India, Germany expand defence cooperation with strategic ammunition agreement

German defence giant Rheinmetall and India’s Reliance Defence have formalised a wide-ranging strategic partnership centred on the production and supply of ammunition and related defence materials, the two companies announced on May 22.

The partnership was sealed through the signing of a Memorandum of Understanding (MoU), marking a significant step forward in their defence cooperation, Caliber.Az reports, citing foreign media.

Under the agreement, Reliance will supply Rheinmetall with explosives and propellants for medium and large caliber ammunition, according to a statement released by the German company. The collaboration also includes plans for joint marketing initiatives for selected products, with both firms expressing a shared intention to expand their cooperation as new opportunities arise.

At the heart of the partnership is a plan for Reliance to establish a massive new manufacturing facility in India. The proposed greenfield facility will be located in the Watad Industrial Area of Ratnagiri, a coastal city in the western Indian state of Maharashtra. Once operational, the facility is expected to become one of the largest of its kind in South Asia.

The planned plant will have an annual production capacity of up to 200,000 artillery shells, 10,000 tons of explosives, and 2,000 tons of propellants, positioning it as a key asset in India’s defence manufacturing ecosystem.

While no specific timeline has been provided for the opening or commencement of production at the facility, Rheinmetall emphasised its strategic significance. The company said the site would make “a significant contribution to supplying India’s armed forces,” and support the Indian government’s stated goal of reaching $5 billion in annual defence exports.

Rheinmetall also highlighted the broader impact of the partnership, noting that it would provide the German firm with greater access to critical raw materials. “This partnership secures not only our supply chains, also in the interests of our customers, but also creates further growth opportunities,” the company stated.

Reliance Group chairman Anil Ambani hailed the partnership as a “transformational moment for the Indian Defence sector,” signalling the company’s deepening involvement in high-end military manufacturing.

The agreement builds upon Reliance Defence’s existing plans to create an “integrated project” focused on the production of explosives, ammunition, and small arms, anchored around the Dhirubhai Ambani Defence City (DADC), which is also located in the Watad Industrial Area. According to Rheinmetall, “The DADC is being built in the Watad industrial area in Ratnagiri, Maharashtra, and once completed will be the largest greenfield project in the defence sector ever developed by any private company in India.”

Previous exchange filings by Reliance indicate the company is exploring joint ventures with as many as six international defence firms to support the DADC initiative. It already maintains partnerships with two major French firms: Thales, for radars and electronic warfare systems, and Dassault, related to the supply of components for Rafale fighter jets.

In a parallel development, Rheinmetall separately announced the signing of another strategic MoU with Spain’s Indra. That agreement focuses on collaboration in armoured vehicle projects for the Spanish Armed Forces.

By Tamilla Hasanova