India and Germany are finalising details of a submarine manufacturing agreement valued at at least $8 billion, which would rank as the largest defence deal ever for New Delhi, according to people familiar with the matter, Bloomberg reported.
The negotiations are being concluded ahead of German Chancellor Friedrich Merz’s visit to India next week. A key feature of the proposed agreement is the inclusion of technology transfer for submarine production — a first in such deals between the two countries — the people said, speaking on condition of anonymity due to the confidential nature of the discussions.
Change in India’s submarine procurement plans
India’s navy currently operates a fleet comprising older submarines and six newer vessels built with French collaboration. If the deal with Germany moves forward, India is expected to set aside plans to acquire three additional French submarines, the people said.
Under the proposed arrangement, Germany’s Thyssenkrupp Marine Systems GmbH would partner with India’s state-owned Mazagon Dock Shipbuilders Ltd. to manufacture the submarines domestically.
A spokesperson for Thyssenkrupp Marine Systems declined to comment. India’s Ministry of Defence and Ministry of External Affairs did not immediately respond to requests for comment, Bloomberg reported.
Merz visit to focus on defence, trade and industry
Chancellor Merz, on his maiden visit to India, is scheduled to meet Prime Minister Narendra Modi in the western state of Gujarat on Monday. He will then travel to Bengaluru to meet German companies operating in India, according to a German government spokesperson.
In addition to defence cooperation, the two sides are expected to explore expanded collaboration in the pharmaceuticals sector. Merz is also likely to use the visit to push for faster progress in negotiations between India and the European Union on a free trade agreement, the people said.
The India visit will be Merz’s first overseas trip accompanied by a large delegation of German chief executives. He is also expected to travel to China with another business delegation in the coming weeks, though no dates have been finalised, Bloomberg reported.
Advanced submarine capabilities
The submarines under discussion would be equipped with air-independent propulsion (AIP) systems, enabling them to remain submerged for longer periods than conventional diesel-electric submarines. The vessels would strengthen India’s naval capabilities, particularly for operations across the Indian Ocean region, the people said.
Industrial and strategic context
The proposed deal reflects a broader push by New Delhi to expand domestic defence manufacturing through partnerships with global defence companies. In 2020, the Indian government restricted imports of several major defence platforms, including fighter jets, helicopters, artillery and warships, in an effort to encourage local production and technology sharing.
The agreement, if concluded, would mark a significant expansion of India–Germany defence cooperation and underline Germany’s growing role in India’s long-term naval modernisation plans.
— With inputs from Bloomberg
