GERMAN CHANCELLOR'S VISIT TO INDIA: What does a granting a "Special Status" mean to India?

 INTRODUCTION 

On Friday, German Chancellor Olaf Scholz and Prime Minister Narendra Modi co-chaired the 7th edition of Intergovernmental Consultations (IGC) and inaugurated the 18th Asia-Pacific Conference of German Business (APK) in New Delhi.

The IGC, is a framework that was established in 2011 by the two countries. Ministers from both countries will hold discussions in their respective areas, and the outcome will be reported to their leaders. Topic’s such as economic ties, defence and trade were centre of discussion.

The dialogue also comes at a crucial juncture as Germany looks to court India as a key strategic partner.

WHY INDIA?

Germany is making investments in India to ‘de-risk’ i.e., reduce its economic dependence on Beijing. Export-oriented economy of The Bundesrepublik faces a second year of contraction and worries over a trade dispute between the EU and China that could affect negatively.

The aftermath of the Ukraine invasion, when Berlin’s reliance on cheap Russian gas appeared to be problematic. The invasion acted as a ‘wake-up’ call for Germany to increase defence cooperation in the Indo-Pacific. Another goal is to replace Russian defence companies, which provide 60–65% military hardware in India.

ECONOMIC AND TRADE ASPECT OF THE VISIT.

This visit acted as a bridge between India and Germany’s economic and trade relations. Thus, keen to boost its trade with India, which currently stands at 1/10th of its trade volume with China.

In the Asia-Pacific Conference of German Business, 800 CEOs were present in Delhi. German Ambassador Philip Ackermann acknowledged the opportunity for increased business cooperation under ‘Make in India’ initiative and through its joint venture in the Indo-Pacific.

A very important tenet of the partnership is migration. According to Ackermann, Germany desires to attract skilled labour from India. Berlin’s labour force is set to decline by around 7 million people over the next decade due to aging. Hence, around 400,000 migrants every year will stable the level of labour force. Therefore, India is an important partner when it comes to the particular issue.

The companies see a bright future in India, with 82% expecting revenues to grow in the next five years. 59% are planning to expand their investments compared to just 39% in 2021; DHL plans to invest half a billion euros in India by 2026.The diverse market and massive population are a potential target for foreign players; thus, this can benefit Germany to reduce its reliance on China and witness growth in the Indo-Pacific region.

India is already Germany’s biggest trading partner in Europe; the bilateral trade in March 2024 was around $26 billion. Currently, 2000 German companies exist in India, and Scholz emphasized his ministers to communicate on free trade pact between India and the EU.

DEFENCE ASPECT.

A special status has been accorded to India so that approvals for military purchases can be accelerated. German seller is awaiting the Indian government to provide their decision regarding the P-75I submarine deal. This multibillion-dollar deal was the top agenda for the visit.

The Thyssenkrupp Marine Systems of Germany and Navantia of Spain are two contenders in the fray to sell six advanced conventional submarines in a deal estimated over Rs 43000 crore to the Indian Navy under Project-75I, a military acquisition initiative affiliated by India’s Ministry of Defence aimed to procure diesel-electric submarines for the Indian Navy. The bids are currently under evaluation. Other areas are cruise missiles, with MBDA as a potential partner, and drones. An agreement for peacekeeping training between both countries is also on the anvil.

This special status provided by Germany is a key to enter the Indo-Pacific region and gain access for the repair and maintenance of their native ships in Indian region, on the lines of the UK and US, which have been leveraging agreements for this purpose.

END NOTE

It is notable that Germany envisions India as a stronger and more reliable partner than China and has shown its willingness to invest in the Indian market, boost trade practices, support skilled labour and defence. This proves that India is an asset for the world, but growth with caution is important.