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Germany’s defence revival offers India a chance to diversify from Russia through deeper co-development.

Russia has continued to loom large for the North Atlantic Treaty Organisation (NATO) as a strategic and security challenge, despite the end of the Cold War and the collapse of the erstwhile Soviet Union (USSR) more than three decades ago. NATO’s interventions in the Balkans during the 1990s and its subsequent eastward expansion provoked strong resistance from Russia. Over time, Moscow’s pushback against NATO enlargement has led to direct military action. It invaded Georgia in 2008, seized parts of Ukraine in 2014, and launched a full-scale invasion of Ukraine in February 2022, a war that continues today. In this context, Germany’s role in maintaining the European balance of power is vital. In 2024, Berlin spent US$88 billion on defence, becoming the fourth largest military spender in the world. While this figure marginally falls short of NATO’s minimum spending of 2 percent of its Gross Domestic Product (GDP), there are optimistic indicators that Germany is starting to pull its weight as a strategic actor. And this is not without precedent. The end of World War II left Germany divided between the Eastern part (occupied by the Soviet Union) and the Western part (aligned with the US-led NATO alliance) from 1949. Although defence expenditure-related data during the 1950s is scant or non-existent, data on military spending from 1960 onwards reveal that West Germany, despite constituting only one half of the Teutonic state, was vital to the balance of power in Europe against the Soviet military threat during the Cold War (CW).

Germany is abandoning its debt ceiling on spending to undertake an expansion of German military power, strengthening its defence industry and its economy.

Military expenditures from 1960–1991 stood at an approximate average of 3.3 percent of Germany’s GDP, which is significantly higher than in the decades after the USSR’s collapse. Today, Europe stands at a precipice, especially due to the ongoing war between Ukraine and Russia. Unlike in the past, when it menaced or was menaced by its neighbours, Germany, today, has a friendly neighbourhood. Friedrich Merz, the newly elected German Chancellor, emphatically declared that his country was a “free-rider” at least for the last three decades, with the United States (US) guaranteeing Germany’s freedom and security—a commitment it is no longer willing to meet. The Bundeswehr remains weak in the face of Russian military power. Germany is abandoning its debt ceiling on spending to undertake an expansion of German military power, strengthening its defence industry and its economy. This data is as revealing as it is instructive because it indicates the inertia within the German political system to bring about the shift that is underway and demonstrates the extent to which German military capabilities atrophied over the last three decades. Today, the US, under the Trump administration, has demanded that NATO members spend at least 5 percent of GDP, which most are unlikely to meet, including Germany. Nonetheless, Germany has committed to meeting at least a 3.5 percent target by 2029.

This shift is vital to addressing the threat facing NATO members along Russia’s periphery, many of whom remain excessively reliant on the United States for their security. In time, these states could also look to Germany for military assistance. Should Berlin sustain defence spending at 3.5 percent of GDP year after year, it has the potential to emerge as a net security provider for its neighbours—from the Visegrad states (Czech Republic, Slovakia, Hungary, and Poland) to frontline countries such as Moldova, Romania, Ukraine, and the Baltic states bordering the Russian Federation. This shift is vital to tackle the threat that many of the states bordering Russia face. Several NATO members which are excessively reliant on the US for military assistance will, in due course of time, be able to turn to Germany. Should Berlin sustain a spending of 3.5 percent year-on-year, then it could very well become a major net security provider for several of its neighbouring countries, including the Czech Republic, Slovakia, Hungary and Poland, and other key states bordering Ukraine such as Moldova and Romania. This could also extend to Ukraine as well as the Baltic states that share borders with Russia.

Several NATO members which are excessively reliant on the US for military assistance will, in due course of time, be able to turn to Germany.

