Also after selling HDW submarines, the Germans would not be averse to selling India the tanks. Again in the present economic scenario Germany would be more than happy to sell Arms to India, with which they have a very good relationship.
You are underestimating the main reasons for Germany to sell weapons or to refuse selling weapons: Politics.
One example are the Turks - they wanted to buy the Leopard 2, but the Germans refused to sell them. Officially because of problems with the human rights and such stuff, but the main reason for not selling the tanks was in my opinion another. After the reunification of Germany the government did have a huge number of Soviet-designed vehicles. Originally it was planned to integrate large parts of them into the German army, but after the collapse of the Soviet Union this plans were discarded and the East-German vehicles were sold or scrapped. It happened that some of the vehicles were sold to Turkey, where they were filmed being used against members of the PKK, which lead to an uproar in Germany... not in the government, but in the public, even though the PKK was/is considered as terror organization in the EU.
Some years later the Leopard 2 tanks were simply sold, at this time the situation in the Turkey was calm. In the end KMW even offered them the licence to produce the Leopard 2 for own use, but the South Korean offer (transfer of technology from the K2 tank) was chosen. In terms of human rights the situation remained more or less the same the whole time.
Germany does not sell weapons for war, only for peace - this does not mean that they are not made for killing or are bad designed and do not work nice - in fact German weapons are often top-performers in comparative trials - but Germany is often not willing to sell weapons to someone who will use them, because of the public opinion. I don't think there are exact figures, but the majority of the Germans are pacifists, even the German consitution forbids wars. If they sell weapons to some war-country and some people from the media will report about it, then the majority of the Germans will probably think twice before voting for the ruling parties - the internal politics are here more important than the relations to other countries.
Some examples are Lybia and Saudi-Arabia. In Lybia the goverment forces used sometimes German G36 - but there was an embargo... this caused a lot uproar and even some police investigation, but in the end the rifles were bought from another country ilegally. Saudi-Arabia wanted to buy German Leopard 2s and the government agreed - the Saudis are/were under stress because of the Iran and therefore it would help the exterior politics to sell the tanks. But someone told the media about it (the German Federal Security Council which decides wether arms can be exported or not meets secretly) and then the public and the media criticized the government (because the Saudis fought civilians in Bahrain), which therefore canceled the deal and wanted to reevaluate the situation - it is possible that they will sell the tanks when the situation in Arabia is calm again. Qatar could simply buy the Leopard 2, because they did not have problems with civilians or their neighbous.
The thing is that selling some weapons is considered as more or less "ok" - like older rifles or handguns. This somehow does also include submarines atm, probably because they are used more seldom than IFVs and tanks or because they are not seen fullfilling their role. Tanks are having a very high prestige and are somehow the "personification" of warfare - selling them to some country which could actually use them for any other use than defending themselves is a total no-go.
The Germans are not on India's side nor on the Pakistani/Chinese side in any potential conflict involving India. They are neutral (and I think I am also neutral in this matter) and they don't want to sell large amounts/large weapons they controll on their own to one or the other side, because a simple provocation from on or the other side could lead to a total war. Their is no "just war" in the German point of view.
German did offered Leo 2a4 back in early 90s but Army refused as Army logistic chain and men are use to with Russian legacy tanks, Leo 2a4 was totaly different tank compare to T-72M1 and require training from beginning on both handling and maintenance..
The manufacturer does present the tank to countries, offer them and make deals. But the government decides wether the export will be allowed or not. Their are three examples (once the Turkey, twice Saudi-Arabia) where the tank was presented to a country and offered, but the government said "no".
Germany has been at the receiving end of punitive actions by India, given their laws that encourage bribery.
Which laws encourage bribery? I don't think that the Germans does, else you could send me the §. It seems for me rather to be a problem with the Indian procurement systems, since a lot of briberies happen in Inda (e.g. Bofors).