Recently, the External Affairs Minister of India met with the Foreign Minister of Germany in New Delhi. This engagement coincided with the launch of an “oil price cap” plan by G7 and European Union countries. According to this plan, shipping and insurance services will be withdrawn from nations purchasing Russian oil above $60 per barrel.
Highlights of the India-Germany Meeting
During this meeting, India and Germany signed a Comprehensive Partnership on Migration and Mobility to simplify travel for study, research, and work purposes. They discussed bilateral issues such as Germany’s aid to India with renewable energy, international matters like their Indo-Pacific strategy, and geopolitical aspects concerning China, Afghanistan, and Pakistan.
The G7 Oil Price Cap
The G7, along with the European Union and Australia, has established a price cap on Russian oil shipments at $60 per barrel. It primarily aims to prevent firms in signatory countries from providing shipping, insurance, brokering, and other services to Russian crude oil shipments sold above the set price. This restriction does not apply to shipments already in transit.
India’s Stance on Oil Trade with Russia
Despite ongoing sanctions on Russia by the United States due to the invasion of Ukraine, India plans to double its trade with Moscow in the near future.
Historic Ties Between India and Germany
The bilateral ties between India and Germany are rooted in shared democratic principles. India was one of the first nations to establish diplomatic relations with Germany after the Second World War. Today, Germany supports India’s development projects with 1.3 billion Euros annually, where 90% is directed towards mitigating climate change and promoting clean energy.
Challenges in Economic Cooperation
A significant issue impacting the India-Germany relationship is the lack of a separate bilateral investment treaty. Germany, through the European Union, has a Bilateral Trade and Investment Agreement (BTIA) with India, yet it cannot negotiate separately due to procedural restrictions.
Significance of the Indo-Pacific Region
The Indo-Pacific region has significant importance in Germany’s and the European Union’s foreign policy. Home to nearly 65% of the world’s population, the region accounts for 62% of global GDP, making it a crucial partner in addressing global issues such as climate change and sustainable energy consumption.
The Role of Germany in the Indo-Pacific
Germany is committed to reinforcing the rules-based international order. Within the German Indo-Pacific guidelines, India plays a substantial role in enhancing engagement and meeting objectives related to international security.
Future Prospects for Enhancing Indo-German Relations
Germany perceives India as a key collaborator in tackling global concerns including climate change, food security, energy, and international peace. The new coalition government in Germany provides an opportunity for India to deepen strategic ties between the two countries.
Potential Areas for Economic Cooperation
India and Germany must focus on realizing the cooperative goals outlined in the Intellectual Property guidelines. German companies should be encouraged to establish manufacturing hubs in India utilizing the liberalized Performance Linked Incentive scheme.
Shared Responsibilities in the Indo-Pacific Region
Both India and Germany are trading nations, with over 20% of German trade conducted in the Indo-Pacific region. This shared economic interest necessitates their joint responsibility to uphold stability, prosperity, and freedom in this part of the world.
