India and Germany are in advanced discussions to finalize a landmark $8 billion submarine manufacturing deal, which, if concluded, would be India's largest-ever defence agreement. This significant pact is poised to include the unprecedented transfer of submarine-building technology to India, a key demand for New Delhi's 'Aatmanirbhar Bharat' (self-reliant India) initiative in defence manufacturing. The negotiations have reportedly accelerated ahead of German Chancellor Friedrich Merz's inaugural official visit to India from January 12-13, 2026. During his visit, Chancellor Merz is scheduled to meet Prime Minister Narendra Modi in Ahmedabad on January 12. Their itinerary includes a visit to the Sabarmati Ashram and participation in the International Kite Festival, followed by high-level bilateral engagements in Gandhinagar, where defence and security cooperation will be a significant point of discussion. The proposed collaboration involves Germany's Thyssenkrupp Marine Systems GmbH partnering with India's state-owned Mazagon Dock Shipbuilders Ltd. to construct advanced submarines equipped with air-independent propulsion (AIP) systems. These systems will allow the submarines to remain submerged for extended periods, significantly enhancing India's endurance and stealth capabilities for patrolling the vast Indian Ocean. Experts suggest this Indo-German venture could lead India to reconsider its plans to acquire additional French submarines, strategically realigning its naval procurement priorities. The deal underscores a deepening of strategic ties between the two nations, aiming to diversify India's defence partnerships and reduce its long-standing reliance on Russian military hardware. For Germany, this willingness to share sensitive technology reflects an evolving defence posture and a desire to strengthen ties with Indo-Pacific partners.