Merz in Modi’s backyard: Here’s what’s on the table for India and Germany

German Chancellor Friedrich Merz is in India with a packed agenda spanning trade, defence, labour and supply chains as Berlin seeks new strategic partners.

• German Chancellor Merz meets PM Modi in Ahmedabad to boost India-Germany ties
• Talks focus on EU-India free trade deal, defence, minerals, and skilled workers
• Germany aims to reduce China ties; India seeks tech and investment partnerships.

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German Chancellor Friedrich Merz meets Prime Minister Narendra Modi on Monday in Ahmedabad, marking Merz’s first visit to Asia and a strategic push by Berlin to deepen ties with India.

The visit comes as Germany looks to revive growth at home, reduce dependence on China and hedge against uncertainty in ties with the United States.

Here’s a look at what both sides are expected to discuss.

Trade and the stalled EU–India FTA

A key focus will be accelerating negotiations on a long-pending free trade agreement between India and the European Union.

According to Bloomberg, Merz is likely to press Modi to help close remaining gaps on sensitive sectors such as steel and automobiles, with negotiators racing to finalise a deal before European Commission President Ursula von der Leyen visits India later this month.

For Germany, an FTA would offer market access beyond China and the US. For India, it could unlock easier entry into Europe’s largest economy.

Defence cooperation and the submarine deal

Defence is one of the highest-stakes items on the agenda.

India and Germany are negotiating a submarine manufacturing agreement worth at least $8 billion, Bloomberg News reported last week, potentially India’s largest-ever defence contract.

Germany’s Thyssenkrupp Marine Systems and state-owned Mazagon Dock Shipbuilders are discussing technology transfer for domestic submarine production. Germany sees the deal as a way to reduce India’s long-standing reliance on Russian defence equipment, which still accounts for about 60–70 percent of India’s military hardware, according to analysts cited by Deutsche Welle.

It remains unclear whether the agreement will be announced during Merz’s visit.

Critical minerals and supply chains

Germany is also seeking stronger access to India’s critical minerals.

Berlin is trying to cut its dependence on China for rare earths and other raw materials vital for electric vehicles, semiconductors and defence manufacturing. Bloomberg reported that the two sides are expected to sign a memorandum of understanding on critical minerals cooperation.

For India, this offers investment and technology partnerships in mining and processing, areas New Delhi wants to scale up.

Semiconductors and industrial cooperation

Semiconductor development is another area of focus, aligning with India’s push to build domestic chip manufacturing capacity and Germany’s effort to secure resilient supply chains for its auto and industrial sectors.

Senior executives from Siemens, Infineon Technologies and Airbus Defence and Space are traveling with Merz, underlining the commercial weight behind the talks.

Skilled workers and labour shortages

Germany’s labour crunch is also on the table.

Bloomberg reported that India and Germany are expected to ink an agreement to reduce barriers for Indian healthcare workers to work in Germany, where shortages in nursing and care services are constraining economic growth.

Indians are already the largest group of foreign students at German universities, according to Deutsche Welle, reflecting India’s growing role in Germany’s workforce pipeline.

Pharmaceuticals and Mittelstand ties

The visit also aims to deepen cooperation in pharmaceuticals and between mid-sized companies.

Executives from Boehringer Ingelheim and managers from Germany’s Mittelstand, the backbone of its manufacturing sector, are part of the delegation, pointing to interest in research, outsourcing and joint ventures in India.

The broader strategic bet

Germany’s outreach to India is shaped by a shifting global order.

Merz has warned that global trade rules are fraying and that Europe must build new, rules-based partnerships. With trade with China at €246 billion in 2024 dwarfing the €29 billion Germany–India trade relationship, Berlin sees India as a growth opportunity, and a geopolitical hedge.

For India, the talks offer access to capital, technology and defence cooperation at a time when it is modernising its armed forces and repositioning itself as a key Indo-Pacific partner.