Germany intends to provide India with reliable support in arms supplies so as to reduce dependence on Russia. Partnerships with German companies are encouraged, and the German government promises easier access to German arms supplies by easing export controls, which have been the bane of growth in this sector.

Due to licensing issues, India could not obtain tank engines for its new light tank Zorawar from Germany in a timely manner. Now, most export controls, including tank engines, appear to be cleared. In 2023-24, Germany exported $166 million worth of defense systems to India. This is their third largest market, and they are keen to develop it further.

German submarines are a matter of high interest. Germany remains a leading contender for building six modern API-based submarines under the P 75 project in India. This process of engagement is about a decade old, and there is some frustration on the German side that India has not reached a conclusion on this more quickly. From the original six serious contenders, now the list of strategic partners is down to two, between ThyssenKrupp Marine Systems (TKMS) of Germany and Navantia of Spain.

It is interesting that right after the Scholz visit, the Spanish Prime Minister was in India. Though submarines have not been on the top of the public agenda, the perception is that both countries were now pushing harder for their version of the submarines.

Spain showed its hand by inaugurating the first Airbus Tata manufacturing facility for the C295 transport aircraft, which will replace the IAF’s Avro 748 fleet. These aircraft will also be provided to the Navy and the Coast Guard. While Airbus is a European conglomerate of which Germany and France are also members, the C295 facility with the Tatas is Spanish-led.

German companies have not been able to score anything like this, having missed the chance to participate fruitfully in the Zorawar tank project. Given the frustrations and change of management in TKMS, the Germans actually withdrew their interest in the submarine project, and it was only when the current defense minister, Pistorius, visited India two years ago that they came back with steadfast interest. They would now like the decision to be reached since they have a tie-up with Mazagon Docks Limited while the Spanish company is linked to L and T.

If India reaches a decision on the submarines, it will add momentum to whichever country’s version it chooses, Germany or Spain, to their defense collaboration. The Germans hope that it would be them.

One issue with large projects with Germany is that they do not catalyze the establishment of ancillary industries as local joint ventures. This is the trend of their FDI investment over the years.

If they promised more offsets and technology transfers into related fields, it would greatly enhance their case. At times, it does not seem clear how strongly the German government pushes the case for the submarines, while other European governments are known to push for their items of interest far more vigorously.

In 2015, the current EU head and then German defence minister Ursula van der Leyen did the unprecedented thing by providing a letter of support from the German government to the submarine project, and now Pistorius is firmly behind it. However, since Pistorius did not join the IGC delegation at the last minute due to illness, attention went off this aspect of the relationship.

There are certainly other areas that can be explored for transferring technology in defense manufacturing and electronics. Germany could take more interest in the defense corridors in UP and Tamil Nadu to bring their companies to set up facilities, preferably in joint ventures with Indian partners.

The Joint statement does support “enhanced industry-level cooperation in the defense sector,” with a focus on “technology collaboration, manufacturing/co-production and co-development of defense platforms and equipment.”

In the case of defense production cooperation, the approach to FDI and joint ventures with India in the economic field needs to be better determined and pursued because the market for this in India is assured.

Unlike Japanese and Korean companies, for instance, which approach state governments to set up industrial parks or estates, the Germans have not done it very often. Japan and Korea have already pursued this around the Noida International Airport in Jewar, but one has not heard of Germany seeking such a facility.

Greater cohesion between German government vigor, which is evident, and German industrial entrepreneurship, showing greater enthusiasm and plans, would benefit German industry in the field of defense cooperation much more.

Indo-Pacific nations are required to navigate geostrategic uncertainties carefully to maintain the momentum of their partnerships and ensure that the region’s security architecture remains resilient in the current phase.

German engagement with India and the Indo-Pacific requires more economic and defense production participation in their partner countries. While the German government embraces the Indo-Pacific concept now, German businesses still call themselves the Asia-Pacific Conference of German Business (APK)!