The Development Game: Assessing Germany's Aid Architecture in India
- Yannik Kum and Francesca Villanueva
- 6 minutes ago
- 8 min read
Introduction
Official Development Assistance (ODA) has long been framed as a technocratic expression of global solidarity post-World War II. In recent years, it has been invited into conversations about its purpose and strategy. This strategy can be observed in India, which is undergoing rapid economic ascent while remaining embedded in development cooperation frameworks. What was once celebrated as the humanitarian fulcrum is now increasingly scrutinised as an instrument through which wealthy states pursue and shape influence in the Global South (Solhjell et al., 2024). This shift raises an unresolved question: whose development does development aid really benefit?
Germany offers an instructive case. As the world’s second-largest ODA donor, it initiated an institutionalised aid architecture tied to long-term global governance goals (OECD, 2025). Much of this is channeled through the Federal Ministry of Economic Cooperation and Development (BMZ), a central tool for translating German foreign policy priorities into development programs. India, being Germany’s largest development partner outside Africa (see figure 1), sits at the convergence of these ambitions (OECD, 2025). Today, as both countries rank among the world’s major economies (O’Neill, 2025), the question becomes sharper: when aid flows toward a rising power, is it development or the quiet architecture of future influence taking shape beneath the surface?
Indo-German Development Partnership: BMZ Initiatives in India
Development cooperation between Germany and India dates back to 1958, when Germany became one of the first countries to support India’s post-independence development trajectory (Nair & Pande, 2022). What started as technical aid has since evolved into a multi-billion-euro partnership. As India grows to become the world’s third-largest economy by 2030, the nations have deepened a bilateral development partnership that spans socioeconomic and development sectors (Federal Foreign Office, 2024). BMZ programs in India are jointly negotiated initiatives aligned with domestic priorities while also advancing Germany’s long-term interests. The BMZ’s two largest foci in India are renewable energy transition and sustainable urban infrastructure (BMZ, 2025).
Firstly, Germany’s investment in India’s renewable energy transition aligns with India’s domestic push for clean power and operates within Germany’s broader global climate strategy. BMZ identifies “renewable energy and energy efficiency” as a core priority (BMZ, 2022), and the scale of support reflects this. Germany’s Credit Institute for Reconstruction (KfW) has promised over €1 billion to India’s solar sector since 2017, underwriting around 4 GW of new capacity and avoiding 6 million tonnes of CO₂ annually (KfW, 2023). The 2022 Joint Declaration on Green Energy supports this, promising another €1 billion in concessional loans between 2020 and 2025 to mobilise an additional 2.5 GW (BMZ & MNRE, 2022).
This investment institutionalises a shared energy framework. India’s grid-scale renewable expansion is being built, in part, through German-designed infrastructure, such as the Green Energy Corridors (BMZ, 2022; AtMigration, 2016). The corridors help stabilise India’s grid as it integrates intermittent solar and wind power, aligning it with the regulatory frameworks Germany promotes globally, through efficiency standards and decarbonisation pathways.
Through this, BMZ support advances Germany’s Energiewende philosophy internationally, translating its domestic energy ideology into global infrastructure. This purpose is facilitated through the Indo-German Hydrogen Task Force, which collaborates on regulatory frameworks and future export infrastructure (BPA, 2022). In pursuit of its National Hydrogen Strategy, which aims to import green hydrogen from partner countries (Federal Ministry for Economic Affairs and Climate Action, 2024), Germany also considers India essential. Thus, German support for India’s renewables is both climate action and strategic foresight: a way of embedding interdependence into the energy systems that will shape the post-fossil world.
Secondly, a key point in BMZ’s interest is sustainable urban infrastructure and governance. India’s urbanisation, amounting to 520 million people and 600 million by 2030, poses significant development challenges (BMZ, 2019). German cooperation in this sector sits at the crossroads of environmental sustainability and institutional capacity-building, whereby initiatives respond to concrete policy gaps identified by India’s Ministry of Housing and Urban Affairs and municipal governments.
In light of this, BMZ’s Green Urban Mobility Partnership (GUMP) supports sustainable transport systems in rapidly growing cities (BMZ, 2019). Its implementation through GIZ includes the SUM-ACA project, which promotes “low-emission, socially balanced” urban mobility (Mahendru & Ahuja, 2023). The Bengaluru Bosch-GIZ Living Lab operationalises these principles to promote innovation and support future sustainability projects (Philip, 2021). These further enhance Indian cities’ capacity to meet national climate targets while strengthening markets for German expertise and technology in transport engineering and climate solutions.
