Scholz Heads to India to Deepen Ties on Green Energy, Defense

(Bloomberg) -- Olaf Scholz wants to use his first visit to India as German chancellor this weekend to strengthen business ties with the world’s most populous democracy and deepen cooperation in areas including green energy, climate protection and defense.

Scholz also plans to discuss Russia’s war on Ukraine with Prime Minister Narendra Modi at a time when Europe and its allies are struggling to maintain economic pressure on the Kremlin and isolate President Vladimir Putin. 

While Germany and its European Union partners have imposed tough sanctions on Russia, including a ban or restrictions on its oil and coal, India has continued to import Russian fossil fuels, partly at a steep discount.

Modi’s government, which holds the presidency of the Group of 20 nations this year, has nonetheless backed joint language condemning Russia’s war and Germany is keen to make sure that the wording is not watered down, according to a senior government official in Berlin, who asked not to be identified in line with briefing rules.

Scholz is taking a large business delegation with him to New Delhi and Bengaluru, including senior managers from German corporate heavyweights such as Siemens AG, ThyssenKrupp AG and SAP SE.

Thyssenkrupp Marine Systems is one of two international contenders for a planned German-Indian project worth around $5 billion to build six submarines in India and it will be discussed during Scholz’s visit, Germany’s ambassador to India, Philipp Ackermann, told reporters on Wednesday, though he said it’s “too early for announcements.”

The government in New Delhi has a long-standing dependence on Russian defense contractors and Germany wants to help it find alternative suppliers.

“The war in Ukraine has made both sides realize the need to explore opportunities and partnerships outside their traditional comfort zones and friends,” said Swasti Rao, an associate fellow at the Europe and Eurasia Center at the Manohar Parrikar Institute for Defense Studies and Analyses.

“New Delhi is keen to deepen defense cooperation with Germany because it understands that Russia may no longer be able to meet its strategic needs,” Rao said. “There is enormous scope for cooperation in this area between the two countries and I would be surprised if substantial progress is not achieved.”

Scholz and Modi will be present during a ceremony Saturday in which executives will sign memorandums of understanding aimed at broadening cooperation on green hydrogen and ammonia, as well as energy infrastructure and climate protection.

Germany is supporting India’s transition to renewable energies and has extended loans amounting to $1.3 billion over the next six years. German companies are ready to share technology and know-how with Indian counterparts to help the Asian country on its path to climate neutrality.

“There is huge potential for intensified cooperation, in sectors such as renewables, hydrogen, mobility, pharma, digital economy and many more,” Scholz said in an interview with The Times of India published Friday. “We can learn a lot from each other.”

Scholz also wants to discuss closer trade ties between the EU and India, and hopes to make progress on opening ways for more IT specialists and other skilled workers to come and work in Germany as growth in Europe’s largest economy is held back by labor shortages in many sectors.

German businesses view high tariffs and other trade barriers such as local-content requirements as the biggest hurdles for more investment in India, according to a survey of the German Chambers of Commerce Abroad.

They don’t expect a breakthrough on a long-sought trade and investment agreement between the EU and India by the end of this year, as initially planned when talks resumed in June last year.

Scholz wants to broach a more controversial issue with Modi, Ackermann told reporters: the rising incidence of hate crimes against Muslims.

“I am sure there will be talk on the internal situation in India,” he said, adding that the chancellor will make his concerns clear to Modi.

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