Merkel will receive Modi when he arrives at the Hannover trade fair grounds on Sunday evening and afterwards they will attend the opening ceremony of the annual Hannover Fair, the world's largest show of capital goods and technology.
The two leaders are scheduled to address the gathering at the Hannover Congress Centre.
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Around 120 top executives from India as well as several representatives of Germany's business and industry are expected to join the two leaders for the dinner.
On Monday morning, Modi and Merkel will jointly open India's national pavilion featuring the products and services of more than 400 companies and will take a tour of the stands of some Indian and German exhibitors.
This will be the largest participation so far by Indian companies at the Hannover Fair. The two leaders will later take part in the opening of the Hannover Fair Business Summit, which is devoted to the 'partner nation'.
Modi will leave for Berlin around mid-day on board a special aircraft and in the afternoon he will visit a training centre of Siemens on the outskirts of the capital.
Sigmar Gabriel, Deputy Chancellor and Economy Minister, is scheduled to call on Modi in the evening.
The prime minister will continue his discussions on Tuesday morning by receiving Foreign Minister Frank-Walter Steinmeier for an exchange of views.
He will also unveil a bust of Mahatma Gandhi in Hannover.
Chancellor Merkel will receive Modi with full military honours at noon on Tuesday at the chancellery here and afterwards she will host a lunch in his honour.
They will have detailed talks in Berlin with focus on how Germany can work with India in its developmental agenda.
Their discussions will focus on matters of bilateral relations as well as global and regional issues of mutual interest, the government said in a press statement.
They will wind up their discussions by addressing a joint news conference in the afternoon.
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