Germany Deepens India Ties as Global Supply Chains Shift, Eyes Defence Deals

Chancellor Friedrich Merz sees India "as a partner of choice" for Germany, offering vast opportunities amid global uncertainties.

For Germany, Europe's economic powerhouse, this partnership promises substantial benefits: enhanced market access, reduced dependency on China, bolstered defence exports, and innovation-driven growth, according to an article in One World Outlook written by Mirium Baumann.

The "Focus on India" strategy, adopted by the German government in 2024, recognises India's trajectory as the world's third-largest economy by 2027, with a burgeoning middle class and digital prowess. Bilateral trade surpassed €35 billion in 2025, marking a 15 per cent year-on-year increase, while German FDI in India reached US$15.11 billion cumulatively from 2000 to March 2025. Over 2,000 German companies operate in India, employing 400,000 locals and generating synergies in sectors like automobiles, chemicals, and renewables, the article states.

The impending EU-India FTA could amplify these gains by slashing tariffs-averaging 12 per cent on EU goods entering India - and unlocking €20 billion in additional trade, it observes.

Chancellor Merz's recent visit to India resulted in 19 Memoranda of Understanding (MoUs) and Joint Declarations of Intent across defence, technology, critical minerals, and green energy.

Defence ties between the two countries have transitioned from consultative dialogues to robust industrial partnerships, yielding direct economic and strategic advantages for Germany. The Joint Declaration of Intent on Strengthening Bilateral Defence Industrial Cooperation, signed during Merz's visit, paves the way for co-development, technology transfer, and co-production of advanced platforms, the article observes.

German companies like Thyssenkrupp Marine Systems (TKMS) stand to gain with India's Project 75I, a €5 billion initiative to build six AIP-equipped submarines with Mazagon Dock Shipbuilders Limited (MDL).

For Germany, this deal not only secures high-value exports to create jobs but also positions Berlin as a key player in India's naval modernisation, reducing New Delhi's reliance on Russian suppliers amid Western sanctions, the article states.

It points out that strategically, this partnership bolsters Germany's Indo-Pacific presence, aligning with its 2020 guidelines for the region. Amid China's assertiveness, collaborative maritime domain awareness and logistics support reinforce a rules-based order, benefiting German trade routes - 90 per cent of which traverse the Indian Ocean.

The article highlights that trade remains the bedrock of Germany-India relations, with Germany as India's top EU partner, accounting for 25 per cent of India's EU trade.

In 2024, bilateral goods and services trade exceeded US$50 billion, sustained into 2025 with German exports to India reaching US$18.3 billion - primarily machinery, electrical equipment, and chemicals.

India's exports, including pharmaceuticals and auto components, totalled US$10.54 billion, highlighting a balanced yet growing exchange. Projections aim for €50 billion by 2030 under Germany's "India First" doctrine, driven by diversified supply chains, the article added.

- IANS