Olaf Scholz's visit to India: Germany to pursue $5.2 billion submarine deal, say sources

German Chancellor Olaf Scholz will reportedly pursue a $5.2 billion deal with India to jointly build six conventional submarines during his two-day visit to the South Asian nation, which he will begin on Saturday (February 25), news agency Reuters reported citing two Indian and two German sources.

Scholz will hold comprehensive talks with Indian Prime Minister Narendra Modi to discuss issues of mutual interest. The key visit is coinciding with the completion of one year of the Russia-Ukriane war and the raging conflict is expected to dominate the talks, with talks also focused on the Indo-Pacific situation, ways to boost bilateral ties in areas of clean energy, trade and new technologies.

New Delhi is aiming to curb China's growing influence in the Indian Ocean and, hence, the replacement of India's ageing submarine fleet becomes important. India's 11 of 16 conventional submarines are more than two decades old. The Indian Navy also has two indigenous nuclear-powered submarines.

One source said that the submarine project will be discussed between the two countries during Scholz's trip and Berlin would support the deal. The report also stated that Germany's ThyssenKrupp Marine Systems (TKMS) is one of two international bidders.

The source also told the news agency that as part of the deal, a foreign submarine manufacturer will have to partner with an Indian company to build the submarines in India.

This comes in the backdrop of PM Modi's Made-in-India push, which is to promote the manufacture of more weapons at home in collaboration with foreign partners to lessen the burden of arms imports.

So far, there's no official confirmation from either government.

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Scholz crucial visit to India

This is Scholz's first to India after he became German Chancellor in December 2021 following Angela Merkel's historic 16-year tenure at the top post.

Ahead of the visit, German Ambassador Philipp Ackermann said on Wednesday: "We see Russia and Ukraine (conflict) very high on the agenda in the meeting between German Chancellor Scholz and Prime Minister Modi. It will be a very important part of the agenda."

Some of the experts have noted that the broad agenda of the Modi-Scholz talks said the consequences of the conflict, especially on food and energy security, are expected to figure prominently during the deliberations.

(With inputs from agencies)

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