With Friedrich Merz visiting India for the first time since he came into power, a synergy that was a result of the compulsions of the economy and the paradigm shift is now finding its balance. This is a critical and carefully planned phase for both Germany and India.
Germany is challenged by economic stagnation, its heightened strategic risk due to its dependence on China, and the uncertainty of its dependency on the United States. India is focused on its needs, including investment in modern technology and a security pact, to counter the growing threat from the expansion of China and its dependency on Russia. All these are soon converging, as demonstrated by Merz’s two-day visit.
Trade, diversification, and the EU-India FTA push
One of the major highlights of this visit is the restart of the long-stalled free trade agreement between India and the EU, which is expected to be the biggest such agreement in the world upon signing. Germany is the biggest trading partner of India in the EU, and it accounts for a quarter of total trade between the EU and India.
The volume of trade in goods and services on both sides approached 51 billion in 2024–25. Although this is considerable, this does not at all compare with trade with China, and serious attempts have been made by Berlin in recent years to reduce this difference. Today, China stands as a complex business partner with respect to security, supply chain, and political risks, and trade tensions in Washington have further increased pressure on this.
A necessary part of the German competitiveness and security agenda has been the relationship between supply chain diversification and material access, and this has been a theme continuously emphasized by Merz. Of course, this also fits extremely well with the vision of itself as a Manufacturing and Services Hub that India has set itself, especially in light of the idea of Non-China supply chains.
Labour mobility & the people element
One aspect of this alliance is labor mobility. Germany is currently faced with a grave shortage in healthcare professionals, engineers, and information technology experts. India, boasting an enormous technically qualified population, is gradually becoming part of the answer to this problem.
Indians currently represent the largest group of international students enrolled in German universities, and this applies mostly in the fields of sciences and engineering. German policymakers consider this not only as a matter of educational exchange but as investing in human capital in the long term, which may serve as support in their industries and maintaining their population.
Defence Cooperation & Strategic Recalibration
The visit is likely to see a good deal of defence cooperation. Defence talks are set to cover a potential $8 billion contract for the sale of six high-tech stealth submarines, apart from others on military transport planes.
In recent years, Germany has eased its regulations on exporting defence equipment. It is noteworthy that defence exports to India from Germany have continued to rise gradually. This is when Indian Defence is already depending on Russian supplies to meet an astonishing 60 to 70 percent demand.
Although pushed hard by European countries, the Indian government has been adamant against criticizing Russia’s aggression against Ukraine, as it still purchases oil from Moscow. The German administration, in private conversations, accepts that the Indian position regarding strategic autonomy would never change. Merz has been vocal about levying tariffs against countries which trade in Russian goods.
Nevertheless, Berlin identifies an opportunity here. Joint sea and air force exercises, port calls, and defense talks have increased. To top it all off, a declaration of intent to promote defense co-innovation, co-development, and co-production was signed between the two on the occasion of the visit. According to the Germans, a stronger defense industry cooperation will accrue benefits to both countries and will help to decrease India’s dependence on Russia.
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Why India is important to Germany today
As per projections by OECD, India’s economy is expected to grow much faster than that of China in this year alone, in contrast to the three years of recession in which Germany’s economy remained mired. Alongside 25 German CEOs, Merz will visit Ahmedabad and Bengaluru to network with business leaders and technology companies to emphasize his country’s aim to solidify long-term ties.
In this regard, Germany looks at India as a huge market, a talented labor force, and an insurance policy to avoid dependence on China. Additionally, for India, a special relationship with Germany provides an opportunity to enter the market of advanced defense technology.
Merz summarized the reasoning behind the visit in no uncertain terms:
The world order is undergoing change, and this change is characterized by great power politics and spheres of influence. Germany and India may not see eye to eye on all questions, but their common interest continues to broaden. With its focus on Eastern Europe, Europe clearly needs partners, and Germany might well stake its bet on India as one of its most important partners in the coming years.”
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