India and Germany agreed on a wide-ranging agenda to strengthen economic, defence and strategic ties during talks between Prime Minister Narendra Modi and Chancellor Friedrich Merz. In a historic leap, 19 agreements were finalised, including a defence industrial cooperation roadmap, energy and climate initiatives, and measures on skills, mobility and education. The two sides highlighted record bilateral trade and growing investment flows, while stressing the importance of concluding the India–EU free trade agreement. Cooperation was expanded in green hydrogen, renewable energy and digital technologies, alongside visa-free transit for Indians.
India and Germany have agreed on a broad set of measures to significantly deepen their economic, defence and strategic partnership, underscoring their shared view that the two countries are “natural partners” at a time of global geopolitical uncertainty. The outcomes were announced following talks between Prime Minister Narendra Modi and German Chancellor Friedrich Merz, who is on his first visit to Asia since taking office last year. Chancellor Merz arrived on Monday for a two-day official visit to India from January 12 to 13, accompanied by a large business delegation, signalling Berlin’s intent to strengthen economic ties with New Delhi amid growing unpredictability in the global trading system, particularly due to recent US trade policies.
During discussions in Ahmedabad, the German Chancellor stressed the importance of finalising the long-pending India–European Union free trade agreement, arguing that it would give a major boost to bilateral trade and investment. Both leaders expressed optimism that the agreement could be concluded during the upcoming visit of top EU leaders to New Delhi later this month.
India–Germany trade and investment ties at a glance
According to data from Destatis, Germany’s Federal Statistical Office, bilateral trade between India and Germany reached an all-time high of US$33.40 billion in calendar year 2024, marking a marginal increase of 0.36%.
India’s exports to Germany stood at US$15.09 billion, a decline of 2.20%, while imports from Germany rose by 2.58% to US$18.31 billion. During the year, India ranked as Germany’s 23rd largest trading partner.
Services trade between the two countries also recorded strong growth. As per figures from the Bundesbank, Indo-German trade in services rose 15% year-on-year in 2024 to a record US$17.03 billion. India’s services exports to Germany were estimated at US$10.31 billion, while services imports from Germany amounted to around US$6.72 billion.
Germany emerged as India’s eighth-largest trading partner in 2024–25, improving its position from 12th in 2023–24 and 11th in 2022–23, reflecting the steady expansion of bilateral commercial ties.
On the investment front, Germany is India’s ninth-largest source of foreign direct investment, with cumulative inflows of US$15.11 billion between April 2000 and March 2025. German investments in India totalled US$469 million in FY 2024–25, compared with US$505 million in FY 2023–24 and US$547 million in FY 2022–23. The Indo-German Chamber of Commerce estimates that more than 2,000 German companies are currently operating in India, with investments concentrated in sectors such as transportation, electrical equipment, metallurgy, services, chemicals, construction, trading and automobiles.
Indian investments in Germany have also gained traction. According to the Confederation of Indian Industry (CII), over 200 Indian companies are active in Germany across trading, manufacturing, research and development, innovation and services. These investments have largely been routed through mergers and acquisitions, particularly in information technology, automotive, pharmaceuticals, biotechnology and manufacturing. The presence of Indian software firms in the German market continues to expand, with major clusters located in North Rhine-Westphalia, Hesse, Bavaria and Baden-Württemberg.
Defence and security cooperation
A major highlight of the visit was the finalisation of 19 agreements spanning defence, trade, technology, climate action, skills, mobility and education. Central among them was a joint declaration of intent on strengthening bilateral defence industrial cooperation. The two sides also unveiled a roadmap to enhance collaboration between their defence industries, opening new avenues for co-development and co-production of military hardware. This was complemented by the launch of a Track 1.5 foreign policy and security dialogue and a dedicated dialogue on the Indo-Pacific, reflecting closer coordination on defence and security issues.
Prime Minister Modi described the expanding defence and security cooperation as a symbol of growing mutual trust and a shared strategic vision. He thanked Chancellor Merz for Germany’s recent steps to simplify strict defence export procedures, which have benefited India. PM Modi emphasised that the new roadmap would create fresh opportunities for cooperation between defence industries in both countries.
Chancellor Merz, for his part, highlighted the need to deepen the India–Germany strategic partnership in light of “profound geopolitical changes and upheavals”. While reaffirming the importance of Europe and trans-Atlantic relations, he said Germany must rapidly build a broader network of global partnerships. PM Modi echoed this sentiment, noting that both countries value reliable and trusted partners in an increasingly uncertain world.
Expanding economic engagement
On the economic front, both sides noted that bilateral trade has crossed US$50 billion, accounting for roughly a quarter of India’s total trade with the EU. They acknowledged significant untapped potential, particularly if the India–EU trade deal is concluded swiftly. PM Modi pointed out that the presence of over 2,000 German companies in India reflects their strong confidence in the Indian economy. The two countries are also working to build secure and trusted supply chains, while technology cooperation continues to expand.
