India and Germany stand on the brink of sealing an $8 billion defence pact, poised to reshape New Delhi's naval prowess. This landmark agreement, the largest in India's defence procurement history, centres on submarine manufacturing with unprecedented technology transfer from Germany.

Officials close to the negotiations reveal that the deal is being finalised ahead of German Chancellor Friedrich Merz's inaugural visit to India next week.

The partnership unites Germany's Thyssenkrupp Marine Systems GmbH with India's state-owned Mazagon Dock Shipbuilders Ltd. Together, they will construct advanced submarines, marking the first instance of such technology sharing for underwater vessels. This collaboration aligns with India's push for self-reliance in defence manufacturing, known as 'Aatmanirbhar Bharat'.

India's current submarine fleet comprises around a dozen ageing Russian vessels and six newer French models. The impending deal could prompt New Delhi to abandon plans for acquiring three additional French submarines, redirecting focus towards this Indo-German venture. Such a shift underscores a strategic pivot in procurement priorities.

Chancellor Merz's itinerary includes high-level talks with Prime Minister Narendra Modi in Gujarat on Monday, followed by a visit to Bengaluru's technology hub to engage with German firms. Accompanied by a sizable delegation of German CEOs, Merz aims to elevate bilateral ties beyond defence. Discussions will also cover expanded cooperation in pharmaceuticals and accelerating EU-India free-trade agreement negotiations.

The submarines in question will feature air-independent propulsion (AIP) systems, a technological edge over conventional diesel-electric setups. AIP enables extended submerged operations, bolstering endurance and stealth capabilities. This upgrade will enhance India's capacity to patrol the expansive Indian Ocean, countering China's growing maritime assertiveness in the region.

New Delhi's defence strategy has evolved significantly since 2020, when the Modi government imposed bans on importing most major platforms like fighter jets, helicopters, artillery, and warships. These measures compel foreign manufacturers to establish production lines within India, fostering technology transfer and local industry growth. Despite this, India remains the world's second-largest arms importer, heavily reliant on Russia, as per data from the Stockholm International Peace Research Institute.

Germany's defence sector has surged post-Russia's invasion of Ukraine, prompting Berlin to loosen export controls and share sensitive technologies. This submarine deal exemplifies that momentum, aiming to diversify India's suppliers and reduce Moscow's longstanding dominance. For Thyssenkrupp, it represents a foothold in one of Asia's most dynamic defence markets.

Mazagon Dock Shipbuilders, already a key player in India's warship construction, gains immensely from this tie-up. The yard has delivered Scorpene-class submarines under licence from France, but AIP integration has lagged. German expertise in Class 212/214 submarines, renowned for their AIP prowess, will bridge this gap, potentially yielding six to eight vessels over the next decade.

Geopolitically, the pact signals deepening Indo-German strategic convergence. Both nations share concerns over Indo-Pacific stability amid Chinese expansionism. Merz's visit, mirroring planned trips to China with business delegations, highlights Germany's pragmatic outreach to counterbalance dependencies. For India, it diversifies naval options beyond Russian Kilo-class and French Kalvari-class boats.

Economically, the $8 billion infusion will stimulate job creation, skill development, and supply chain integration in India's defence ecosystem. Mazagon Dock and Thyssenkrupp are expected to localise over 60% of components, aligning with offsets mandated under India's Defence Procurement Procedure. This could spawn ancillary industries in advanced materials, sensors, and propulsion systems.

Challenges persist, however. Negotiations must navigate intellectual property safeguards, export controls under Germany's War Weapons Control Act, and integration with India's indigenous weapons like Astra missiles and BrahMos. Timeline slippages, common in mega-projects like the delayed P-75I programme, loom as risks.

India's broader submarine ambitions include Project P-75I, originally earmarked for six AIP-equipped boats. The German deal may supplant or merge with it, fast-tracking delivery amid urgency to offset fleet obsolescence. By 2030, India aims for a 24-submarine force, necessitating 12-18 new builds.

Thyssenkrupp's track record bolsters optimism. Its Type 209/1400 submarines, operated by nations like Greece and South Korea, offer proven export success. Adapting this for Indian conditions—tropical waters, monsoons—will demand customisation, likely incorporating DRDO-developed sonars and periscopes.

Broader bilateral momentum aids the deal. Indo-German trade hit €25 billion in 2025, with defence emerging as a pillar alongside renewables and engineering. Merz's predecessor Olaf Scholz laid groundwork via 2022's Indo-Pacific policy, emphasising maritime security.

For India's Navy, facing a two-decade procurement drought, this arrives providentially. Admiral Tripathi's force structure review prioritises undersea deterrence against PLAN's 70+ submarines. AIP boats will enable persistent presence in chokepoints like the Malacca Strait.

Sceptics note unconfirmed details, with Thyssenkrupp and Indian ministries silent. Yet, sources' alignment across Bloomberg and Economic Times lends credibility. Final signatures could occur during Merz's Gujarat summit, catalysing a new era in Indo-German defence synergy.

This agreement transcends hardware, embodying India's ascent as a defence manufacturing hub. By indigenising complex platforms, New Delhi not only shores up capabilities but positions itself as an exporter, eyeing markets in Southeast Asia and Africa.

The $8 billion submarine pact heralds a transformative chapter, blending German precision with Indian scale to secure maritime frontiers.

IDN (With Agency Inputs)