Govt Pact Clears Path for $10B Submarine Deal with Germany

• India will sign a ~$10 billion deal with Germany to build six next-generation submarines in India with major technology transfer
• The submarines will feature Air-Independent Propulsion, enabling longer underwater endurance and enhanced stealth
• The project will boost domestic shipbuilding, create jobs, and address the Navy’s submarine shortage

India will complete a multi-billion dollar submarine construction contract by March, 2026 after it establishes an Intergovernmental Agreement (IGA) with Germany.

The IGA will provide long-term support, export clearances, and technology transfer, personnel training, and administrative approvals guarantees, while Mazagon Dockyards Limited (MDL) cost negotiations have reached their final outcome. The German defense minister is expected to visit India for the formal signing.

The project will see MDL, in partnership with Germany’s Thyssenkrupp Marine Systems (TKMS), build six advanced submarines domestically. The technical oversight committee had approved the bid in January 2025, and the past year was spent finalizing costs and technical specifications.

Sources estimate the final contract value at approximately $10 billion although the official amount remains undisclosed. The deal is expected to create thousands of jobs and foster a robust industrial ecosystem in India.

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The submarines will be equipped with Air-Independent Propulsion (AIP) systems which enable them to operate under water for two weeks without surfacing, thus boosting their capability to operate without detection.

The project aims to deliver its first warship seven years after the contract is signed, which will establish India as a main export center for German naval vessels. The costs will decrease through collaboration with Indian shipbuilders which will facilitate shared sales throughout the region.

The Indian Navy wants to complete the agreement during this financial year because they need to solve their urgent requirement for submarine vessels. The contract will use this year's budget to make initial payments to MDL which will enhance India's submarine capabilities for future operations.