Unless you have a visa for the United States (or some other countries) Indian passport holders do need to hold a visa when transiting in Germany even if they stay airside.
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Yes, a Schengen visa is needed even for transit. This type of visa is valid for 24 hours and can only be used in the transit area of a Schengen country airport. If you want to leave the transit area and go anywhere outside, you need to have a regular Schengen visa in that case.
Do I need a visa? The vast majority of foreign travellers benefit from the “transit privilege” - if during a stopover at a German airport, you do not leave the International Airport Area and if the destination is not in a Schengen country, you do not need a transit visa.
Currently, only four EU/Schengen countries require Indian passport holders to obtain a Transit Schengen Visa in order to transit their territory, and these are France, Germany, Spain and the Czech Republic. Indian nationals can, however, transit through other Schengen Area countries, including here in the Netherlands.
An airport transit visa is generally required if you travel internationally and if you need to transit through a country. Even if you do not intend to leave the airport, you may need an airport transit visa.
Indian nationals generally require an airport transit visa for the Schengen area. This visa allows a short stop-over at an international airport only. Neither leaving the airport's international transit area nor overnight stays in a hotel are possible.
Do I need a visa? The vast majority of foreign travellers benefit from the “transit privilege” - if during a stopover at a German airport, you do not leave the International Airport Area and if the destination is not in a Schengen country, you do not need a transit visa.
During layover if you do not leave the airport then you can directly catch the next flight. But if you decide to leave the airport and go out then when you again want to enter into airport then you have to go through all the security check and sometimes custom and immigration check which will take roughly 2–3 hours.
For example, you may be required to get a transit visa if: You are changing transport in a country to travel to another destination. You are leaving within a short time from your arrival. You are not eligible for an automatic visa or visa waiver based on your nationality.
Indian nationals, unless they come under one of the exemptions listed on the UK government web site, need a Direct Airside Transit Visa if they transit airside or a Visitor in Transit Visa if they transit landside - so either way a visa would be required.