The German Chancellor Olaf Scholz can offer joint production of Diesel-Electric submarines to the Indian Navy with Government-To-Government route on his visit to India this week, reported Economic Times.

The Indian Navy is on a hunt for acquiring six Diesel-Electric submarines under Project-75I at a cost of $5.6 billion.

These submarines will be made in India under the Strategic Partnership (SP) route with significant Transfer of Technology (ToT). The boats will come with Air-Independent Propulsion (AIP) technology, as well.

The SP model requires foreign Original Equipment Manufacturers (OEMs) to partner with Indian Private companies to manufacture these products in India and offer them to Indian Armed Forces.

However, the project under the SP model is stuck due to tough technical and financial conditions.

Germany’s ThyssenKrupp Marine Systems (TKMS) in the report has highlighted some challenges in the SP model.

One challenge the report identifies is the imposition of heavy liabilities on foreign OEMs for inefficiencies or delays on part of the Indian contractor.

According to the report, another condition — the inclusion of a sea-proven AIP — is a sticking point as well.

Only Germany’s TKMS has sea-proven AIP technology, while France and Russia have no functional submarines fitted with the AIP.

The South Korean shipyard, on the other hand, doesn’t have government clearances and they are believed to be pending, due to the shipyard facing a legal challenge from TKMS for copying their design, the report further said.

This could lead to a single vendor condition in the project, the report said.

One other challenge, the report revealed is the possibility of demerger of ThyssenKrupp from the TKMS group. ThyssenKrupp is believed to be leaving the entire shipbuilding industry.

The German Government may take a stake in TKMS if ThyssenKrupp gets out, the report said.