The German engineering and steel production conglomerate Thyssenkrupp is set to build six submarines for the Indian navy in a multi-billion-dollar deal after a bid with its Indian partner was approved.

The conglomerate's shipbuilding division, known as Thyssenkrupp Marine Systems (TKMS), teamed up with India's state-owned Mazagon Dock Shipbuilders (MDS) for the contract. Both companies recently confirmed that India's Ministry of Defense had opened the bid for "further processing."

The bid was the only one to clear the navy's field trials, beating off competition from Spanish company Navantia, which had partnered with India's Larsen & Toubro.

An exchange filing by MDS said the Indian Ministry of Defense had invited the company for commercial negotiations. Media reports quoting people close to the discussions put the value of the project at around $5.2 billion (€5 billion), but the final figure could be higher.

In a statement provided to DW by Thyssenkrupp, Oliver Burkhard, CEO of TKMS, said, "By acting in partnership, and with the support of the German and Indian governments MDL and Thyssenkrupp Marine Systems will be setting standards for a sustainable and safe maritime future."

The deal is not necessarily a sign that India's dependence on Russian military imports will be reduced anytime soon. According to the Stockholm International Peace Research Institute (SIPRI), Russia accounted for 36% of India's defense imports from 2019-2023, the most of any single country.

"India's reliance on the Russian military platforms continues unabated, and it has shown little desire to substantially reduce that dependence on Moscow," Sushant Singh, lecturer in South Asian studies at Yale University, told DW.

However, SL Narasimhan, a retired member of the Indian defense forces and an expert in Indian security issues, expects more collaboration between India and Europe on defense "when the requirement, price expectations and availability match."

Speaking with DW, he pointed to a recent agreement between France and India to build Scorpene class submarines in India as another example of collaboration. 

Germany has also been exporting arms in large volumes to India. In the first six months of 2024, India was the third-largest recipient of German arms, valued at around  €153.75 million ($160 million).

Designed in Germany, made in India

The deal with Thyssenkrupp is for six diesel submarines, known as advanced conventional submarines. Among the technical requirements is that the submarines have air-independent propulsion (AIP) technology, allowing them to stay underwater longer to increase stealth capacity.

It's part of an Indian Navy strategy to boost its capability in the face of the Chinese navy's growing presence in the Indian Ocean and across South Asia. "India is now becoming a major maritime power of the world," Prime Minister Narendra Modi said earlier this month at the launch of two Indian-made warships and a submarine.

TKMS has said it will help with engineering and designing the new submarines, with MDS building them in India.

Thyssenkrupp has a substantial history with the Indian Navy. Howaldtswerke-Deutsche Werft, a former shipbuilder now owned by TKMS, built four submarines for India in the 1980s, with two built in the German city of Kiel and two in Mumbai.

Sushant Singh says there was "nothing new" about this latest deal. "It is an old project which has moved forward after major delays when the fleet of submarines in the Indian navy has reached a critical stage."

Modi has prioritized domestic defense manufacturing and Indian defense spending overall has increased substantially in absolute terms during his decade as prime minister. However, defense spending as a percentage of gross domestic product (GDP) has fallen in each of the past four years.

"The defense forces are crying for modernization but are getting no funds to buy modern weapons and platforms," said Singh. "More than half of India's defense spending goes towards personnel costs, and with high inflation and falling foreign exchange rates, the funds for buying defense equipment are coming down drastically in real terms."

Russian reliance

The deal with Thyssenkrupp aligns with Modi's domestic manufacturing push since the submarines will be built in India. However, according to the most recent data from SIPRI, India remains the world's largest arms importer, accounting for almost 10% of global arms imports between 2019 and 2023.

Central to that story has been Russia, still the key partner for Modi's government when it comes to arms imports, but there are signs that dependence is gradually falling. While 36% of Indian arms exports came from Russia from 2019-2023, the figure was 46% for 2017-2021 and 69% for 2012-2016.

Singh is doubtful, however, saying the deal with Thyssenkrupp is not typical of a trend. "These kinds of limited collaborations, with a past record and for some specific equipment, can happen."

During a meeting between Modi and German Chancellor Olaf Scholz  last October, the two leaders agreed to support "enhanced industry-level cooperation in the defense sector," singling out a specific focus on "technology collaboration, manufacturing/co-production and co-development of defense platforms and equipment."

When approached by DW for comment about possible future Indian-German defense sector collaboration, the German Ministry for Defence referred to a statement made by Defense Minister Boris Pistorius on a visit to India in 2023.

"We need reliable cooperation in the field of armaments and military cooperation with strategically reliable partners. And that includes India," he said at the time.

Nonetheless, Singh expects high volumes of Russian imports to continue to India due to several factors. "This is because of the low price of Russian platforms, Moscow's willingness to transfer high technology, and the Russian control of spares and ammunition for equipment already in Indian military service."

Edited by: Uwe Hessler