Swiss corporations like ABB (ST:ABB) and Kühne+Nagel are increasingly setting their sights on India. The country has become more attractive since the European Free Trade Association signed an agreement in March with the rising economic powerhouse on the subcontinent. Once this agreement comes into effect, it will further boost investments in Switzerland: tariffs on chocolate, watches, and machinery will significantly decrease. India offers opportunities not only due to trade advantages but also because of its rapidly growing market. ABB, a specialist in electrical and industrial automation, has reported annual growth rates of 27% in orders for its Indian production sites over the past three years.
To meet rising demand, ABB has invested heavily in India, building factories, offices, and showrooms and increasing its workforce from 6,000 to 10,000 employees since 2020. Since 2023, eight new projects have already been completed. Kühne+Nagel has grown its workforce in the country from 2,850 in 2019 to 4,800 and has opened new logistics centers this year in Chennai, Gurugram, and Kolkata.
The move toward India also reflects a trend among many European companies seeking alternative trade partners to reduce their geographical dependence on China and diversify their operations.
The Trade Pact
In March, India signed a free trade agreement with four European countries—Switzerland, Norway, Iceland, and Liechtenstein. These countries, united under the European Free Trade Association (EFTA), struck a deal that reduces tariffs and paves the way for increased investment. India anticipates $100 billion in investments over the next 15 years, benefiting sectors such as automotive, food processing, railways, and finance. For EFTA countries, the agreement opens a market of 1.4 billion people. Swiss companies see particularly strong opportunities, especially for machinery manufacturers, luxury items like watches, and transport systems.
India has explicitly invited Swiss transport companies to invest in its railway sector, contributing to the country’s infrastructure development. India’s export industry also hopes for significant boosts. The agreement could increase exports of pharmaceuticals, chemicals, and machinery, while processed foods and technical products from EFTA countries will gain easier access to the Indian market due to lower tariffs. The pharma and medical technology sectors also foresee growth opportunities and view the trade pact as a significant opportunity to expand their role in India’s healthcare sector.
European Companies Turn Away from China
For years, China was the top destination for Swiss direct investments. But between 2021 and 2022, India took the lead, according to data from the Swiss National Bank. "Business in China has become more challenging—the economy is weakening, and several conflicts loom, whether economic or otherwise," says Philippe Reich, chairman of the Swiss-Indian Chamber of Commerce, who calls the new trade agreement "groundbreaking." Approximately 350 Swiss companies are already active in India, with that number steadily increasing.
The trend of moving away from China is evident throughout Europe. Even countries without a stake in the new trade agreement with India, such as Germany, are seeking alternatives.
Recently, senior officials from the German government attended the Asia-Pacific Conference of German Business in India. In New Delhi, Chancellor Olaf Scholz and Economic Minister Robert Habeck spoke with their Indian counterparts to strengthen India as a location for the logistics and automotive industries and reduce dependence on China. Key drivers of this shift are India’s young, skilled labor force, lower costs, and optimistic economic forecasts.
The International Monetary Fund (IMF) expects India's economy to grow by 7% this year and 6.5% in 2025—significantly above China’s projections of 4.8% and 4.5%. According to the IMF, this trend is likely to continue through the end of the decade. Given these positive outlooks, the Indian market is expected to attract even greater interest from Western companies in the coming years.