Lead
Chancellor Friedrich Merz is travelling to New Delhi this Sunday with a large delegation after Foreign Minister Johann Wadephul’s recent visit, underscoring Berlin’s sharpened focus on India as an economic and geopolitical partner. Germany sees India—home to about 1.45 billion people and forecast by the OECD to grow faster than China this year—as a source of skilled labour and investment at a time when Germany has been in recession for nearly three years. Trade between the two reached €29 billion in 2024, yet remains far below Germany’s €246 billion trade with China the same year. Despite converging interests in supply-chain diversification and defence procurement, differences over Russia, arms sales and geopolitical alignment complicate deeper strategic alignment.
Key Takeaways
- Germany’s leadership—most recently Chancellor Friedrich Merz—is prioritising high-level visits to India to boost trade, investment and security ties.
- India’s population (~1.45 billion) and OECD-backed growth outlook make it an attractive long-term partner for Germany facing a near three-year recession.
- Bilaterial trade hit €29 billion in 2024, a significant rise but still a fraction of Germany’s €246 billion trade volume with China that year.
- Indian students are the largest foreign group at German universities and a growing source of skilled workers for Germany.
- Strategic divergence on Russia—India’s continued purchases of Russian oil and long-standing defence links—remains a core obstacle to closer alignment.
- Germany hopes to secure defence orders (A400M transports, submarines) but currently ranks far behind Russia and France in Indian arms imports.
- French €6.6 billion Rafale deal in 2025 highlights how other European suppliers have succeeded where Germany has not.
Background
Germany’s renewed outreach to India reflects a broader shift in European foreign and economic policy after years of reliance on China and the transatlantic partnership. With trade frictions, security concerns, and questions over the effectiveness of multilateral institutions such as the WTO, Berlin is seeking diversified partners for raw materials, technology cooperation and defence supplies. The change in tone accelerated after repeated warnings from German leaders about overlapping crises, rising geopolitical competition and the return of large-scale conflict in Europe.
India has moved from being a services-led economy—call centres and IT outsourcing—to a rising centre for research, higher education and advanced engineering. German institutes and firms now increasingly place R&D activities in India, and Indian graduates in science and engineering form a growing portion of Germany’s talent pipeline. Yet New Delhi pursues strategic autonomy, balancing ties with the West while maintaining longstanding defence and energy relations with Moscow.
Main Event
Chancellor Merz’s trip follows Foreign Minister Johann Wadephul’s visit and is billed as part of a broader push to deepen strategic partnerships beyond the trans-Atlantic core. In a speech to German ambassadors last year, Merz warned that the liberal world order was under pressure and said Europe must create a new rules-based trade architecture. He framed India as a central partner for supply-chain diversification and for safeguarding Germany’s security and competitiveness.
Economically, Berlin is responding to two pressures: weaker domestic demand after a prolonged recession and an acute shortage of skilled labour. Germany’s companies and universities see India as both a market and a talent source; Indian students have become the largest foreign cohort at German universities, and several large German firms have offshore research operations in India. Trade growth to €29 billion in 2024 marks strengthening ties, but it remains small against the backdrop of China trade figures.
On security, Berlin’s hopes are more constrained. India maintains close defence ties with Russia, with an estimated 60–70% of Indian armed forces still dependent on Russian equipment, and talks continue—according to Russian sources—about additional S-400 missile deliveries. Berlin has signalled interest in selling transport aircraft and submarines, but Western systems are typically costlier and come with political conditions that Delhi finds restrictive.
Analysis & Implications
Germany’s pivot toward India is driven by pragmatic economic and strategic calculations. The OECD outlook that India will outpace China in growth this year, combined with Germany’s recessionary context, gives Berlin an incentive to accelerate commercial ties and labour mobility initiatives. For German industry, Indian R&D and a steady pipeline of STEM graduates present an opportunity to offset supply-chain risks and address workforce shortages.
However, India’s policy of strategic autonomy limits how far it will side with Western positions on Russia or other geopolitical flashpoints. Attempts to press India into a sanctions regime against Moscow have not succeeded; New Delhi continues to import Russian oil and maintain defence cooperation. That divergence reduces the scope for a fully aligned security partnership and constrains joint action on matters such as export controls or collective diplomatic pressure.
Defence procurement is another mixed field. Cost, operational preferences and historical ties favour Russian equipment for much of India’s inventory, while European suppliers have made selective inroads—France’s €6.6 billion Rafale deal in 2025 is a recent example. Germany’s industrial offerings (A400M transports, submarines) face tough competition from established sellers and from New Delhi’s buy-local and interoperability considerations.
Comparison & Data
| Metric | Germany–India 2024 | Germany–China 2024 |
|---|---|---|
| Trade volume | €29 billion | €246 billion |
| India population | ~1.45 billion | — |
| India defence dependence (est.) | 60–70% on Russian equipment | — |
The table shows the scale gap between Germany’s trade with India and China in 2024. Even with rapid percentage growth, the absolute value of trade with India remains far smaller than with China, which shapes how urgently German firms and policymakers pursue deeper commercial ties. Defence dependency figures underline New Delhi’s continued operational reliance on Russian systems, which affects purchase decisions and alliance calculus.
Reactions & Quotes
German officials frame the India push as pragmatic and strategic, emphasising supply-chain resilience and talent flows. Chancellor Merz has described his trips as designed to codify partnerships beyond the trans-Atlantic region and to establish a new foundation for rules-based trade.
“What we called the liberal world order is now under pressure from many sides, also from inside the political West.”
Friedrich Merz, Chancellor (speech to German ambassadors)
Observers in Berlin note that while Merz is advocating diversified partnerships, he is also candid about systemic rivalry with China and the limits of existing multilateral institutions like the WTO.
“India’s strengths are primarily in the services sector. India serves as the office of the global economy.”
Christian Wagner, India specialist, German Institute for International and Security Affairs (SWP)
Wagner and other analysts emphasise India’s evolution from call centres to research and engineering hubs—factors that have prompted German firms to relocate R&D functions and recruit Indian graduates.
“The intention is to signal our guiding principle of strategic partnerships.”
Friedrich Merz, Chancellor (trip announcement)
That signalling aims both at markets and at political partners, but realignment will require managing differences over Russia, defence procurement and trade rules.
Unconfirmed
- Reports that Russia and India are negotiating increased S-400 deliveries come from Russian sources and have not been fully corroborated by independent confirmation.
- Claims that India systematically resells Russian oil to Western buyers to circumvent EU sanctions require additional verification from customs and trade-tracking agencies.
- Whether German punitive tariffs against countries trading with Russia will explicitly target India is unconfirmed; Merz has advocated tariffs generally but has not publicly named India as a specific target.
Bottom Line
Germany’s outreach to India is driven by clear economic and strategic logic: India’s demographic scale, growth prospects and growing role in research and services make it an attractive partner as Berlin seeks supply-chain resilience and skilled labour. High-level visits and commercial initiatives are likely to continue as both sides pursue mutual opportunities in trade, education and selective defence cooperation.
At the same time, fundamental divergences—most notably India’s continued defence and energy ties with Russia and its policy of strategic autonomy—limit how closely India and Germany can align on security policy. Expect incremental progress in commercial and scientific cooperation, but only gradual movement toward a fully integrated strategic partnership unless New Delhi narrows its policy distance on core geopolitical issues.