The India Africa Trade Council to Kickstart Bilateral Trade, Business Relations
On January 22, 2021 the India Africa Trade Council was inaugurated by Dr Tizita Mulugeta Yimam, Ambassador of Ethiopia in India and Nagma Mallick, Additional Secretary, Indian Foreign Service, (Africa) in order to boost India-Africa business and trade relations.
Impetus for closer ties
The African continent has a varied and largely untapped scope for multilateral business opportunities due to its abundance of natural resources, such as millions of untilled acres of farmland and large reserves of oil, as well as the potential to support a large percent of the world’s hydroelectric power besides human capital.
This untapped potential is important for India as it seeks to forge stronger trade ties with the region. Similarly, Africa is keen to build up its business relations with India and seeks aid in strengthening the capacity of the following organizations in terms of knowledge, skills, and resources:
- Common Market for Eastern and Southern Africa (COMESA) Regional Economic Organization;
- Economic Community of West African States (ECOWAS);
- The Sahel Alliance; and
- West African Economic and Monetary Union (WAEMU).
India Africa Trade Council to open trade offices in major Indian cities
To kickstart its initiatives, the India Africa Trade Council will open 13 trade offices in each of India’s major metropolitan cities, that will assist Indian businesspersons who want to trade with African countries.
South India delegation to sign MoUs with African countries
A recent roundtable meeting organized by the Trade Council in Chennai made the decision to send a 30-member South Indian delegation representing the Trade Council in April 2021 to sign various memoranda of understanding (MoUs) on health, skill development, and agriculture with Botswana, Namibia, and COMESA (where Djibouti, Ethiopia, and Zimbabwe are member countries).
This decision was made by Chris Pohl, Vice Chairman of the India Africa Trade Council; Dr Asif Iqbal, President of the Indian Economic Trade Organization (IETO); and Dr B. Ramakrishnan (Dr. BRK), Founder and CEO of Corporate Clinic in Chennai and Director of the India Africa Trade Council alongside Dr Tizita Mulugeta Yimam and Nagma Mallick.
Further initiatives planned for the Trade Council include:
- Establishing the India Africa Film Commission, that will find opportunities to shoot films for the South India Film Industry and Bollywood;
- Organizing meetings to discuss possible collaborations with the Indian auto giant Tata Motors, as well as purchase 500 cars from them for the Republic of Djibouti;
- Organizing monthly roundtables every month in Chennai, for the purpose of focusing on various African countries, with support for better cooperation from their respective Delhi embassies who along with Indian entrepreneurs will chair the meetings; and
- Launching an Africa Special Economic Zone (SEZ) for better collaborations with African companies in the city of Kolar, Karnataka by utilizing 100 acres of land.
Dr Tizita Mulugeta Yimam commented that Indian and Ethiopian bilateral partnerships must be elevated strategically in order to have fruitful dialogues, for the benefit of both countries.
Dr Asif Iqbal added to this by stating that engagement with Africa is one of India’s top priorities, which will be acted upon by creating as many opportunities as possible for Africa to trade with India.
India, Africa trade and investment profile
India is reportedly Africa’s third largest trading partner, accounting for 6.4 percent of the continent’s total trade at a value of US$62.6 billion in 2017-18.
In contrast, the value of China-Africa trade was reportedly US$185 billion in 2018, making China Africa’s largest trading partner after surpassing the US. Chinese overseas investment in Africa, in all sectors, as of mid-2020, amounted to US$147.66 billion. While India cannot match Chinese spending, it can strengthen engagement in terms of developing human capital while also tapping into the rich Indian diaspora community across the continent.
Trade and investment snapshot
India’s exports to Africa are diverse, ranging from mineral fuels to automobiles, pharmaceutical products, machinery, and cereals. Indian imports from Africa, on the other hand, is dominated by mineral fuels.
Main export destinations for India in Africa include South Africa, Kenya, Egypt, Nigeria, Tanzania, Mauritius, Mozambique, Algeria, Ghana, and Ethiopia. Major African countries that India imports from include Nigeria, South Africa, Angola, Egypt, Morocco, Ghana, Algeria, Tanzania, Libya, and Botswana.
In terms of investment opportunities, there is clearly a lot of scope for investments in establishing forward and backward linkages. Indian investments are presently focused on primary commodities like oil, gas, mining besides automobile and pharmaceutical sectors in manufacturing.
Growth driver in 2021 – AfCFTA
The African Continental Free Trade Area (AfCFTA), which commenced January 1 this year, could play a key role in expanding Indian trade and investment footprint in the region and promote domestic industrial enterprise in export-oriented manufacturing. The AfCFTA pact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 trillion. According to the World Bank, analysis shows that full implementation of AfCFTA could boost pan-African income by seven percent, or nearly US$450 billion. The agreement would also significantly expand African trade, and especially intraregional trade in manufacturing.
A comprehensive, 163 page World Bank report, “The African Continental Free Trade Area: Economic and Distributional Effects“ can be downloaded here.
Data representation in the article was adapted from: Singh, Rajender & Aslam, Mohamad & Preet, Gaibul & Mahapatra, Sushanta. (2020). India-Africa Trade and Investment Cooperation for Economic Development. 10.4018/978-1-7998-1730-7.ch005.
India Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Delhi and Mumbai. Readers may write to email@example.com for business support in India.
- Previous Article India’s Union Budget 2021: Key Provisions Foreign Investors Should Track
- Next Article How Tesla Structured a Tax Efficient Manufacturing Investment Strategy in India