The trip to India comes at a crucial time for Scholz as he struggles to revive the German economy.

Germany is trying to turn India into a source of commercial and geopolitical support as its deteriorating relations with China cast a shadow over the country’s economic future.
Chancellor Olaf Scholz embarks on a three-day visit to India accompanied by a large delegation of ministers and leaders on Thursday as he seeks to forge a strategic partnership with Prime Minister Narendra Modi. The two leaders will meet on Friday morning and chair a joint cabinet meeting.
This trip comes at a crucial time for Scholz who is struggling to revive the German economy shaken by the war in Ukraine and competition from China. Modi has just returned from the BRICS summit in Russia where he embraced President Vladimir Putin. India has also just signed a border agreement with China to ease tensions with its neighbor after a four-year standoff.
Here are the main issues to watch out for:
Submarine contract
India plans to order six new submarines as part of its strategy to counter China’s growing naval presence in the Indo-Pacific region and Germany’s Thyssenkrupp AG bids for a 400 billion rupees order (4 .8 billion dollars). German government spokeswoman Christiane Hoffmann declined to say whether a decision could be made during the visit.
Spanish Prime Minister Pedro Sanchez is due to travel to India later this month to open an Airbus SE factory in the state of Gujarat. Spain’s Navantia is also in the running for the contract.
India has been seeking to diversify its supplies of military hardware since Russia, its biggest arms source, invaded Ukraine in 2022 and became entangled in a web of Western sanctions.
Russia and Ukraine
India has nevertheless maintained its traditionally close ties with the Kremlin and Scholz plans to discuss the war in Ukraine with Modi after his talks with Putin and Xi. There are reports that India is supplying military equipment to the Russian army.
“The chancellor will be very curious to know what the prime minister will have to say after this meeting,” said German Ambassador to India Philipp Ackermann. “India is in a very good position to listen to both sides and keep them in mind. And we saw the Prime Minister go to kyiv and we saw a renewed interest in the conflict.”
China and trade
The German government has tried to persuade businesses to reduce their reliance on trade with China and some have suggested India, the world’s fifth-largest economy, as a potential alternative. But the country’s close relationship with Russia and the fact that it just resolved a year-old border dispute with Beijing suggest that India is not ready to go all-in as Germany’s strategic partner .
Germany is already India’s largest trading partner in Europe and the seventh largest in the world. Bilateral trade stood at $22 billion in 2020-21, according to the Indian government.
Scholz will also likely seek help in overcoming obstacles that small and medium-sized German companies face when doing business in India. More than 60% of German companies cited bureaucratic hurdles – such as protectionist measures and government procurement rules – as the main drawback to doing business in the country, according to a survey by the Indo-German Chamber of Commerce released in June.
On Saturday, Scholz will continue his trip to the port city of Vasco da Gama, where he will visit two German naval ships that recently crossed the Taiwan Strait for the first time in 22 years, defying Chinese warnings.
Help wanted
Germany’s workforce is expected to shrink by 7 million people over the next decade due to an aging population, unless the government can attract an influx of skilled migrants. This year, the labor shortage is already costing the economy nearly 50 billion euros ($54 billion), according to the German Economic Institute. In an attempt to reverse this trend, the Scholz government has relaxed immigration laws for skilled workers.
“Germany considers India a particularly important partner when it comes to the issue of skilled labor migration,” said Labor Minister Hubertus Heil, who will be part of the delegation.
It’s a potentially win-win situation for both leaders, as Modi is under pressure to create more jobs for young people, who make up more than half of the country’s 1.4 billion people. His government has already negotiated several mobility agreements with other countries facing aging societies.
A total of 137,000 Indians are currently employed in Germany and the country needs around 400,000 migrant workers a year to keep its workforce stable, according to government calculations.