Germany has deepened its ties with India in light of significant changes in global geopolitics and supply chain vulnerabilities. Chancellor Friedrich Merz views India as a valuable partner for Germany, offering numerous opportunities amidst global uncertainties. This partnership holds the promise of increased market access, reduced reliance on China, strengthened defense exports, and growth driven by innovation.
The German government’s “Focus on India” strategy, implemented in 2024, acknowledges India’s trajectory towards becoming the world’s third-largest economy by 2027, with a growing middle class and digital capabilities. Bilateral trade between the two countries exceeded €35 billion in 2025, showing a 15% year-on-year increase. Additionally, German foreign direct investment in India has reached US$15.11 billion cumulatively from 2000 to March 2025, with over 2,000 German companies operating in India and employing 400,000 locals.
During Chancellor Merz’s recent visit to India, 19 Memoranda of Understanding (MoUs) and Joint Declarations of Intent were signed across various sectors including defense, technology, critical minerals, and green energy. The collaboration between Germany and India in defense has evolved from discussions to robust industrial partnerships, providing economic and strategic benefits for Germany. The Joint Declaration of Intent on Strengthening Bilateral Defense Industrial Cooperation, signed during the visit, sets the stage for co-development, technology transfer, and co-production of advanced platforms.
German companies such as Thyssenkrupp Marine Systems (TKMS) are poised to benefit from India’s Project 75I, a €5 billion initiative to construct six AIP-equipped submarines with Mazagon Dock Shipbuilders Limited (MDL). This deal not only secures valuable exports and job creation for Germany but also establishes Berlin as a significant player in India’s naval modernization efforts, reducing India’s dependence on Russian suppliers amid Western sanctions.
The partnership between Germany and India enhances Germany’s presence in the Indo-Pacific region, aligning with its 2020 guidelines for the area. Amid China’s growing assertiveness, collaborative efforts in maritime domain awareness and logistics support contribute to reinforcing a rules-based order, which in turn benefits German trade routes, 90% of which pass through the Indian Ocean.
Trade forms the cornerstone of Germany-India relations, with Germany being India’s top EU partner, representing 25% of India’s EU trade. In 2024, bilateral trade in goods and services surpassed US$50 billion, with German exports to India reaching US$18.3 billion, primarily comprising machinery, electrical equipment, and chemicals. India’s exports to Germany, including pharmaceuticals and auto components, totaled US$10.54 billion, indicating a balanced and growing trade relationship. Projections aim for €50 billion in trade by 2030 under Germany’s “India First” doctrine, driven by diversified supply chains.
