The German Government will provide India a loan worth €1 billion (£860m) to help the country develop its renewable energy plans.
Reports claim the two nations signed a joint declaration during inter-governmental talks in Berlin. The loan is expected to help India develop grid integration technology of renewable energy and speed up the construction of power lines.
India’s Prime Minister Manmohan Singh and Germany’s Chancellor Angela Merkel were present as the agreement was signed.
The Indian Government wants to increase its renewable energy generation capacity as many parts of the country still have no access to electricity and a major two-day blackout last year affected 600 million people.
A statement from India’s Ministry of New and Renewable Energy said it plans to add 30GW of capacity as part of its five-year plan, of which 25GW is expected to come from wind and solar energy.