Mechanical engineering worldwide: India is booming, China is slowing down

The global business situation of machinery and plant engineering companies from Germany and Europe remains mixed - with remarkable regional differences. This is shown by the current VDMA Business Climate Survey for Brazil, China, India, and for the first time also the USA, which is based on surveys of member companies on site.

While India and Brazil impress with stable to positive figures, China struggles with structural challenges. The market in the USA also appears cautious, not least due to the recent tariff policy.

“The current results confirm once again: Mechanical engineering is a globally operating, but locally very differently positioned industry. Our companies navigate through regional uncertainties, geopolitical hurdles, and economic fluctuations - with India as a clear bright spot,” says Dr. Johannes Gernandt, chief economist of the VDMA.

Indian domestic market ensures positive business climate

India remains a growth-strong market for machinery and plant engineering. 27 percent of the surveyed companies rate their business situation as good, 64 percent as satisfactory - only nine percent as poor. The responses regarding the order backlog indicate that the Indian domestic market in particular is responsible for the positive business climate.

The outlook for the future is even more encouraging: 62 percent of companies expect a further improvement in business conditions in the coming months - only two percent expect a deterioration. For 2025/26, companies anticipate a nominal sales growth of nine percent.

54 percent of respondents already produce in India, of which 74 percent want to further expand their capacities. Of the 46 percent without their own production on site, 21 percent are aiming for such.

Brazil: Positive development despite increasing uncertainties

Brazil proves to be a resilient market for machinery and plant engineering: 31 percent of respondents report good business conditions, 61 percent satisfactory. In 2024, a remarkable sales growth of 13 percent was achieved - more than originally expected. For 2025, companies anticipate seven percent growth.

Nevertheless, uncertainties are increasing: The proportion of companies reporting business obstacles has risen. Particularly frequently mentioned are weakening domestic demand, financing hurdles, and an increasingly challenging competitive environment.

Tense business climate in China

The business climate in China remains tense. Although the situation has slightly improved, 36 percent of companies still report a poor business situation. Only 14 percent are positive. Nevertheless, companies expect a revenue growth of five percent in 2025, after stagnation in the previous year.

The central challenges in China persist: a continuing lack of orders, increasing competition from local providers, and trade barriers such as tariffs. Capacity utilization and order backlog remain at a low level - especially in the domestic business.

Great uncertainties in the USA

For the first time recorded, the USA is shown as a market with great uncertainty. 20 percent of companies report a good business situation, 59 percent a satisfactory one - but 21 percent a poor one.

Particularly alarming: 79 percent of companies feel impaired in their business activities. The main causes are a lack of orders and the recently introduced tariffs on European mechanical engineering products. These are also reflected in expectations: only 30 percent expect an improvement in the business situation - just as many expect a deterioration. A revenue increase of only two percent is forecast for 2025.

Differentiated market strategies are becoming increasingly important

The VDMA Business Climate Survey highlights the heterogeneity of international markets. While India is developing into a reliable growth market, clear strategies are needed in China and the USA to deal with political and structural challenges.

“For our member companies, this means: differentiated market strategies, robust local networks, and perseverance are more important than ever. Those who focus on the right markets and remain flexible can succeed even in a complex global environment,” says Gernandt.

(Source: VDMA)