India-Africa Project Partnership: 9th CII- EXIM BANK Conclave March 17 - 19, New Delhi

Africa offers the right atmosphere for India to expand trade


Second India-Africa Forum Summit in Addis Ababa.

The determined effort of the Indian government to evolve a strong economic and trade relation with Africa is recognised by the initiatives it is taking.The countrys First India-Africa summit in 2008 at New Delhi was an important step in that direction.Conclaves and meetings in 2009 and 2010 are an indication that both are eager to establish and nurture a strong relationship.

In todays global scenario where Africa is well positioned in terms of providing a reservoir of energy resources,a near-virgin land for economic and trade opportunities and a continent that can side with emerging economies to offset the long dominance of the North,the march towards Africa is well visualised.Emerging economies such as India and China are looking at Africa as a viable alternative for their immediate growth and survival.

To that end, Prime Minister Manmohan Singhs decision to attend the second Africa-India summit in Addis Ababa,Ethiopia,during May 20-27 is an indication of the priority and urgency that the Indian government is extending towards Africa. Among the engagements, trade and investment relations between the two occupy a key priority.

First is trade. India-Africa economic and trade relations have witnessed a surge. Currently pegged at $39 billion,the trend is poised to witness a further rise as the first two quarters of 2011-12 have already registered more than $24 billion in bilateral trade,of which $25 billion has been Indias imports and $14 billion exports.The growth is significant compared to the bilateral trade of $967 million in 1991. Major exporting destination for India in the African region are South Africa,Mauritius,Nigeria,Egypt and Tanzania,and major importing partners are Nigeria,South Africa,Congo and Tanzania.

The two major trading partners have, of late,witnessed a diversified export basket. Major items of African exports to India are mineral fuel,mineral oils and products, copper ores and concentrates natural or culture pearls,precious or semi-precious stones, coffee, coconut, edible fruit, etc.

India, the largest importer of rough diamonds, sources most of its requirement from Africa. Similarly Indias exports to the African market constitute a wide variety of products that include mineral fuel,mineral oils and products of their distillation, cotton,iron and steel, nuclear reactors, boilers, machinery and mechanical appliances, meat of bovine animals, etc.

This growing trade relation has generated keen interest in the Indian government that was adequately noticed when commerce and industry minister Anand Sharma said that we have set for ourselves a target of $70 billion by 2015 and I am sure that we will be able to achieve it.

The minister reiterated the countrys commitment to ensure supply of affordable life-saving drugs for poor people.India will not allow a situation where life-saving medicines are out of reach of poor people. We will ensure that whatever new molecules develop, the benefit must reach the poor people in the region.

The Indian government is also taking measures to promote bilateral trade. Its commitment to provide a duty-free preferential tariff scheme for 49 least developed countries (LDCs) including 33 African countries is a major step acknowledged by developed countries in WTO negotiations.

Its efforts to attain developmental goals through Doha round for all developing and LDCs is largely supported by African countries in forming G20 and G33 blocs. It is promoting South-South cooperation as a counter to the long dominance of North.The government has identified certain areas of cooperation between the two regions that includeIT,telecom,agriculture,agroprocessing,irrigation,mining,power,pharmaceuticals,etc.

Secondly, the Indian investment is also playing an active role in strengthening this relationship. More than $25 billion of investment has gone into Africa. Although the energy sector has received a large chunk of this investment, sectors like manufacturing and services have also received huge amount of investment.

India's quest for energy resources has been a paramount factor in its investment in Africa as India needs to be self-sufficient in its energy sector for its future industrialisation process. In the manufacturing sector,investment has gone into sectors such as apparel, agro-processing,power generation,road construction, and the growing services sector like e-education and telecommunications in African region has received wide attention of Indian investors.

Indian businesses have found Africa a familiar ground and similar to other emerging markets and also easy to compete unlike industrialised countries.The major investors include ONGC, Essar, Tata, Bharti Airtel, Zydus, Ranbaxy, TCS, Infosys, etc.

This investment has produced positive results. The impact of Indian investment in Africa has contributed to the welfare of African nations. Leading pharma companies such as Ranbaxy and Zydus have provided low-cost generic drugs;Tata Consultancy Services and Infosys have delivered ITeS at cheaper rates;sourcing of raw material for Indian companies has put upward pressure on price levels because of competition from China,and this, in turn,has benefited Africans; and as many Indian companies have gone into extraction sector, this activity has provided longer employment to the Africans. Besides, Indian operation in African markets has also helped African countries to integrate with the global market.

In the background of this,the Prime Ministers current visit to Addis Ababa promises to deepen further engagement of India with Africa. Both are poised to benefit from this exercise as greater movement of bilateral trade and investment between India and Africa is constantly growing.The confidence of Indian industry has increased in spite of the law and order problem and non-transparency in legal and administrative structure still prevailing to an extent.It could be a win-win situation for both parties.

(The author is with the Indian Institute of Foreign Trade, New Delhi)

(Economic Times)



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