India, Germany to sign $10B submarine deal: What it entails
What's the story
India is set to finalize a multi-billion dollar deal with Germany to build next-generation conventional submarines. The Intergovernmental Agreement (IGA) has been finalized, paving the way for long-term support and export clearances. The German Defense Minister is expected to visit India by the end of March for the signing of the IGA, which will lead to the finalization of the main contract.
Contract details
Mazagon Dock to construct submarines under new deal
The main contract will be signed between Mazagon Dockyards Limited (MDL) and the Defense Ministry, with MDL partnering with Germany's Thyssenkrupp Marine Systems (TKMS). The IGA will provide assurances for technology transfer, personnel training, and administrative clearances. MDL, in partnership with TKMS, had its bid approved by a technical oversight committee in January 2023. The deal is expected to be worth around $10 billion, including significant technology transfer and job creation in India.
Technological advancements
New submarines to enhance India's naval capabilities
The new submarines will come with an AIP system, which will allow them to stay underwater for up to two weeks. This would greatly improve their stealth capabilities. The project also has the potential to make India a warship-building hub for Germany's Thyssenkrupp Marine Systems (TKMS), which is looking for new markets and cost-effective solutions through joint exports in the region.
Strategic importance
Submarine deal to address India's underwater platform shortage
The Indian Navy is keen on signing the contract within this financial year as it faces a severe shortage of underwater platforms. The mainstay Kilo-class submarines are being retired after reaching their end of service life, with only six Kalvari-class submarines added in the last two decades. The deal will not only boost India's naval capabilities but also create jobs and an industrial ecosystem in the country.