Wednesday, May 29, 2024

India & Germany Chart €5 Bn Course In Submarine Co-Production Deal

By Staff Correspondent

In an ambitious effort to curb its dependence on Russian military gear and bolster the German defence sector, India is negotiating a €5 billion submarine contract with Germany. This strategic move involves a memorandum of understanding (MoU) signed between Thyssenkrupp Marine Systems (TKMS) and Mazagon Dock Shipbuilders Limited (MDL). Both organisations have expressed intent to jointly bid to manufacture six submarine vessels, a person close to the discussions said.

Boris Pistorius, Germany’s defence minister, views this submarine contract as a potential “flagship project” for Indo-German collaboration. However, he also noted the presence of other contenders vying for the same contract. Pistorius was part of a high-profile German delegation, including Oliver Burkhard, the head of Thyssenkrupp’s naval unit, that visited India recently in June.

The proposed deal involves the construction of six diesel submarines, complete with air propulsion systems, to ensure silent operation. Crucially, these vessels would be manufactured domestically in India. This development was confirmed by TKMS in a statement released in June, outlining their role in providing engineering and design expertise alongside consultation on the manufacturing process. MDL expected to undertake the construction and delivery of these submarines.

This agreement will be a significant achievement for India, known as the world’s largest arms importer and striving to boost local defence production through a scheme known as ‘indigenisation’. This aligns with Prime Minister Narendra Modi’s ‘Make in India’ initiative, which prioritises job creation in the manufacturing sector.

India’s defence procurement predominantly relies on Russia, with France and the US playing secondary roles. However, given the rising tensions with China and an ongoing border dispute, the country strives to diversify its defence partnerships and strengthen its military capabilities. New Delhi’s efforts to diversify have been amplified by the delays in obtaining Russian armaments due to Moscow’s increased demand following the war in Ukraine.

Germany and India have been defence collaborators since the 1980s, but Pistorius has stated his desire to deepen these ties. He believes India to be a crucial strategic partner for Europe and Germany and intends to simplify the German arms sales procedures for India, similar to the facilitations provided to Japan and Australia. This will level the playing field for India with Germany’s NATO allies in terms of weapon procurement.

Thyssenkrupp, recognised as a global leader in non-nuclear submarines, has reignited its plans to divest its naval unit since late March, a move that has attracted the interest of several private equity groups.

Consequent to India and Germany signing an agreement on Bilateral Defence Cooperation in 2006, there has been significant enhancement in military interactions. Cooperation in the maritime domain is the most enduring and key facet of engagement between India and Germany, which inter alia encompasses training and reciprocal bilateral visits by naval ships and delegations.

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