A less visible strand of German involvement is institutional. BMZ reports that 126 million people now benefit from improved municipal governance systems supported through its programs (BMZ, 2019). GIZ’s Smart Cities initiatives build capacities in data governance, disaster management, urban planning, and climate resilience (GIZ, 2018; GIZ, 2022). Meanwhile, KfW’s €500 million in loans for climate-resilient infrastructure further enhances municipal capability-building as a condition for long-term infrastructural sustainability (KfW, 2022). Therefore, strengthening urban governance is not just a technocratic gesture; it is state-building at the municipal level. As India becomes increasingly central to Germany’s long-term economic and geopolitical calculus, investing in the country is an investment in the stability of an advantageous partner.
Understanding Interests: India’s Role in Germany’s Strategic Calculus?
The new centrality of India is documented in German foreign policy. In its 2024 “Focus on India” strategy, the German Government emphasises India’s growing influence in multilateral forums such as BRICS and the SCO, as well as its emerging position as a prominent voice of the Global South (Federal Foreign Office, 2024). Bilateralism is also defined by concurrence over rules-based multilateral order and the pursuit of UN reform, particularly securing a permanent seat on the Security Council. (Wagner, 2024).
Beyond ideological congruence, Germany’s growing engagement with India is also driven by India’s economic and geopolitical potential (Wagner, 2024). By 2040, India is projected to account for 8-10% of global GDP (Deswal et al., 2025). In addition, India’s status as the world’s most populous nation, with a distinct, self-reliance-oriented foreign policy, makes it an attractive strategic partner for Germany.
The 2022 Partnership for Green and Sustainable Development exemplifies a German foreign policy initiative. It focuses on expanding renewable energy, modernising transmission grids, and developing energy storage systems (BMZ, 2025), which are crucial steps towards securing two critical aspects. Firstly, it positions India as a future energy supplier, given that India is the world’s third-largest crude oil consumer (Sahai, 2025). Moreover, it aims to reduce India’s structural dependence on Russian energy imports as India purchases discounted Russian oil and gas, refining and re-exporting part of these volumes to Western states that cannot directly import Russian energy due to EU sanctions (CREA, 2025).
For Germany, this dynamic poses another challenge: while its foreign minister emphasised that the EU seeks to prevent any “detours” through which Russian oil might enter Europe (The Wire, 2025), Germany is also seeking to deepen its already extensive ties with India (The Wire, 2025). Germany, therefore, encounters a structural dilemma: its efforts to uphold EU sanctions and promote a values-based foreign policy clash with India’s commitment to strategic autonomy and its continued energy cooperation with Russia.
In contrast, India’s stance on the moral dilemma appears unambiguous. Despite the 25% sanctions on Russian oil, the government imported a record 1,855 million bpd (barrel per day) in November 2025, an increase of 25% compared to October (Bradstock, 2025). While India fulfils its energy demands from Russia, its contours of cooperation with Germany and the EU vary significantly and primarily revolve around: (1) technology transfer in machinery, engineering, and pharmaceuticals, (2) increased external investment into the rapidly expanding Indian market (3) skilled migration opportunities, and (4) defense and security cooperation (Dye, 2025).
As competing interests become a test of Berlin’s ability to balance its values-based foreign policy with the pragmatic requirements of engaging a rising, non-aligned power, Germany should carve out a solution rather than being hobbled by inertia. It can demonstrate political astuteness by expanding cooperation in areas that support its long-term energy diversification, such as renewables, green hydrogen, and technology partnerships, while maintaining diplomatic dialogue that upholds European norms without directly challenging India’s strategic autonomy.
Conclusion
Germany’s development cooperation with India illustrates how ODA has evolved from a post-war solidarity instrument into a strategic tool shaping future partnerships.BMZ’s initiatives in renewable energy, green hydrogen, and sustainable urban governance address not only India’s developmental needs but also advance German interests by embedding long-term interdependence between the two nations.
As India becomes a central actor in Germany’s global governance strategy, development cooperation functions as both capacity-building and quiet statecraft. Yet India’s strategic autonomy, especially its continued energy ties with Russia, reveals the limits of normative alignment. Managing this tension requires Germany to pair sanction discipline with pragmatic, diversification-oriented cooperation. Ultimately, the Indo-German case shows how modern development policy blends interests and long-term geopolitical positioning.
This article represents the views of contributors to STEAR's online digital publication, and not those of STEAR, which takes no institutional positions.
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