Germany is actively pursuing a stronger partnership with India, driven by economic and geopolitical considerations. This increased engagement follows challenges from US tariffs, Russian threats, and China's strategic ambitions. High-level German visits to New Delhi have increased, including Chancellor Friedrich Merz's recent delegation.
Economic and Strategic Impulses
India's economy is projected to grow substantially more than China's in the current year, according to an OECD prognosis. This contrasts with Germany's nearly three-year recession. Germany seeks new economic opportunities and skilled workers, with Indians forming the largest group of foreign students at German universities. India's service sector, particularly in IT and research, is a significant strength, with many German companies outsourcing research facilities to the country.
Bilateral trade between Germany and India reached €29 billion in 2024. This figure, while substantial, remains a fraction of Germany's trade volume with China, which was approximately €246 billion in the same year.
Geopolitical Rationale
Chancellor Merz has described the current global political situation as one where the liberal world order faces pressure. Trading with China has become increasingly complex due to security concerns, while US import tariffs have impacted trade relations. Merz emphasized the need for Germany and Europe to construct a new rules-based trade system. He highlighted the importance of diversifying raw material supply chains and trading networks, identifying major countries like India as crucial partners for Germany's security and competitiveness.
Challenges and Divergent Interests
Despite Germany's overtures, the relationship with India presents challenges, particularly regarding India's stance on Russia. German efforts to align India with Western condemnation and sanctions against Russia have not succeeded. India continues to purchase Russian oil, which is then re-sold to Western countries, circumventing EU sanctions. Analysts suggest India will maintain its course of strategic autonomy, preserving its good relations with Russia. The US also previously imposed tariffs on Indian goods over New Delhi's continued purchase of Russian oil.
Historically, India and Russia have maintained close defense ties. Currently, approximately 60-70% of India's armed forces depend on Russian military equipment. While France has secured significant defense deals with India, Germany aims to secure orders for military transport aircraft and submarines as India modernizes its armed forces. Western armaments are noted for being more expensive and often coming with additional conditions compared to Russian alternatives.