India Nears Historic Naval Boost
India is preparing to sign one of its largest defence contracts in recent decades, potentially worth $10 billion, to construct next-generation conventional submarines. The government has finalized a formal Intergovernmental Agreement (IGA) with Germany, clearing the path for smooth execution of the deal.
The IGA covers technology transfer, personnel training, regulatory approvals, and long-term maintenance, all critical for such a large and complex project. While the final contract will be signed between Mazagaon Dockyards Limited (MDL) and India’s Ministry of Defence, the agreement ensures Germany remains a committed partner throughout the process.
Background: How the Deal Came Together
Negotiations for this deal have been underway for years. MDL, in partnership with Germany’s Thyssenkrupp Marine Systems (TKMS), received technical approval from a defence oversight committee in January 2025. Cost and technical specifics were finalized after extensive discussions, ensuring both sides agreed on industrial and operational responsibilities.
Though the official contract price has not been publicly confirmed, sources close to the deal indicate it will hover around $10 billion. This includes construction, technology transfer, long-term support, and the creation of a domestic industrial ecosystem.
Submarine Details and Advanced Technology
The contract will see six submarines constructed in India, with MDL leading shipbuilding and Germany providing technical expertise. These submarines will feature Air-Independent Propulsion (AIP) systems, allowing them to remain submerged for up to two weeks.
This capability dramatically improves stealth and operational endurance, enabling the Indian Navy to maintain a strong deterrent presence in the Indian Ocean and broader Indo-Pacific region. In modern naval warfare, the ability to remain undetected underwater for extended periods is a game-changer.
Strategic and Industrial Significance
The deal is not just about submarines; it represents a massive boost for India’s defence industry. Thousands of engineers, technicians, and support staff will likely be employed, while local manufacturing could position India as a global submarine-building hub.
Germany sees the deal as an opportunity to enter Asia’s growing defence market, while India benefits from technology transfer, cost-effective construction, and long-term operational support. This aligns closely with the government’s “Make in India” initiative and its push for defence self-reliance.
Timeline and Execution
The project is expected to be long-term, with the first submarine entering service approximately seven years after contract signing. The Indian Navy is keen to finalize the deal within the current financial year to ensure budget provisions are used efficiently for initial payments to MDL.
While the timeline is lengthy, it reflects the complexity of modern submarine construction, which requires meticulous planning, advanced materials, and rigorous testing.
Current Naval Context
The Indian Navy faces a critical shortage of operational submarines. Several older Kilo-class boats are nearing retirement, and the only major additions in the past two decades have been six Kalvari-class submarines, also built by MDL. This new contract will significantly enhance India’s underwater warfare capabilities and operational readiness.
Broader Implications
Beyond strengthening the navy, this deal has significant geopolitical and economic implications. By building submarines domestically, India can eventually offer joint exports to regional partners. The project also strengthens India’s bargaining position in the Indo-Pacific, where maritime competition is intensifying.
Frequently Asked Questions (FAQ)
Q1: How many submarines will India build under this deal?
A: Six submarines will be constructed in India with German technical support.
Q2: What is Air-Independent Propulsion (AIP) and why is it important?
A: AIP allows submarines to remain submerged for extended periods (up to two weeks), improving stealth and operational effectiveness.
Q3: How long will it take for the first submarine to be operational?
A: The first submarine is expected to be commissioned roughly seven years after contract signing.
Q4: Will this deal create jobs in India?
A: Yes. Thousands of engineers, technicians, and support staff will be employed during construction and maintenance.
Q5: What are the strategic benefits of this deal?
A: It addresses the Indian Navy’s submarine shortage, enhances deterrence in the Indo-Pacific, boosts domestic defence production, and positions India as a potential submarine-building hub.
