India and Germany Accelerate Multidimensional Cooperation

The overwhelming reams of editorials and extensive media debates on the first anniversary of the Russia-Ukraine conflict have taken the wind out of the strategic importance of German Chancellor Olaf Scholz’s state visit to India.

With imbued geopolitical, economic and security significance, the visit is of great consequence to both the countries-India and Germany.  Accompanied by a business delegation comprising CEOs of 12 major companies, Chancellor Scholz made a two-day visit to India on Feb 25-26, not part of the regular ICG. India and Germany have an established format of biannual Inter-Governmental Consultations (ICG) hosted by respective countries alternately since 2011 to review the bilateral ties. Last year, PM Modi travelled to Germany for the 6^th ICG.

With India scheduled to host the G20 summit in September this year and the German Chancellor, all set to attend the event, the current state visit is rather unusual. This standalone visit first by a German Chancellor is truly unprecedented.

The Ukraine crisis has brought about a remarkable change in the global world order. While major powers are jostling to bolster their global heft, middle-order countries are trying to redefine their policies to leverage their strengths in this era of contestation. The Ukraine war brought a real crisis to Europe and more so to Germany which is dependent on Russia’s cheap oil supplies. With its autonomy compromised and its economy threatened, Germany is finding India’s autonomous position regarding the Ukraine crisis, a real hope for the much-needed peace negotiations.

This was evident from German Ambassador to India Philipp Ackerman’s press briefing ahead of Scholz’s trip to India, “India buying oil from Russia is none of our business. If you get it at a low price, I can’t blame India for it. India is an appropriate candidate to come up with a solution (to stop the Russia-Ukraine war). India has skilled and good diplomacy”¹. This indeed, is an unambiguous acknowledgement of India’s advocacy of “diplomacy and dialogue” for the Ukraine crisis.

At the recently held Munich Security Conference, Chancellor Scholz endorsed EAM Jaishankar’s reference to the “European mindset” of “somewhere Europe has to grow out of the mindset that Europe’s problem is the World’s problem but the World’s problem is not Europe’s problem”. Scholz said, “he has a point. It wouldn’t be Europe’s problem alone if the law of the strong were to assert itself in international relations”². Jaishankar’s quotes are now part of the Munich Security Report.

Amid the perennial weapons supply pledges and military assistance which is ostensibly deepening the crisis, India’s middle position is finding acceptance in Germany which is now dragging its feet to tow America’s line. Forced to parrot the words of NATO and the US, European countries are now feeling the heat of the crisis with rising fuel prices, and record inflation affecting the domestic constituency. As the G20 chair, India can don a crucial leadership role in addressing global challenges and crises. Ukraine is thus one of the major issues of the visit.

Domestically, the Ukraine crisis has woken up Germany to new realities causing a rethink on increased defence spending and a strident security posturing. Having paid a heavy price for its dependence on Russian energy supplies, Germany is now applying the same lessons to China. German Foreign Minister Annalena Baerbock suggested that Germany should reduce its economic dependence on China³. Unlike in the Merkel era, the political resolve toward China has shifted.

Reportedly, a muscular policy is underway with Minister Baerbock shaping the National Security Strategy of Germany who on her visit to India called Beijing a “systemic rival”. In a veiled reference she said, “we’ve seen, in a very brutal way, that when we have deep economic ties with partners who are not partners in values, it can have dramatic repercussions on our economies and this is not in our interest”. She added, “India is not a ‘substitute partner’ for Germany….. we are connected to India not only by economic or people to people partnerships but also by a partnership of values”⁴.

The Ukraine crisis has been a rude awakening for Germany and forced it to talk about security challenges beyond the borders of Europe. Germany is now part of India’s Indo-Pacific Oceans Initiative (IPOI) and it has deployed a frigate for seven months in the Indo-Pacific region. With a focus on the Indo-Pacific strategy, Germany is strengthening ties with Japan and India.

Seeking closer ties with countries that share democratic values and to share an engagement with the Indo-Pacific region, Scholz made Japan his first destination for his Asia trip. He also met PM Modi thrice in the past year- 6^th ICG, G7 meeting, G20 Bali Summit and travelled to Vietnam and Singapore.

