The preliminary agreement will be signed in the presence of German Defense Minister Boris Pistorius, who arrived in New Delhi on Tuesday for a two-day visit.
Germany and India are finalizing a deal to build diesel submarines in the South Asian country, as Russia’s protracted war in Ukraine pushes New Delhi to expand its sources of military hardware beyond its main supplier, Moscow.
The naval division of Thyssenkrupp AG and India’s Mazagon Dock Shipbuilders Limited are likely to jointly bid on an estimated $5.2 billion project to build six submarines for the Indian navy, according to people familiar with the matter.
The preliminary agreement, or memorandum of understanding, will be signed in the presence of Defense Minister Boris Pistorius, who arrived in New Delhi on Tuesday for a two-day visit, German and Indian officials said.
Pistorius told public broadcaster ARD that the submarine deal would be on the agenda for his visit to Mumbai on Wednesday.
His role is to “support and assist” in the negotiations between the German executives traveling with him and their Indian counterparts, he said in the television interview. “This is a large and important contract, not only for the German industry but also for India and the German-Indian strategic partnership,” Pistorius said.
When the tender was announced two years ago, the Kiel-based defense manufacturing giant had shown no interest in jointly manufacturing submarines in India. With the Ukraine war in its second year and China moving in unison with Russia in the war, the West, particularly Germany, is betting on India becoming a bulwark against Beijing’s growing diplomatic and military assertiveness.
For the submarines, India has identified Mazagon Dock Shipbuilders and Larsen & Toubro to partner with large foreign defense companies to build the diesel attack subs. Thyssenkrupp Marine Systems, one of the world’s two manufacturers of submarines with air-independent propulsion, a technology that helps conventional submarines stay underwater longer, had been one of the partnership’s main targets.
In addition, Thyssenkrupp-made submarines have been used in the past by the Indian navy, making them a much more compelling choice compared to South Korea’s Daewoo and Spanish group Navantia.
German Chancellor Olaf Scholz wants German and European defense companies to step up their efforts to supply New Delhi with modern military equipment as a way to help Prime Minister Narendra Modi’s government shed its dependency on Russia in the defense sector defending.
India has become one of the swing states, buying large quantities of crude from Moscow at a discount while remaining committed to the United States and its allies. New Delhi has taken advantage of an ongoing border dispute with China to continue buying weapons from Moscow, its biggest supplier of military hardware. However, deliveries have stalled as Russia and India struggle to find a payment mechanism that does not breach US sanctions.
Submarines are a key need for New Delhi due to its aging fleet. To effectively patrol the Indian Ocean, the Indian Navy needs a minimum of 24 conventional submarines, but currently, only 16 are available. Of this fleet, apart from six newly built vessels, the remainder are over 30 years old and likely to be withdrawn from service in the next few years.
India, part of the so-called Quad grouping that includes Japan, the United States and Australia, has been pushing for these countries and their European allies to share technology to build submarines. However, there has been a general reluctance to give up technology given India’s proximity to Russia and Modi’s “Make in India” policy to boost local manufacturing and create jobs.