Germany is eying a $5.2 billion deal with India to jointly build six conventional submarines in the country during Chancellor Olaf Scholz's two-day visit to India starting today, reported news agency Reuters citing its sources.
The naval project deal is seen as the latest attempt by a Western military manufacturing power to reduce New Delhi dependency on Russia for military hardware.
India is also looking to replace its ageing submarine fleet, with 11 of its 16 conventional submarines more than two decades old. Besides, it also seeks to counter China's growing presence in the Indian Ocean. As of now, the Indian Navy has two indigenous nuclear-powered submarines.
Prime Minister Narendra Modi's government is also keen on manufacturing more weapons in the country in collaboration with foreign partners. India has remained one of the world's largest arms importers.
What’s the submarine project?
Scholz will arrive in Delhi on Saturday on his first trip after he became German Chancellor in 2021 following Angela Merkel's historic 16-year tenure at the top post.
The submarine project, for which Germany's ThyssenKrupp Marine Systems (TKMS) is one of two international bidders, is said to be discussed between the two countries during Scholz's trip, the agency reported citing a source.
A foreign submarine manufacturer will partner with an Indian company to build the submarines in India under the deal.
The foreign partner will be required to transfer a niche technology for fuel-cell-based Air Independent Propulsion (AIP), a clause that has been a sore point for most foreign firms.
France's Naval Group had pulled out of the project just ahead of Modi's visit to Paris in May 2022, citing its inability to meet conditions listed by India in 2021.
Russia's Rosoboronexport and Spain's Navantia Group are also not in the race anymore, the report cited a source in the defence ministry. That leaves German TKMS, which signed a deal for jointly building six submarines with Norway, and Daewoo Shipbuilding and Marine Engineering Co Ltd of South Korea in contention.
India has requested Germany for an assurance for joint manufacturing for the submarines, not just supply-side support, according to the source. While another source said "Scholz was determined to reinvigorate trade and defence ties with India".