India and Germany ties poised for take-off

New Delhi: The Chancellor of Germany, Olaf Schulz will land in Delhi today to attend the 7th Inter-Governmental Consultations (IGC), and the Asia Pacific Conference of German business (APK 2024). Chancellor Scholz will be accompanied by senior Ministers for the IGC consultations.

It maybe normal for one to dismiss both meetings as opportunities for regular exchanges and no more. However, the changed global situation and the felt need in Europe for greater engagement with India are driving a renewed push by Germany (and Europe) to talk to Prime Minister Modi.

That is why the German Chancellor’s visit is important and significant. It is a chance for India and Germany to imbibe strategic meaning to the relationship and give impetus to bilateral defence cooperation, including co-production and co-development of weapon systems.

As the Ministry of External Affairs aptly states the IGC is a whole-of-government framework under which respective Ministers hold discussions in their respective areas of responsibility.

This will give the leaders time to discuss larger strategic issues and developments affecting the world today. Both leaders are also scheduled to address the 18th Asia Pacific Conference of German Business (APK 2024) being held in New Delhi on 25 October.

The APK event is important as it is a biennial event for business leaders, executives, and political representatives from Germany and the countries in Indo-Pacific.It is expected to give a further fillip to trade and investment ties between the two countries and open opportunities for joint investment in the Indo-Pacific. About 650 top business leaders and CEOs from Germany, India, and other countries will be participating in the event.

The German Chancellor visited India twice in 2023, once for a bilateral state visit in February and, the second time in September, to attend the G20 leaders’ Summit in Delhi. This reflects the importance that Germany attaches to India from an economic and geo-political perspective.

The last IGC was held in 2022 and this time around the global situation has changed dramatically. With India having taken on an important geo-political role on many fronts, Germany wants to engage. The German focus on the Indo-Pacific and the need to move away from the China dependent supply chain are two key factors for renewed German engagement with New Delhi.

Perhaps most importantly, Germany will raise the Ukraine conflict, given PM Modi’s visits to both Moscow and Kyiv recently. The bottom line as PM Modi has repeatedly stressed that India wants peace. The way to go forward on this is for both Ukraine and Russia to sit across the negotiating table.

The other sector in which deepening of collaboration is expected to take place is defence and high technology. The need to access India’s huge markets is a major aim for Germany today.

As Reuters reports, German companies are optimistic about India’s growth potential across a range of sectors and want to tap into the pool of skilled young workers, a cheaper cost base and economic growth of about 7%.For India, access to high technology in several domains is an important ask. Additionally, India’s ‘make in India’ programme offers countries like Germany the opportunity to invest with renewed vigour.

This engagement is practical and oriented towards collaboration in economic and defence sectors. Germany is keen to sell high-end defence technology to India. With this objective in mind, it has modified the export licensing requirements and included India in several categories of equipment. This opens the opportunity for India to import several important systems in the maritime, missile and land domains. The German company Thyssen Krupp has entered the Indian competition to bid for construction of submarines for the P 75 (I) project. A decision on this is still awaited. This is just one example of the plethora of systems that Germany has to offer and India’s position is that it is willing to acquire, as long Berlin eases the export licensing regime to automatically export to India.

Defence technology apart, India and Germany could take forward proposals made earlier on collaboration in critical technologies. India already has ongoing links with the US and the UK, which could be tailored to meet specific needs of both India and Germany. There are a number of reasons why Germany is pivoting towards India and the Indo-Pacific region. The first is China and the second, the Indian market. With China, European economic engagement remains strong, but the Russian experience and Beijing’s actions during the Covid pandemic have taught Germany the value of seeking other, more reliable, supply chain partners. Further, the Indian market is today moving to high-end manufacturing; hightechnology is the buzz word. As Germany has much to offer, this is the right time to engage and agree on a number of fronts.

The German Chancellor’s visit to India comes at a timewhen the country’s export-oriented economy is facing a second year of contraction and there is concern over a possible rebounding on Germany, of the ongoing EU-China trade dispute.Additionally, the bad experience of over-reliance on Russian gas before the Ukraine conflict in 2022 has shown Berlin the necessity of de-risking from and reducing its exposure to China. In terms of investment, Germany had done around 25 billion euros (US$27 billion) in 2022;this is about 20% of the volume invested in China. Volker Treier, head of foreign trade at the German Chamber of Commerce DIHK told Reuters,this share could rise to 40% by the end of the decade. Notably, he added, “China will not disappear, but India will become more important for German companies.’

It is expected that the 7th IGC could include discussions to allow more Indian students to study in Germany, as the country will need to add five million more to its workforce in the coming years. Indian business daily Mint reported that Germany planned to more than quadruple the number of visas for skilled workers from India, to 90,000 annually from 20,000 currently. However, the need to learn the German language and finding the right kind of employment have remained minor hurdles to progress on this front. Perhaps the forthcoming discussions will allow both countries to find simple and practical solutions to this conundrum.

A strategic perspective of the visit shows that both regional and international issues will be discussed, as will be, bilateral cooperation. There will be some deliverables on the economic and defence front. The significance of specific agreements will become known soon, however, what it means is a deeper understanding of each other’s position and intense discussions going forward on areas of mutual benefit. What has been narrated above is only a snapshot of the whole range of deliverables that are in the offing at the 7th IGC. The contours of future India-Germany engagement could well be framed at the forthcoming meeting of the leaders of India and Germany.

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