German Chancellor Merz Seeks Business and Defense Partnerships During First Asia Visit to India

German Chancellor Friedrich Merz is undertaking his first trip to Asia with a focus on expanding business and defense ties with India, as Europe's biggest economy seeks to strengthen partnerships amid growing tensions with major trading partners China and the US. The high-profile visit comes as both nations face challenges from US trade policies, with India facing tariff rates of 50% and Germany dealing with President Trump's controversial statements regarding Greenland.

Key Meetings and Diplomatic Engagements

Merz will meet Prime Minister Narendra Modi on Monday in Ahmedabad, located in Modi's home state of Gujarat. The leaders' agenda includes bilateral talks, a visit to a Mahatma Gandhi memorial site, and participation in a local kite festival. This diplomatic engagement provides both leaders an opportunity to showcase stronger economic and security cooperation during a period of strained relations with the US.

Expected Agreements and Partnerships

The two-day visit is expected to yield several significant agreements across multiple sectors:

Germany particularly hopes to gain better access to critical minerals from India through a memorandum of understanding, as Berlin works to reduce supply chain dependencies for rare earths and other raw materials from China. Additionally, both sides plan to sign an agreement facilitating the movement of Indian healthcare workers to Germany, where labor shortages across various economic sectors are constraining growth.

Business Delegation and Corporate Participation

Merz's delegation includes a substantial group of German business leaders, demonstrating the commercial importance of this visit. The delegation features chief executive officers from major corporations and representatives from Germany's Mittelstand companies:

Major Corporations:

• Siemens
• DHL Group
• Infineon Technologies
• Uniper
• Airbus Defence and Space

Specialized Sectors:

• Boehringer Ingelberg (Pharmaceuticals)
• ThyssenKrupp Marine Systems (Defense)
• Various small and medium-sized Mittelstand companies

On Tuesday, Merz plans to visit a Bosch facility in Bangalore, further emphasizing the business-focused nature of his visit.

Defense Cooperation and Submarine Deal

A major focus of the visit involves defense sector cooperation, particularly a significant submarine manufacturing agreement. Germany and India are negotiating details of a submarine manufacturing deal worth at least $8 billion, which would represent the largest-ever defense agreement for New Delhi. The negotiations involve Germany's ThyssenKrupp Marine Systems GmbH and Indian state-owned Mazagon Dock Shipbuilders Ltd., with discussions including technology transfer for submarine production.

India's navy currently operates approximately a dozen aging Russian submarines and six new French-made models. Germany views this submarine deal as an opportunity to reduce India's dependence on Russian military equipment, particularly relevant given India's continued ties with Russia following the 2022 Ukraine invasion.

Trade Relations and Future Prospects

The economic relationship between Germany and India demonstrates substantial depth and potential for growth. More than 2,000 German companies conduct business in India, while over 700 Indian companies invest in Germany. With bilateral trade volume approaching $50 billion, Germany serves as India's most important partner within the European Union.

Merz will likely use his meeting with Modi to accelerate negotiations on a free-trade agreement between the European Union and India. Negotiators are working to finalize a deal before EU President Ursula von der Leyen's planned visit to India later in January, though talks remain stuck on key issues including steel and automobiles. As the fastest-growing economy in the G20, India represents a crucial economic partner for Germany in the Indo-Pacific region.