Implications for India

Beyond its impact on the European balance of power and security, Berlin’s growing military strength can also be a key area of cooperation with India. Increased military spending is also likely to consolidate the German defence industry, making it a very promising partner. New Delhi already has a history of cooperation with the German defence industry. The erstwhile West Germany or the Federal Republic of Germany (FRG), which remained FRG following unification in 1990, was a critical source of technological expertise and a key supplier of whole weapons platforms and military sub-systems to India. When India wanted to develop the Arjun Main Battle Tank (MBT), the FRG in the early 1980s stepped in to provide India with initial design assistance for the MBT. In 1983, Kraus Maffei, the German manufacturer, served as a consultant to the Combat Vehicles Research and Development Establishment (CVRDE) for design, development, testing and evaluation for the Arjun MBT. Several components are of German origin even in the latest variant of the Arjun, such as the Renk RK 304-I transmission system, the MTU MB838 1,400cc diesel engine that powers the Arjun, and the Bosch gun control system.

Between 1986 and 1994, the FRG supplied the Indian Navy (IN) Type 209 dubbed the “Shishumar” class diesel-electric submarines. Built by the German Howaldtswerke-Deutsche Werft (HDW), these submarines are expected to be in service for the next 10-15 years. The IN’s future submarine acquisitions under the Project 75I will be sourced from Germany’s Thyssenkrupp Marine Systems (TKMS), which is partnering with India’s Mazagaon Dockyard Limited (MDL) to develop the submarines with an Air Independent Propulsion System (AIPS) under the Project 75I of the Indian Navy. This signals New Delhi’s intent to reduce reliance on Russian platforms while reinforcing cooperation with a major European defence partner. TKMS is ready to transfer technology as a Joint Venture (JV) under the Ministry of Defence’ (MoD) Strategic Partnership (SP) model with the MDL. Another crucial gain is the strategic venture concluded between Germany’s Diehl and Reliance Defence in June 2025 for the domestic production of 155mm Vulcano precision-guided munitions that are capable of executing highly accurate long-range strikes. In the long term, estimates suggest that this deal could generate revenue of approximately 10,000 crores or US$1.1 billion.

Expanded military budgets will mean not just growth in German military power and more defence industrial strength, but also pave the way for Joint Ventures (JVs) that can keep costs at manageable levels.

For New Delhi, Germany under the Merz government can be a very critical partner in the co-development of military technologies, ranging from entire platforms to sub-systems and components for the Indian armed services. Expanded military budgets will mean not just growth in German military power and more defence industrial strength, but also pave the way for Joint Ventures (JVs) that can keep costs at manageable levels. India and Russia’s defence cooperation could serve as a model for JVs specific to weapons. They have concluded JVs for the co-development of BrahMos supersonic cruise missiles and AK-203 assault rifles, which allows them to distribute costs and risks between them more equitably. Under the India-Russia Inter-Governmental Agreement concluded in 2019 for better “after-sales support” that enables “Mutual Cooperation in Joint Manufacturing of Spares, Components, Aggregates and other material related to Russian/Soviet Origin Arms and Defence Equipment.” Further, Germany also offers an alternative to Russia at a time when India’s dependence on Moscow remains considerable. To be sure, there are still challenges, such as German export control restrictions, which will need some relaxation for Transfer of Technology (ToT), even if more co-development partnerships between Berlin and New Delhi serve as a productive template to expand the relationship. Further, Germany’s entering into a strategic cooperation agreement with Pakistan to supply IRIS-T Air Defence System (ADS) to counter India’s BrahMos supersonic cruise missile could sour or at least constrain growing defence ties between New Delhi and Berlin. But the TKMS-L&T deal signals a step in the right direction. Apart from gaining technical expertise, India must also bring more incentives to the table, offering reciprocal supply arrangements for spares and components from which Germany can benefit. India can also serve as a source of skilled technicians who can help German defence manufacturers such as TKMS in the areas of welding, pipework, and electrical work—a cohort of skilled labour shortage that the United States Navy (USN) is experiencing acutely and not just high-end design engineering.

In a nutshell, India can serve both as a source of skilled manpower and a low-cost development hub for select German military products. The real test for Berlin and New Delhi lies in grasping the opportunities that come their way.

Kartik Bommakanti (Senior Fellow ORF)
9 September 2025

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