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India and Germany are in talks over a multibillion submarine deal aimed at reducing the south-Asian nation’s dependence on Russian military equipment and boosting Berlin’s defence industry.
Germany’s Thyssenkrupp Marine Systems (TKMS) and India’s Mazagon Dock Shipbuilders on Wednesday signed a memorandum of understanding on a plan for the two parties to bid to co-produce six vessels that would be worth about €5bn, according to a person close to the discussions.
The German defence minister, Boris Pistorius, who is on a four-day visit to India, said a submarine deal could be “a flagship project” for the two countries — although he said there were other competitors bidding for the contract.
The head of Thyssenkrupp’s naval unit, Oliver Burkhard, was among a group of senior German defence executives who accompanied Pistorius on the trip to India.
The deal relates to six diesel submarines with air propulsion systems — meaning the underwater vessels can be operated silently — all of which would be manufactured in India, according to a person familiar with the discussions.
TKMS said in a statement released on Wednesday afternoon that it intended to contribute with engineering and design of the submarines, as well as consult on the process, while Mazagon would construct and deliver the boats.
The Indian navy currently has four submarines built in the 1980s by the predecessor of TKMS. Two of the submarines were built in Kiel, Germany, while the other two were manufactured in Mumbai under a technology transfer agreement.
The defence deal will be welcome in India, which is the world’s largest arms importer, but has been trying to boost local defence production under an “indigenisation” drive. Creating jobs in manufacturing is a priority for Narendra Modi’s government under its Make in India programme.
Russia is India’s top supplier of arms by far, followed by France and the US. But its share in imports is falling as New Delhi tries to diversify to new partners and to bolster its military capabilities in the face of a more assertive China, with which it has an unresolved border conflict. India’s imports of Russian armaments and parts have faced delays since the beginning of the war in Ukraine last year because of Moscow’s own demand for weaponry.
While Germany and India have co-operated on defence since the 1980s, Pistorius said he wanted to significantly expand ties between the two countries, including on weapons procurement.
“India is an important, not to say the most important, strategic partner for Europe and also for Germany. And that’s why we have to treat it that way,” he said in New Delhi after talks with his Indian counterpart Rajnath Singh on Tuesday.
Pistorius suggested that the country should benefit from simplified German arms sales rules that already applied to Japan and Australia and puts them on an equal footing with Germany’s Nato partners when it comes to buying weapons from India.
Thyssenkrupp, a world leader in non-nuclear submarines, in late March revived longstanding plans to sell its naval unit, with several private equity groups having expressed an interest.
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