Germany to pursue $5.2 bln submarine deal with India during Scholz trip

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NEW DELHI/BERLIN, Feb 24 (Reuters) - Germany will pursue a $5.2 billion deal with India to jointly build six conventional submarines in the country during Chancellor Olaf Scholz’s Feb. 25-26 visit, two Indian and two German sources said.

The naval project is the latest attempt by a Western military manufacturing power to wean New Delhi away from its dependance on Russia for military hardware.

India is desperate to replace its ageing submarine fleet, with 11 of its 16 conventional submarines more than two decades old, and as it seeks to counter China's growing presence in the Indian Ocean.

The Indian Navy also has two indigenous nuclear-powered submarines.

Prime Minister Narendra Modi's government wants India to manufacture more weapons at home in collaboration with foreign partners after decades of being one of the world's largest arms importers.

The submarine project, for which Germany’s ThyssenKrupp (TKAG.DE) Marine Systems (TKMS) is one of two international bidders, will be discussed between the two countries during Scholz’s trip and Berlin would. 

Under the deal, a foreign submarine manufacturer will have to partner with an Indian company to build the submarines in India.

The foreign company will also need to transfer a niche technology for fuel-cell based Air Independent Propulsion (AIP), a clause that has been a sore point for most foreign firms.

France’s Naval Group had pulled out of the project just ahead of Modi’s visit to Paris in May 2022, citing its inability to meet conditions listed by the Indian government in 2021.

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