Friedrich Merz visit signals India’s rising role in Germany’s global strategy

The visit of German Chancellor Friedrich Merz to India underscored the growing importance that India and Germany attach. Against the backdrop of the Donald Trump-era trade disruptions, challenges in managing relations with China, strains in transatlantic ties, and difficulties in India-US ties, both sides sought to strengthen the strategic dimensions of their partnership during the visit.

Apart from a lengthy joint statement, the visit resulted in a large number of MOUs and announcements. These included declarations on strengthening bilateral defence industrial co-operation, a semiconductor ecosystem partnership, co-operation on critical minerals and the bioeconomy, a roadmap on higher education, as well as the establishment of dialogues on Track 1.5 foreign policy and security, the Indo-Pacific, a digital dialogue, and the scaling up of triangular development co-operation in third countries.

In its ambition to become a developed economy by 2047, India has identified Europe as an important partner in trade, investment, technology, and the green transition. Since the core of India’s partnership with Europe is economic, Germany, as Europe’s largest economy, constitutes a central pillar of this relationship. Out of India’s $~200 billion goods and services trade with the European Union, about $50 billion is with Germany.

As strategic partners since 2000, India and Germany have established a strong institutional framework to support their partnership. At the apex of this framework is the Intergovernmental Consultations (IGC), which is held every two years. Merz’s visit to India — outside the IGC framework (which will meet later this year in Germany) and his first visit beyond the EU and the US — clearly underscored the priority he accords to ties with India.

As a major investor and trading power, German industry has long focused on the US and China outside the EU. In 2024, Germany’s total trade amounted to about €2,878 billion, of which €1,560 billion were exports. Its main trading partners outside the EU were the US (€253 billion) and China (€246 billion).

Over the past few years, Germany has pursued a ‘China plus X’ strategy to reduce excessive dependence on a single partner. As a result, 2024 marked the first time since 2016 that China was no longer Germany’s largest trading partner. After peaking at around €300 billion in 2022, trade with China declined, reflecting both growing challenges in engagement and Germany’s diversification efforts. Although exports to the US have risen, the uncertainty created by Trump-era tariffs continues to weigh on the relationship.

Since the 2022 Ukraine war, the German economy has hardly grown. While dependence on Russian energy has declined, many industries have lost their competitiveness. With the rise of Chinese electric vehicles (EVs), Germany’s future dominance in the automobile sector is no longer assured. The manufacturing core is increasingly challenged by other players, especially China. In efforts to diversify toward digital and financial sectors, a partnership with India could offer a significant advantage.

Although India cannot replace the US or Chinese markets for German industry, its expanding market can offer meaningful support in difficult times. For this reason, Germany has long been one of the strongest advocates of an FTA with India. During his visit, Merz once again put his weight behind the deal, which could be announced at the forthcoming India-EU summit later this month.

Given its demographic profile, Germany is pushing for serious ties with India on migration and mobility. With tighter US visa policies, many students are seeking alternatives, and Germany has emerged as an attractive destination. Already, around 60,000 Indian students are enrolled in German universities. The Indian diaspora is well integrated into German society. Indians have been among the main recipients of the EU's Blue Card scheme from Germany. The 2022 migration and mobility agreement is further facilitating orderly migration. During his visit to Bengaluru, Merz acknowledged that “many German companies depend on Indian skilled workers and the dynamism of this market”, and “India is emerging as one of our key economic partners”

Apart from traditional areas such as trade and economy, technology, and green and sustainable partnership, defence and security were a clear focus during Merz’s visit. India is already negotiating an $8 billion deal to purchase six next-generation submarines from Germany. As Germany increases its own defence spending and expands its defence capabilities, Indian companies could emerge as important partners. Although perceptions of Russia continue to differ — and this was evident during the visit — both sides are keen to work together on defence- and security–related issues.

At the global level, India’s and Germany’s interests have increasingly converged, as both seek to promote a democratic, rules-based, multipolar international order. In a rapidly changing global environment, where many institutions of global governance are underperforming, both countries are calling for serious reforms. Central to this shared agenda is reform of the United Nations Security Council.

At a time of significant shifts in the international order and increasingly complex relations with China, Merz’s visit to India highlighted the growing strategic importance India and Germany attach. It also marked a phase in which defence and security issues featured far more prominently than in the past in bilateral discussions.

(Gulshan Sachdeva is Jean Monnet Chair and Professor at the Centre for European Studies, Jawaharlal Nehru University, New Delhi.)