An announcement on the resolution of the issue is likely to be made during Chancellor Angela Merkel's visit to India in October.
The issue figured prominently during External Affairs Minister Sushma Swaraj's meetings here yesterday with her German counterpart Frank-Walter Steinmeir and German Education Minister Johanna Wanka as both sides discussed contours of a resolution.
As per the broad understanding between the two sides, India will continue to teach German as an additional language while Germany will promote Indian languages including Sanskrit in their educational institutions.
The Human Resource Development ministry had in November decided to discontinue teaching of German as an alternative to Sanskrit and cited "national interests" for its decision.
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Germany had criticised the decision and the issue was also raised by Merkel during her meeting with Modi on the sidelines of the G-20 summit in Brisbane in November last year. Modi had assured her at the time that his government will look into the matter and try to work out an amicable solution.
Meanwhile, Swaraj raised with Wanka problems faced by some of the Indian students in pursuing their studies in Germany like residency status, renewal of visa and accommodation as both sides discussed new initiatives to enhance cooperation in the education sector.
The number of Indian students in Germany has gone up significantly in the last few years. Currently, more than 10,000 Indian students are studying in Germany while around 800 German students are pursuing various courses in India.
Wanka told Swaraj that Germany was planning to set up an international centre for advance studies in humanities and social science in India as part of a series of new initiatives to ramp up cooperation in areas of education and science and technology.