders because of labour shortage, the demand spilled over to the smaller foundries. “Those foundries that were operating at 125% capacity have reduced to less than 100%. Those who were operating at 75% capacity are now running at 100% capacity. So, orders are spread across large and small foundries now. If the orders are good, payments will be on time. If the present situation continues, the smaller foundries will also start investing,” he said.

Orders for pumpsets usually drop after June when the monsoon rain picks up. This year, with poor rain during southwest monsoon, demand for pumpsets is high even now. Textile industry and basic engineering sectors are also doing good in Coimbatore region. These have all led to higher orders for foundries, he said.

Regarding raw material prices, Mr. Shiva Shanmughakumar said the prices have increased 5% in the last one week and are expected to see another 5% hike in the coming weeks.

For the small foundries in Coimbatore, the last six months have seen a revival of orders after a phase of sluggish demand.

“If the current trend continues, small foundries will start investing again,” said Coimbatore Tiny and Small Foundry Owners Association (COSMAFAN) president A. Shiva Shanmughakumar.

The foundries in Coimbatore district require about two lakh workers. The current availability of workers is just 1.5 lakh to 1.75 lakh. Hence, the foundries have reduced to 12-hour operation from three shifts a day.

Since the larger foundries were unable to cater to all their orders because of labour shortage, the demand spilled over to the smaller foundries. “Those foundries that were operating at 125% capacity have reduced to less than 100%. Those who were operating at 75% capacity are now running at 100% capacity. So, orders are spread across large and small foundries now. If the orders are good, payments will be on time. If the present situation continues, the smaller foundries will also start investing,” he said.

Orders for pumpsets usually drop after June when the monsoon rain picks up. This year, with poor rain during southwest monsoon, demand for pumpsets is high even now. Textile industry and basic engineering sectors are also doing good in Coimbatore region. These have all led to higher orders for foundries, he said.

Regarding raw material prices, Mr. Shiva Shanmughakumar said the prices have increased 5% in the last one week and are expected to see another 5% hike in the coming weeks.

Industrial growth in India quickened to 8% in August 2026 from 7.35% a month earlier, driven by a strong performance in the manufacturing, electricity, capital goods, and consumer goods sectors.

Growth in the Index of Industrial Production, data on which was released by the Ministry of Statistics and Programme Implementation on Monday, was last quicker in June 2026 when it touched 8.8%. 

The growth in August is the second-highest for the period going back to April 2024 for which the new series of the IIP has data. 

“This [August growth] was aided by sharp growth in capital goods, intermediate, infrastructure, and consumer durable goods,” Madan Sabnavis, chief economist at the Bank of Baroda said. 

“For the five months period, growth was at 6.7%,” Mr. Sabnavis added. “If this is maintained, India can register growth of 7-8% for the year on the back of higher growth during the festival season with demand building up. This makes the third quarter very critical for industry.”

The manufacturing sector grew at 8.95% in August 2026, the second-highest in the history of the new series of the IIP after the 9.5% seen in June 2026. A deeper look showed that the growth in the sector was driven by motor vehicles, electric and non-electric machinery, electronics, textiles, beverages, rubber, and non-metallic products.

The electricity sector saw growth quicken to a 27-month-high of 12.3% in August 2026, which, according to Mr. Sabnavis, was supported by growth in both conventional and renewable electricity. 

The capital goods sector grew by 16.9%, which was however a three-month low. This growth came on a relatively high base of 6% in August 2025.  

The consumer durables sector grew 11.1% in August 2026, marginally slower than the 12% seen in the previous month. The consumer non-durables sector returned to a growth of 2.05% after having contracted 0.8% in July 2026. 

Principal Secretary to the Prime Minister P.K. Mishra on Wednesday cautioned banks against reviving aggressive lending practices driven by short-term optimism, warning that poor credit assessment in the past had forced the banking system to divert significant resources towards cleaning up stressed assets.

