Germany pushes for inter-governmental agreement for submarine deal with India

The race for the Indian Navy’s P-75I procurement deal, expected to cost upwards of ₹45,000 crore, is between Germany and Spain, and the process has been considerably delayed

Germany has presented a government to government proposal for the sale of six advanced conventional submarines to India for the Navy’s P-75I procurement programme, diplomatic sources confirmed. A senior German delegation was in Delhi recently to take the discussions forward.

“The senior officials were here two weeks back. They had good talks in order to move the process forward,” diplomatic sources in the know said, without elaborating. The race for the deal, expected to cost upwards of ₹45,000 crore, is between Germany and Spain, and the process has been considerably delayed.

Indian and Germany discussed the deal at the highest level during the visit of German Defence Minister Boris Pistorius in June 2023, when he made a strong pitch for the bid by Thyssenkrupp Marine Systems (TKMS) in his talks with Defence Minister Rajnath Singh. Mr. Pistorius had said that the submarine deal could become a “flagship project” between the two countries.

Only Germany and Spain technically meet the criteria to submit bids under the P-75I deadline, which saw several extensions before finally culminating in July 2023. The deal is being progressed under the ‘strategic partnership’ of the defence procurement procedure. Mazagon Dock Shipbuilders Limited (MDL), along with Larsen & Toubro (L&T) Limited, have been shortlisted to partner with foreign submarine manufactures to make six advanced conventional submarines in India under a technology transfer.

As reported earlier, TKMS, which was initially in talks with L&T for partnering under P-75I, recently decided to partner with MDL to bid for the deal. Subsequently, L&T and Spanish submarine manufacturer Navantia concluded a ‘teaming agreement’ to jointly bid for the project. As per the understanding, Navantia would carry out the design of P75I submarines based on its S80 class of submarines, the first of which was launched in 2021 and was delivered to the Spanish Navy in November 2023, while L&T will be responsible for constructing the submarines. Both the bids have since been submitted and are currently being evaluated, officials said.

On Germany, officials had said India asked Berlin to relax some of their licensing requirements for the export of spares and components under a BAFA (Federal Office for Economic Affairs and Export Control) clearance, and a list was submitted to the German side in this regard. Officials have expressed concern over export clearances from Germany that have cropped up time to time.

The P-75I process ran into rough weather, among other issues over one of the specifications mentioned — that the submarine on offer should have a proven ‘Air ai dependent Propulsion’ (AIP) module with an endurance of two weeks. In addition, some manufacturers had also raised the issue of unlimited liability on them, some of which have since been addressed by the Defence Acquisition Council. The AIP condition meant only two manufacturers were left in the race.