Germany's Olaf Scholz in India: Will New Delhi’s ties with Berlin get a boost?

German Chancellor Olaf Scholz is in India to discuss defence, economic and labour ties. He is set to co-chair the seventh Intergovernmental Consultations (IGC) with Prime Minister Narendra Modi on Friday (October 25).

Scholz has led a high-level delegation to New Delhi, including Vice Chancellor and Economy Minister Robert Habeck, Foreign Minister Annalena Baerbock and Defence Minister Boris Pistorius. The German Chancellor had visited India twice last year, for a bilateral state visit and then to attend the G20 Leaders’ Summit.

Here’s what to expect from Olaf Scholz’s three-day trip to New Delhi.

What’s the agenda?

PM Modi and Germany’s Scholz will co-chair the inter-governmental consultations amid hopes it would signal a new era in Indo-German ties.

Scholz is being accompanied by a host of Cabinet ministers, who along with their Indian counterparts, will hold talks in their respective areas of “responsibility and report on the outcome of their deliberations to the Prime Minister and Chancellor,” according to the Ministry of External Affairs (MEA).

“The German government wants to raise the strategic partnership that has underpinned our relationship with India since 2000 to a new level. The first steps towards implementation are to be agreed at the next Indo-German intergovernmental consultations,” DW cited Germany’s Foreign Office as saying.

Bilateral discussions between PM Modi and Chancellor Scholz are also in the offing. The two leaders will talk about boosting security and defence cooperation, greater opportunities for the mobility of talent and deeper economic cooperation.

The MEA says the focus will be on regional and global developments, with Russia’s war with Ukraine expected to come up. Discussions on Green and Sustainable Development Partnership and working together in emerging and strategic technologies are also on the agenda.

Both leaders will participate in the 18th Asia Pacific Conference of German Business on Friday in Delhi. According to the MEA, the biennial event for “business leaders, executives, and political representatives from Germany and the countries in Indo-Pacific, is expected to give a further fillip to trade and investment ties between our two countries. About 650 top business leaders and CEOs from Germany, India, and other countries are expected to participate in the event.”

The German chancellor’s three-day visit will also see him travelling to Goa, where two German naval vessels are docked for a seven-month deployment.

The MEA has said Scholz’s trip, which comes as India and Germany enter their 25th year of strategic partnership, will “pave the way for further strengthening of our bilateral ties.”

Why Scholz’s India trip matters

Scholz and several of his Cabinet ministers reached New Delhi just days after Germany published a rare, country-specific paper last week. Titled ‘Focus on India’, the document outlined the future direction of bilateral relations between India and Germany.

It shows Berlin recognises India’s growing importance on the global stage, as the “world’s most populous nation and a stable democracy” in the economic and geopolitical areas. Germany wants to “benefit from India’s diverse expertise as a central player in international politics with a prominent position among the countries of the so-called Global South.”

Germany’s ambassador to India, Philipp Ackermann, told DW that Germany has not published such a paper with any other country.

India and Germany are defence partners in the Indo-Pacific region. New Delhi is looking to order six new submarines to counter China’s rising naval presence in the Indo-Pacific region.
Acknowledging India’s concerns, the German document mentioned, “We want to do justice to India’s growing influence by continuing fruitful high-level dialogue formats such as the consultations between the German and Indian foreign and defence ministries and dovetailing them more closely.”

As per Bloomberg, Germany’s Thyssenkrupp AG is bidding for the $4.8 billion order of the submarines but it is not confirmed whether a decision would be reached during Scholz’s visit.

Berlin is keen on helping India to make weapons indigenously. It has offered to “expand its arms cooperation with India, continue to improve the reliability and predictability of arms export control procedures, and promote and support cooperation between German and Indian arms companies.”

Christian Wagner of Germany’s Institute for International and Security Affairs told AFP, “Germany sees India as a reliable partner in the Indo-Pacific and naturally wants to support India against China’s growing hegemonic ambitions in the Indian Ocean.”

He added that Scholz’s visit to New Delhi may aim to increase efforts to “support India to reduce its dependency on Russian arms”.

Germany is also seeking to reduce its reliance on China and is banking on India to make that possible.

“India, the most populous country in the world, is a key partner of the German economy in the Indo-Pacific and plays a key role in the diversification of the German economy,” Germany’s Economy Minister Habeck said on Wednesday.

“We must reduce critical dependencies and strengthen the resilience of German companies and their supply chains to and from Asia.”

According to an Indian Express piece, the paper released by the German Foreign Office puts emphasis on building deeper economic relations with India, which is a major break from Berlin’s “China First” position in its Asian economic policy.

But it is not easy for Germany to ditch China, which is involved in a trade dispute with the European Union.

Speaking to Reuters, Volker Treier, head of foreign trade at the German Chamber of Commerce DIHK, said German direct investments in India were around $27 billion in 2022, just 20 per cent of the amount invested in China.

“China will not disappear, but India will become more important for German companies. India is the litmus test, so to speak. If de-risking China is to work, India is the key to it, because of the size of the market and the economic dynamism in the country,” Treier added.

As per Bloomberg, Scholz could seek help to remove obstacles faced by German companies when doing business in India.

His visit will also see Modi and Scholz navigate the two countries’ divergent ties with Russia due to its war in Ukraine. While Germany is a strong supporter of Ukraine, New Delhi has taken a neutral stance and maintained relations with Moscow while stressing the need for dialogue and diplomacy to resolve the conflict.

Russia’s war with Ukraine is expected to surface in the talks between the two leaders. “The chancellor will be very curious about what the prime minister has to say after this meeting,” Germany’s ambassador to India, Ackermann, was quoted as saying by Bloomberg.

“India is in a very good position to basically listen to both sides and to have both sides in mind. And we have seen the prime minister going to Kyiv, and we have seen a renewed interest in the conflict,” he said.

Another concern for Germany is its labour shortages. The country’s workforce is predicted to shrink by 7 million people over the next decade due to an ageing population. For Berlin, India could help plug this labour shortage with its skilled workers, reported AFP.

Scholz’s government has already eased immigration laws for skilled workers. To woo Indians, Germany plans to improve the recognition of Indian professional qualifications in the country.

Political observers say Indo-German relations are witnessing a “turning point” or “Zeitenwende”.

“I think the changing political shifts with the war in Ukraine and another war in the Middle East [West Asia] has brought a focus on how do you transform your partnerships,” Ummu Salma Bava, a political scientist at the Jawaharlal Nehru University (JNU) in New Delhi, told DW. 

“I think we could then use the term Zeitenwende over here. But then we’ll have to do a lot of hard work to live up to that idea that it is a Zeitenwende,” Bava stated.

As Scholz is in India, his visit could provide a heft to India and Germany’s strategic partnership.

With inputs from agencies