“The cleanup of the banking system required considerable resources and time. Those resources could otherwise have supported productive investment. We should therefore preserve the institutional memory of that episode,” Mr. Mishra said while addressing the SBI Banking and Economics Conclave in Mumbai.

“Credit must be appraised against the economics of the project rather than the enthusiasm of the moment. That is the surest protection against a repetition of the cycle of excessive lending, stressed assets and subsequent cleanup,” he added.

The remarks come at a time when India’s banking sector has emerged from one of its worst asset quality crises, with gross non-performing assets (GNPA) at a multi-decadal low. The GNPA ratio of the banking system fell below 1% in the first quarter of fiscal 2027, compared with nearly double-digit levels about a decade ago during the peak of the bad loan crisis.

The earlier deterioration in asset quality had contributed to the “twin balance sheet problem”, where stressed corporate borrowers and weakened bank balance sheets constrained fresh investment. The government responded through bank recapitalisation, consolidation of weaker lenders and regulatory measures aimed at strengthening risk management practices.

Mr. Mishra’s comments assume significance as banks are currently witnessing strong liquidity conditions and improved balance sheets, raising concerns that renewed credit growth could lead to excessive risk-taking if lending decisions are influenced by market optimism rather than fundamentals.

Manufacturing, FDI to strengthen resilience

Highlighting the need to improve India’s macroeconomic resilience, Mr. Mishra stressed the importance of reducing dependence on imports and strengthening domestic manufacturing capabilities.

“We have a significant merchandise trade deficit. We must make things at home and competitively,” he said, adding that improving manufacturing performance and skilling the workforce would remain critical to sustaining economic growth.

He also underlined the importance of attracting foreign direct investment (FDI), describing it as a source of long-term capital at a time when global capital flows have become increasingly volatile.

“Capital is fickle-minded,” Mr. Mishra said, emphasising the need to create conditions that encourage stable and long-term investments.

In Coimbatore, one of the main MSME clusters in the country, price of copper has shot up by almost 75% in the past one year. One kg of copper now costs ₹1,450 as against ₹800-₹900 a kg last year.

The prices had touched ₹1,500 a kg earlier in the year and softened only recently.

With MSMEs in Coimbatore manufacturing automobile components, electric vehicles, pumps, renewable energy components, electronic parts, and so on, the high price of copper is eroding the competitiveness of the engineering industries.

The U.S. and China are the major consumers of copper globally, and India imports almost all its requirements. In the recent months, use of recycled copper is on the rise because of the prices, said industry sources here.

V. Rangaswamy, president of the Coimbatore District Small Industries Association, said if the price hike was less than 10%, the units would have absorbed it fully. With over 60% increase, however, the MSMEs were able to pass on [to the customers] just 10%-15% of the rise in copper prices. Along with it, prices of steel and zinc have also gone up.

“MSMEs fix the pries once in a year or once in two years. Hence, they are unable to pass on the hike fully to the customers. Further, it is not just the price of copper. Cost of all petroleum-based products have also seen a hike. These have eroded the competitiveness of the MSMEs,” he said.

Schemes such as raw material banks were not helpful in these situations as copper was precious and could not be stored in bulk, he added. “Copper is like gold now. Even if a small quantity is lost, the MSMEs will stand to lose,” he said.

Jayakumar Ramadas of Mahendra Pumps said use of copper coated wires is becoming common in many pumpsets manufacturing units. “We tell our customers whether the wires used are copper or copper coated and have priced the pumps accordingly,” he said. According to him technology will evolve gradually around use of copper-coated products for industrial use.

In Coimbatore, one of the main MSME clusters in the country, price of copper has shot up by almost 75% in the past one year. One kg of copper now costs ₹1,450 as against ₹800-₹900 a kg last year.

The prices had touched ₹1,500 a kg earlier in the year and softened only recently.

With MSMEs in Coimbatore manufacturing automobile components, electric vehicles, pumps, renewable energy components, electronic parts, and so on, the high price of copper is eroding the competitiveness of the engineering industries.

