Germany is looking to strengthen its ties with India as its relationship with China worsens. Chancellor Olaf Scholz is set to embark on a significant three-day trip to India starting this Thursday, accompanied by a large delegation of ministers and business leaders. The primary aim of this visit is to enhance the strategic partnership with Indian Prime Minister Narendra Modi.
As Chancellor Scholz prepares for this important meeting, he faces challenges back home. Germany’s economy is currently struggling due to the ongoing war in Ukraine and increasing competition from China. Meanwhile, PM Modi has just returned from a BRICS summit in Russia, where he met with President Vladimir Putin.
In a surprising turn of events, India has recently signed an agreement with China to ease tensions after a lengthy four-year standoff, highlighting the complexities of international relations in this region.
Key Issues on the Agenda
The discussions between the two leaders are expected to cover several important topics, including potential military collaborations, trade relations, and the ongoing situation in Ukraine.
Submarine Deal
One of the critical points of discussion will be India’s plan to acquire six new submarines as part of its strategy to counter China’s growing naval presence in the Indo-Pacific. German company Thyssenkrupp AG is competing for this lucrative deal, which is valued at around 400 billion rupees (approximately $4.8 billion). German government spokesperson Christiane Hoffmann has not confirmed if a decision will be made during the visit.
Additionally, Spain’s Prime Minister Pedro Sanchez is set to visit India later this month to inaugurate an Airbus plant in Gujarat, which signifies increasing international interest in India’s defense market. The Spanish firm Navantia is also vying for the submarine contract.
India is actively seeking to diversify its sources of military hardware, especially after facing supply issues due to the war in Ukraine, which impacted its primary supplier, Russia.
Russia and Ukraine
Chancellor Scholz plans to address the complex topic of the Ukraine conflict with PM Modi during his visit. India has historically maintained close ties with Russia, and recent reports suggest that India has been supplying military equipment to the Russian army.
Germany’s ambassador to India, Philipp Ackermann, expressed a keen interest in what PM Modi has to share following his discussions with Putin and Chinese President Xi Jinping. He acknowledged India’s unique position, allowing it to engage with both sides effectively while exploring opportunities for resolution.
Concerns About China and Trade Relationships
Germany is primarily focused on reducing its dependency on trade with China, and it sees India as a potential strategic partner in this regard. As the world’s fifth-largest economy, India has considerable importance in the global economic arena. However, India’s close relationship with Russia and the recent resolution of its border dispute with China may indicate that India is not yet fully prepared to embrace a deeper partnership with Germany.
Germany is currently India’s largest trading partner in Europe and the seventh-largest globally, with bilateral trade amounting to approximately $22 billion in the 2020-2021 fiscal year. Chancellor Scholz will likely seek assistance from PM Modi in overcoming the challenges faced by small and medium-sized German businesses operating in India. A recent survey by the Indo-German Chamber of Commerce identified bureaucratic obstacles, protectionist measures, and procurement regulations as significant barriers.
On Saturday, Chancellor Scholz’s journey will take him to Vasco da Gama, a port city where he plans to visit two German navy ships that recently crossed through the Strait of Taiwan, a move that challenges Chinese warnings.
Germany’s Workforce Challenges
Another crucial item on the agenda is the issue of workforce shortages in Germany. The country is projected to lose around 7 million workers over the next ten years due to an aging population, which will impact the economy significantly. A recent estimate indicated that labor shortages already cost Germany approximately $54 billion this year alone.
To address this grave issue, the German government has relaxed immigration laws for skilled workers, making it easier for them to relocate to Germany. Labor Minister Hubertus Heil, who is traveling with Chancellor Scholz, emphasized India’s vital role in providing skilled labor.
This presents an opportunity for both nations. PM Modi is under pressure to create jobs for the youth, who constitute over half of India’s 1.4 billion population. His government has successfully negotiated various mobility agreements with other countries facing similar challenges.
At present, there are approximately 137,000 Indians working in Germany. However, to maintain workforce stability, Germany requires around 400,000 immigrant workers each year.
As these discussions unfold, both countries stand to benefit from increased cooperation, addressing their individual challenges, and potentially transforming their strategic relationship.
Germany’s efforts to foster closer ties with India could reshape trade dynamics, defense relationships, and workforce collaboration between the two nations in the coming years.
Both leaders will certainly have a lot to discuss, and the outcomes of these meetings could have lasting implications for India, Germany, and their respective positions on the world stage.
