The strategic significance of Scholz’s visit

Last week’s visit of German Chancellor Olaf Scholz to India, close on the heels of the first anniversary of the Russia-Ukraine war, had strategic significance. It is unusual for a German Chancellor to arrive for a standalone visit without attending the bilateral Inter-Governmental Consultation (IGC) ever since the mechanism was established in 2011.

Scholz is also expected to visit India in September for the G20 summit, followed by the next IGC in India next year. Over the last year, he has already met PM Narendra Modi three times: at the IGC, the G7 meeting in Germany and the G20 Bali summit. Evidently, the Modi-Scholz understanding has clicked.

What made Scholz visit India now when perhaps a phone call may have served the purpose? He wishes to establish his Indo-Pacific policy with firm steps. This also includes his visits to Japan, China and ASEAN countries.

In the German version of the Indo-Pacific policy, India plays a pivotal role, both for its geostrategic location leading to the possibilities of strategic cooperation, and more importantly, for enhanced economic engagement, particularly for green and sustainability purposes.

There were several fulfilments of Germany’s commitment to India. The Green and Sustainable Development Partnership, adopted during the last IGC in Berlin by both leaders, is now being implemented. The 10 billion euros promised up to 2030 go along with 983 million euros for projects signed in November 2022. Discussions on how to hasten this disbursement were held over the weekend.

The partnership to have the Indo-German development model taken to third countries is also making progress. Projects in Ghana, Cameroon, Malawi and Peru are under way. These projects build local sustainable capacities and, therefore, form a part of Germany’s overall approach to development cooperation in which India is a good partner. Germany appreciates India’s role as a voice of the Global South.

Economic cooperation remains important, with particular focus on green mobility and sustainable projects. Germany is a major partner in the development of Metro rail in several Indian cities, utilising hybrid financing which reduces the rate of interest.

Now, Germany is supporting the Atmanirbhar Bharat campaign and the technological upgradation of the Indian Railways. Siemens, one of Germany’s largest companies with a longstanding presence in India, and the Railways have signed an agreement on the production and maintenance of high-horsepower locomotives over the next decade. This project worth Rs 26,000 crore (nearly 3 billion euros) will utilise railway infrastructure and manpower at the Dahod facility in Gujarat. The facility will see a technology upgrade with components coming from Siemens’ Indian centres in Bengaluru, Nashik and Aurangabad, from where different parts of the locomotives would be produced and brought for amalgamation. This will be followed by the skilling of the Indian Railways’ workforce and upgrade of its technology.

These locomotives will be entirely made in India in a unique partnership between Siemens and the Railways. It is the single largest contract that Siemens has ever won anywhere for its railway locomotives; it will significantly augment the company’s business in India. What’s more, it is an entirely ‘Made-in-India’ venture. Siemens will have a 35-year maintenance contract covering the life cycle of the locomotives. The presence of Siemens CEO Roland Busch in the business delegation accompanying Scholz was, therefore, significant.

This brings Germany to the forefront of contributing to the Make-in-India and Atmanirbhar Bharat efforts and utilising the capacities of German companies in India to enhance collaboration with the Indian public sector. It is notable that this large project, however, did not make any major news in India, unlike the buzz over the order for Airbus and Boeing aeroplanes. It is also not entirely clear why Germany did not claim a part of the credit for the aeroplane order since many Airbus aircraft are actually manufactured at the Hamburg facility.

A similar collaboration is also feasible for the manufacture of submarines in India. Thyssenkrupp was a frontrunner, but later withdrew. Now, its interest has been revived; company CEO Martina Merz was part of the accompanying delegation.

Scholz was forthright in saying that the negotiations over the India-EU FTA and related agreements had gone on too long and he would intervene to ensure their early conclusion. This will help private companies invest in India.

Besides green sustainability and economic aspects, there is a clear understanding in Germany, particularly among the ruling Social Democratic Party more than the Greens who run the foreign ministry, that India is an important part of the reform of the international order, which is undergoing extreme stress.

Germany would like to retain an autonomy from the US, particularly with regard to Russia and the Ukraine crisis which has wrecked its European policy. Germany finds India’s autonomous position on the Ukraine crisis valuable for creating a middle ground in which the possibility of diplomacy is revived. At the Munich Security Conference, where India was absent, Scholz reiterated what External Affairs Minister S Jaishankar has been saying: Europe’s problems cannot be imposed upon the rest of the world unless Europe is also willing to undertake responsibility for the latter’s problems.

Despite the Germans, the French and others having rapidly fallen behind the US and NATO on the Ukraine issue, there remains a strand of thought, particularly within Germany, to revive its plans of engaging Europe to deal with Russia a little differently because they do not see this war coming to an early conclusion. Germany is among the victims of the consequences of the Ukraine war and wants to contribute to its end and an economic revival.

Therefore, Germany wishes to engage with India, the G20 president, to try and see if a middle ground for diplomatic manoeuvres could be opened. India is a salient partner in the climate agenda, the Indo-Pacific, new opportunities for German companies and the like. Germany wants to make the most of this partnership.