India’s Largest Defence Agreement? New Delhi Nears $8 Billion Submarine Deal with Germany – Mazagon Dock’s Pivotal Role

In a significant boost to India’s naval capabilities and its Make in India initiative, New Delhi is inching closer to finalising an approximately $8 billion deal with Germany for the construction of six advanced conventional submarines.This agreement, under the long-awaited Project 75I, could rank as one of the country’s largest single defence contracts in history, surpassing or matching deals like the 2016 Rafale fighter jet acquisition valued at around $8.7 billion, said a Bloomberg report.With negotiations in their final stages as of early 2026, the pact not only strengthens Indo-German ties but also underscores India’s push for indigenous defence manufacturing through key player Mazagon Dock Shipbuilders Limited (MDL).The Genesis of Project 75I:

A Long Road to ModernisationProject 75I, formally known as the Project-75 (India) submarine acquisition programme, was conceived in the late 1990s to bolster the Indian Navy’s underwater fleet by procuring six diesel-electric attack submarines equipped with air-independent propulsion (AIP) technology.AIP allows submarines to operate submerged for extended periods without surfacing, enhancing stealth and endurance—critical for operations in contested waters like the Indian Ocean Region.The programme’s objectives include anti-surface and anti-submarine warfare, intelligence gathering, special operations support, and land-attack capabilities. It emphasises local manufacturing, mandating that the submarines be built in India with foreign technology transfer, aligning with the government’s Atmanirbhar Bharat policy.Delays plagued the project for over two decades due to bureaucratic hurdles, changing requirements, and a rigorous bidding process. Initial requests for information went out in 2008, but it wasn’t until 2017 that the Strategic Partnership model was adopted, inviting global firms to collaborate with Indian shipyards.The competitive bidding saw participation from France’s Naval Group, Spain’s Navantia, South Korea’s DSME, Russia’s Rubin, and Germany’s ThyssenKrupp Marine Systems (TKMS). Several bidders were disqualified or withdrew over issues like unproven AIP systems or stringent technology transfer demands.By 2023, the field narrowed, with TKMS partnering with MDL and Navantia with Larsen & Toubro (L&T). In January 2025, the Ministry of Defence rejected the L&T–Navantia bid for non-compliance with sea-proven AIP criteria, paving the way for TKMS as the frontrunner.Deal Details: Value, Technology, and TimelineThe impending agreement involves TKMS supplying designs based on its Type 214 submarine, a proven export-oriented platform known for its fuel-cell AIP system, low acoustic signature, and modular design.Valued at an initial Rs 70,000 crore (about $8.3 billion), the cost could escalate to Rs 90,000–100,000 crore ($11–12 billion) factoring in indigenisation, design modifications, and inflation. This includes an option clause for three additional submarines.Key highlights of the deal:Technology Transfer:Germany will provide expertise for AIP integration, heavyweight torpedoes (via a September 2025 MoU between TKMS and India’s VEM Technologies), and overall submarine construction. This marks the first time such advanced German submarine technology will be built in India.Indigenisation:Starting at 60% local content—well above the required 45%—the project aims to build domestic capabilities in hull fabrication, sensor integration, and propulsion systems.Timeline:Negotiations, cleared by the Cabinet Committee on Security in August 2025, are expected to conclude by March 2026. Production would begin in the third year post-contract, with the first submarine delivered by 2032 and the full batch by the mid-2030s.This deal comes amid India’s record defence spending, with 2025 seeing approvals for over $18.5 billion in procurements across sectors.Historically, India’s largest single defence deals include the $5.4 billion S-400 air defence system from Russia and the $8.7 billion Rafale jets from France. Project 75I’s scale—especially with potential expansion—positions it as a contender for the top spot.Mazagon Dock Shipbuilders: The Indian AnchorAt the heart of this collaboration is Mumbai-based Mazagon Dock Shipbuilders Limited (MDL), a public-sector undertaking under the Ministry of Defence and India’s premier warship builder.MDL has been shortlisted as the Indian strategic partner since 2020 and signed a memorandum of understanding with TKMS in June 2023 to jointly bid for Project 75I.MDL’s strengths include:Experience in Submarine Building:MDL is already constructing Scorpene-class submarines under Project 75, with five delivered and the sixth nearing completion. This experience in handling foreign designs makes it well suited for integrating German technology.Role in Project 75I:As the lead shipyard, MDL will manage construction, assembly, testing, and delivery. It has negotiated cost reductions and is pushing for higher indigenisation to contain expenses.Recent Milestones:In December 2024, MDL secured a Rs 19.9 billion contract for next-generation offshore patrol vessels and has invested in infrastructure upgrades to accommodate larger submarines like the 3,000-tonne Type 214 variants.MDL’s involvement ensures alignment with India’s goals of reducing import dependence, creating jobs, and strengthening the domestic defence ecosystem. Analysts estimate the project could generate thousands of skilled jobs and boost ancillary industries.Strategic Implications and Challenges AheadThe submarine deal comes at a critical moment as India faces growing maritime challenges from China’s expanding naval presence in the Indo-Pacific. An AIP-equipped fleet would significantly enhance deterrence and complement India’s nuclear-powered submarines.For Germany, the deal represents a major export win amid intense global competition.However, challenges remain. Past delays in Project 75I highlight risks of cost overruns and technology absorption issues. Geopolitical considerations, including India’s balancing act between Western and Russian partnerships, could also influence final terms.If signed, the pact would not only strengthen India’s blue-water navy but also cement defence cooperation as a cornerstone of Indo-German relations—potentially marking India’s largest defence agreement ever and a major milestone in self-reliant military capability.