Rs 99,000 Crore, 6 Subs, One Big Guarantee: Inside India’s German Deal

When the Rs 99,000 crore deal for the production of six German submarines in India by Mazagon Docks Limited (MDL) is signed, it will, importantly, be accompanied by an Inter-Government Agreement (IGA) between New Delhi and Berlin. Both countries have agreed to have the IGA, it will provide commitment not just by a German firm, but the government in Berlin, highly-placed sources said. "The IGA means that the German government is committing to the contractual obligations and that's significant," sources added. The deal, a huge one between MDL and Thyssenkrupp, the German firm, is for building six submarines in Mumbai. Naturally, clearance by the Union Cabinet is necessary, and the draft cabinet note has already been circulated, with the National

Security Council Secretariat (NSCS) and the finance ministry also having to look at it before the defence ministry readies the final version. Then, only clearance by the Cabinet Committee on Security (CCS) headed by Prime Minister Narendra Modi will be necessary. After cabinet clearance, likely in a few months, the IGA and the contract between Thyssenkrupp and MDL can be readied. The decision to go with the Germans came after the Navy examined the submarine, and also, the one the Spanish had offered. These are AIP or Air Independent Propulsion submarines, which can stay underwater for considerably longer periods, and are detected with more difficulty compared with a diesel-electric submarine, their "acoustic signature," being lower. These six submarines will be the first AIP versions the Indian Navy will have. Pakistan already has the French-made Agosta submarine which has AIP capabilities and is acquiring eight Hangor class ones from China. Four will be made in China, and four in Karachi. The MDL has built six French-designed Scorpene submarines for the Navy and the plan to build three more, currently has less priority. MDL has experience with the construction of German submarines-- the first two HDW versions came from Germany, a country that has enormous experience in building submarines since the early 20th century, and many were built during the two World Wars. MDL built the other two in Mumbai. All four German submarines, though aging, are still effective and are in regular use.