The U.S. and China are the major consumers of copper globally, and India imports almost all its requirements. In the recent months, use of recycled copper is on the rise because of the prices, said industry sources here.

V. Rangaswamy, president of the Coimbatore District Small Industries Association, said if the price hike was less than 10%, the units would have absorbed it fully. With over 60% increase, however, the MSMEs were able to pass on [to the customers] just 10%-15% of the rise in copper prices. Along with it, prices of steel and zinc have also gone up.

“MSMEs fix the pries once in a year or once in two years. Hence, they are unable to pass on the hike fully to the customers. Further, it is not just the price of copper. Cost of all petroleum-based products have also seen a hike. These have eroded the competitiveness of the MSMEs,” he said.

Schemes such as raw material banks were not helpful in these situations as copper was precious and could not be stored in bulk, he added. “Copper is like gold now. Even if a small quantity is lost, the MSMEs will stand to lose,” he said.

Jayakumar Ramadas of Mahendra Pumps said use of copper coated wires is becoming common in many pumpsets manufacturing units. “We tell our customers whether the wires used are copper or copper coated and have priced the pumps accordingly,” he said. According to him technology will evolve gradually around use of copper-coated products for industrial use.

Kolkata-based Ramkrishna Forgings that supplies forged, machined, and fabricated products, is investing ₹250 crore to ₹300 crore this year in multiple production facilities.

Chaitanya Jalan, Joint Managing Director, said the company is investing ₹170 crore to manufacture components for passenger vehicles in Jharkhand. This will be commissioned in March- April next year. It will also invest to augment capacity in machining and assembly lines. The company is looking at taking its total annual production capacity to one million tonnes by 2030, he added.

Kolkata-based Ramakrishna Forgings that supplies forged, machined and fabricated products is investing ₹250 crore to ₹300 crore this year in multiple production facilities.

Chaitanya Jalan, Joint Managing Director, said the company is investing ₹170 crore to manufacture components for passenger vehicles in Jharkhand. This will be commissioned in March- April next year. It will also invest to augment capacity in machining and assembly lines. The company is looking at taking its total annual production capacity to one million tonnes by 2030, he added.

The foundry industry in Coimbatore saw 20 % growth in the last one year with robust orders, said Jayakumar Ramdass, chairman – Inter Foundry and Inter Diecast event and Managing Director of Mahendra Pumps, Foundry Division.

The foundry industry in Coimbatore is doing well, as orders have picked up across sectors, from auto and farm equipment to general engineering. Of the 15 million tonnes of annual casting production in the country, 1.5 million tonnes is manufactured in Coimbatore and it is worth almost ₹ 25,000 crore. Castings worth ₹10,000 crore is exported from here every year. “We need to increase Coimbatore’s share in the global market,” he told The Hindu on Tuesday.

Almost 65 % of castings sold out of Coimbatore are machined and hence value addition is also on the rise. Most of the foundries are operating at more than 90 % capacity and at present, demand is higher than supply. However, one of the main challenges for the industry is availability of skilled manpower. Hence, foundries are investing in automation, new technologies, and digital tools to increase productivity and meet the global standards, Mr. Ramdass said.

The third edition of the exhibition for ferrous and non-ferrous foundry industry – Inter Foundry and Inter DieCast – with 315 exhibitors this year will showcase latest technologies, use of AI, and new equipment.

Organised by the Foundries Development Foundation (FDF) and VA Exhibitions at the CODISSIA Trade Fair Complex from September 10 to 12, the event will have 23 exhibitors from China, five from Germany, and four from Italy apart from participants from across the country. It is expected to attract more than 10,000 visitors.

The three-day expo will have a new concurrent event called “Cast Zone” where 25 FDF members will display castings they make. This segment is open only for registered buyers and it has, so far, 60 overseas buyers confirming their visit, Mr. Ramdass added.

Conferences will be organised on strengthening the Indian foundry sector as a global supply base for ferrous and non-ferrous castings and transition in foundry businesses: succession, scaling up and compliance. There will be a panel discussion on magnesium die casting, said a press release from the organisers.