Germany is presenting itself as a European state proactively wanting to build better relations with India at a time when both countries are contending with similar problems in their relations with China.
Key takeaways:
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The recent fillip and fanfare over the Indo-German relationship has signaled political receptivity in both capitals for deeper and pragmatic cooperation, despite disagreements over the Russian war in Ukraine
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A revisit of two key elements driving the bilateral cooperation’s strategic rationale—security cooperation in the Indo-Pacific and supply chain resilience regarding China—reveals that Sino-Russian convergence has silently moved the needle of Indo-German ties
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Like Germany, India has a complex domestic discourse on the security implications of its economic relationship with China—one that will mark the future of the Indian option for the “China Plus One” strategy
The German government’s “Focus on India” paper, published just ahead of Chancellor Olaf Scholz’s visit to New Delhi in October 2024 (his third in two years) is the latest indication that Berlin is readjusting its China-centric approach to Asia by engaging India as a critical partner. Moreover, the recent conclusion of the P75I submarine deal (more below) in Germany’s favor further brightens the outlook of the bilateral.
The paper and Scholz’s visit cemented some of the core focus areas—sustainability, climate action, trade, mobility, and technology—they have improved the nuts and bolts of relationship management. Meanwhile, the “Focus on India” paper, if not so much for its content but for its timing, stands out. When both countries are wrangling with complex internal debates on the national security implications of their economic ties with China, recent developments call attention to the larger drivers of the German-Indian relationship: security in the Indo-Pacific and supply chain resilience from China.
Locating the Indo-Pacific in Indo-German ties
Since Russia’s full-scale invasion of Ukraine in 2022, questions have been asked in India about Europe’s appetite for the Indo-Pacific. The war, however, has seemingly contributed to German interest in engaging Indo-Pacific partners like India. Improving Sino-Russian ties, which have converged the Indo-Pacific and Euro-Atlantic security theaters, is an ongoing conversation about the West’s role in the Indo-Pacific. India’s recognition of this was alluded to by Foreign Minister Jaishankar, when speaking on a visit to Germany in September 2024. He expressed New Delhi’s appreciation for Europe’s growing “strategic awareness” and welcomed German interest in the Indo-Pacific, parallel to India’s own rising interest in the Euro-Atlantic.
Scholz’s India visit in October also sparked a debate among Indian policymakers and policy-shapers over the same strategic questions. The high-profile delegation from Germany was in India for the 7th Annual Inter-Governmental Consultations (IGC) between both countries. However, a lucrative submarine deal was the talk of the town. Under Project 75 India (P-75I), the Indian Navy has been assessing bids for the construction of six conventional diesel-electric submarines, equipped with cutting-edge Air Independent Propulsion Systems (AIP), with Germany and fellow European competitor, Spain, in the running. Scholz’s October visit was immediately followed by Prime Minister Pedro Sanchez of Spain, highlighting the importance of the deal. Led by ThyssenKrupp Marine Systems (TKMS) tied up with India’s state-run Mazagon Dock Shipbuilders Ltd. (MDL), Germany has now edged out Spain. The deal, a minimum seven-year affair, could catalyze closer defense engagement between the two countries.
Broadly, Scholz’s India visit saw discussions held on a reciprocal logistical support agreement between Germany and India’s armed forces, the submarine deal, easing license requirements for arms exports, and engagement of defense manufacturing in India. It also included participation in the 18th Asia Pacific Conference of German Business, which featured a defense roundtable on the sidelines, and a port call in Goa by two German naval ships, the Baden-Wuerttemberg and Frankfurt am Main, which had recently sailed through the Taiwan Strait. This was part of a series of planned exercises by the German navy that reflect an evolution towards more defined strategic thinking of tensions in the Indo-Pacific. As the narrative goes, Germany is interested in the Indo-Pacific and India is looking for options to reduce its military reliance on Russia. Here the Sino-Russian axis also lends an additional dimension.
Supply chain resilience and the China factor
Indeed, economic relationships with China have been a thorny issue for both countries. Scholz’s visit to India and his government’s “Focus on India” paper came amid a considerable churn within Europe, and in Germany in particular, over China, as most recently demonstrated by the EU’s contested EV tariffs vote. Germany’s economic dependency on China raises questions over whether Berlin might weaken the collective EU stance against China amid mounting concerns about Beijing’s support for Moscow’s war effort.
India, too, is reassessing its own economic dependency on China. The country’s 2024 Economic Survey, which recommended tapping into Chinese supply chains and attracting more foreign investment from Beijing to improve Indian manufacturing and exports triggered a contentious debate on the future of India-China economic ties. New Delhi distanced itself from the report, yet recent developments indicate increasing receptivity within industry, as well as state, for China ties. These include appeals from the industry to relax visa restrictions for Chinese technicians as well as the launch of a new subsidiary in China by the Adani group – a major player that has been something of a poster child for the government’s push for Indian private sector ventures abroad and whose move was criticized by the Opposition as proof of a governmental concession. India’s strategic community calls for caution, arguing that, though lucrative, deeper economic ties with China may not be a price worth paying if they lead to the weakening of national security priorities.
As such, Scholz’s visit offered a glimpse of this contentious landscape. When the Indian Commerce and Industry Minister Piyush Goyal met German Vice Chancellor Robert Habeck, the former noted that China had blocked the sale of tunnel-boring machinery from Herrenknecht, a German company, to India. Jokingly, Goyal suggested that India should “stop buying German equipment” if third parties (meaning China) can derail the purchase. Behind the humor lay Indian frustration with German businesses’ “China problem”.
Goyal’s comments went viral on social media and received mixed reactions from Indian experts. Some questioned the “need (of) a Western middleman to access Chinese machine tools”, while others noted India’s own supply chain dependency on China, particularly in industries like pharmaceuticals. In the backdrop were calls for Indian companies to be more aware about the Chinese origins of their own products, triggered by US Customs detaining $43 million worth of solar panel shipments from India since October 2023 for breaching the Uyghur Forced Labor Prevention Act. The recent round of disengagement at the India-China border has reignited speculation that, amidst economic worries in both countries, a thaw in trade and economic ties is likely on the cards. The narrative terrain is hence increasingly muddied by a multiplicity of concerns.
Conclusion
The “Focus on India” paper is a promising statement of interest by Germany, whose charm offensive has seemingly proved effective in landing the P-75I deal. While Germany lags behind the likes of the United States, France and even Russia in New Delhi’s pecking order, it is well poised to improve relations with a country with which it doesn’t have too much political or geopolitical baggage.
The enthusiastic reception of the Scholz visit within India highlights the Indian government’s political appetite for the promise of the Indo-German bilateral. Now, with the submarine deal going Germany’s way, the Indo-German defense relationship, long the poorer cousin of Indo-French ties, can emerge as a decisive factor in India’s defense diversification thrust. In the economic sphere, Germany’s ability to maintain robust economic ties even without FTAs (as evident in its China ties) should for now reassure both partners as the EU FTA remains enmeshed. Cooperation on sustainability and skilled labor, in particular, holds promise as key pillars for the future of the Indo-German relationship.
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