Notably, he became the first European leader to visit Beijing after President Xi’s elevation post-20th CCP Congress. While there is a shift in Berlin’s position on China, its policies are by and large dictated by German businesses.

India-German relations rest on the strong pillar of trade and investment. Germany is India’s largest trading partner in Europe and is among the top 10 global partners. The pandemic and the Ukraine crisis underscored the need to build sustainable, reliable and diversified supply chains. India’s versatile and resilient markets with immense growth potential are now propelling a latent decoupling of trade with China in Europe. German businesses betting on China plus one approach are seeking to outsource R&D and expand manufacturing to new shores.

In January Germany’s Siemens clinched a $3.2 billion Indian Railways order to manufacture 1200 electric locomotive units for a period of 11 years. In a boost to “Make in India” the locomotives will be manufactured at Siemens India unit and assembled in Gujarat. This order includes 35 years of maintenance and repair work⁵.

The new coalition government in Germany with Greens as a major coalition partner has added a new facet to the existing Indo-German bilateral agenda. At the 6^th ICG held in Germany, countries unveiled Green Sustainable Development Partnership (GSDP) to steer collective political commitment toward climate action. Shared interests in renewable energy and energy transition positioned Germany as a crucial partner for India in technological collaboration.

Germany pledged Euro 10 billion for this development cooperation for the period up to 2030 of which Euro 983 million commitments were finalized during the Annual Negotiation Meeting (ANM) held in November 2022. Countries have agreed on Green Hydrogen Mission and set up Green Hydrogen Task Force in September 2022⁶.

Besides the congruence over ambitious climate goals, India and Germany agreed on triangular development cooperation in third countries- Cameroon, Ghana, Malawi and Peru which is now in an advanced stage of implementation. This rapid progress in both areas together with Migration and Mobility Partnership signed by both countries in December 2022 will enhance cooperation in trade and investment and people-to-people ties.

India has already ratified the partnership. Pending its ratification in the Bundestag, Scholz on his Bengaluru leg of the trip has welcomed India’s skilled and talented pool to Germany. Countries have inked an MoU in skills during his visit. Scholz announced that India will host the Asia-Pacific of German Businesses in 2024. Indians form the second largest group of international students in Germany, pursuing higher education in STEM. Currently, 35000 Indian students are enrolled in Germany⁷.

The existing framework of bilateral cooperation includes security, defence and space. During Scholz’s visit, leaders unveiled a vision document to enhance cooperation and innovation in technology to use scientific and technological knowledge for the economic development of both countries and to address global challenges. This has five different aspects to it-energy partnership and clean technologies; strengthening the framework and ecosystem of technology enterprises; digital technologies; fintech to achieve SDG and artificial intelligence⁸.

India is among the fastest-growing developing economies in the world and given its centrality to Indo-Pacific and the EU’s growing interest in the region, an FTA (Free Trade Agreement) would augur well for the aspirations of both sides. Germany is a major player in India-EU FTA. Scholz asserted his commitment to expediting India-EU FTA and assured personal involvement⁹.

Defence cooperation also majorly figured in the talks with a discussion on a $5.2 billion proposed deal for Germany to build six conventional submarines for the Indian Navy. Associated aspects of defence cooperation like co-design, co-development, manufacturing and transfer of technology have featured in the meeting¹⁰. The two countries are actively cooperating to reform the multilateral institutions. Both countries within the G4 are working to reform the UNSC.

Since the Ukraine crisis, India has consistently articulated its position and robustly defended the criticism of being soft towards Russia. Summarily expressing discomfort “I know this is not an era of war”, India resonated with the West causing the shift in perceptions from a stinging rebuke to an uncommon appreciation. At the press briefing post-bilateral talks, PM Modi said, “since the beginning of the developments in Ukraine, India has insisted on resolving this dispute through dialogue and diplomacy. India is ready to contribute to any peace process”¹¹. India’s approach to seeking opportunities for a diplomatic solution to the Ukraine crisis echoes the German position.

Ukraine crisis and China’s muscular adventurism have exalted European fears of a similar kind of scenario in the Indo-Pacific region. Amid major geostrategic challenges to counterbalance China and to advance the shared interests of a multipolar world, rule-based order and multilateral cooperation India and Germany are finding rare strategic congruence.

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