Energy transition and climate collaboration
Energy transition and climate cooperation featured prominently in the discussions. The leaders announced the establishment of a centre of excellence to advance cooperation in renewable energy. They also highlighted joint projects in climate action, energy, urban development and urban mobility. PM Modi said a new mega green hydrogen project involving companies from both countries would be a “game-changer” for the energy of the future.
An offtake agreement for green ammonia was signed between India’s AM Green and Germany’s Uniper Global Commodities. Additionally, a memorandum of understanding (MOU)was inked between India’s Petroleum and Natural Gas Regulatory Board and the German Technical and Scientific Association for Gas and Water Industries (DVGW) to enhance cooperation in the renewable energy sector.
In addition, Germany committed €1.24 billion in new funding under the bilateral Green and Sustainable Development Partnership. The funding will support projects in renewable energy, green hydrogen, the PM e-Bus Sewa programme and climate-resilient urban infrastructure. Germany had earlier pledged €10 billion under the programme until 2030, largely through concessional loans, of which around €5 billion has already been utilized or earmarked for projects since 2022, according to the Prime Minister’s Office.
A battery storage working group was also launched under the India–Germany Platform for Investments in Renewable Energy Worldwide.
People-to-people ties and skilled mobility
People-to-people ties and skilled mobility were another key pillar of the engagement. The two nations, India and Germany, adopted a higher education roadmap and signed agreements on skilling and mobility, including setting up a National Centre of Excellence for Skilling in Renewable Energy in Hyderabad.
With around 300,000 Indian expatriates and 60,000 Indian students already in Germany, the two sides signed an agreement on a Global Skills Partnership to facilitate the movement of healthcare professionals. Chancellor Merz said Germany’s demand for skilled workers, including caregivers and nurses, is rising rapidly, and praised Indians as one of the most successful immigrant communities in the country. He said Germany is keen to encourage this trend in the future.
In a significant move to ease travel, the two sides announced visa-free transit for Indian passport holders passing through Germany. Foreign Secretary Vikram Misri clarified that Germany has taken an in-principle decision on the exemption, which will come into force after the completion of legal and procedural steps. Once implemented, it is expected to considerably ease travel for Indians.
The agreements also covered a wide range of other sectors. These included the establishment of a CEOs’ Forum under a joint economic and investment committee, a Semiconductor Ecosystem Partnership, cooperation in critical minerals, telecommunications and sports. The two sides also adopted a work plan for a bilateral digital dialogue covering the period from 2025 to 2027.
Defence dialogue and global issues
Defence cooperation featured strongly in strategic discussions as well. Foreign Secretary Mr Misri addressed remarks suggesting that closer India–Germany defence ties could reduce India’s dependence on Russia for military hardware, stressing that India’s defence procurement decisions are guided solely by national interest, not ideology. He also referred to “positive momentum” in talks on a proposed €5-billion submarine deal with German defence major ThyssenKrupp Marine Systems, noting that both sides are hopeful of a favourable outcome in ongoing technical and commercial negotiations.
The two leaders, PM Modi and Chancellor Merz also exchanged views on major global issues, including the Russia–Ukraine conflict, the situation in Gaza and developments in the Indo-Pacific. PM Modi reiterated India’s long-standing position in favour of peaceful resolution of conflicts and support for all diplomatic efforts aimed at ending ongoing crises.
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FAQs:
What was the purpose of Prime Minister Modi and Chancellor Merz’s meeting?
The meeting aimed to deepen India–Germany economic, defence, and strategic cooperation, strengthen bilateral trade and investment, and expand collaboration in renewable energy, skills, and technology amidst global geopolitical uncertainty.
How many agreements were signed between India and Germany, and what areas do they cover?
Nineteen agreements were finalised, covering defence industrial cooperation, energy and climate projects, skills and education, technology, trade, digital dialogue, mobility, and investment promotion.
What is the current status of India–Germany trade and investment ties?
Bilateral trade reached a record $33.4 billion in 2024, with services trade at $17.03 billion. Germany is India’s ninth-largest FDI source, with over 2,000 German companies in India, while over 200 Indian companies operate in Germany.
What initiatives were launched in renewable energy and green technologies?
India and Germany set up a centre of excellence in renewable energy, a battery storage working group, and signed agreements for green hydrogen and green ammonia projects. Germany committed €1.24 billion for renewable energy, green hydrogen, e-buses, and climate-resilient urban infrastructure.
Were there any agreements to facilitate people-to-people ties and skilled mobility?
Yes. A higher education roadmap was adopted, a Global Skills Partnership for healthcare professionals was signed, and visa-free transit for Indian passport holders through Germany was announced to promote mobility and collaboration.
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