Syllabus: General Studies Paper 2 (International Affairs)
With so much potential on the African continent, and India being a natural partner with it, still the trade relationship remains a weak link. Comment.
India and Africa enjoy special relations with their ties inextricably linked by shared colonial past, geography, socio-economic similarities and common developmental challenges. India s ties with African states have grown rapidly in the past two decades. At the same time, India is also facing many challenges due to its competition with China, which has become one of the most critical factors for Indian diplomacy in Africa.
How India and Africa are Natural Partners
- India s carefully crafted diplomacy in Africa has brought positive results as no other country enjoys so much goodwill in Africa as India does. Both sides enjoy shared colonial past, dynamic present and promising future .India has much to gain from resource-rich regions of Africa as they can provide raw materials to India s industries.
- There is ample scope in energy cooperation as though Africa is rich in crude oil resources, its refining capacity is limited, and that precisely where India can step in with its much-advanced refinery sector.
- Growing market size and rising middle class can provide an alternate market for Indian products.
- The rising level of development and economic growth can provide investment opportunities to Indian entrepreneurs Indian Diaspora can play an important political, economic, and social role.
Reasons for weak trade relations
India’s Africa trade policy over the past few decades has oscillated between passive and reluctantly reactive at best. Strategic apathy toward the continent was obvious on many fronts.
- Most of the countries in Africa did not feature in India’s larger trade policy matrix, but until recently there wasn’t any significant attention paid to the continent.
- Indian leaders seldom travelled to African nations.
- India’s substantive trade presence in Africa has remained marginal as it focused on its own periphery through much of the Cold War period which limited its capabilities.
- Since the end of the Cold War China’s presence has grown in Africa, who has been providing soft loans to African states which has resulted in Chinese growing influence in the continent.
- With government institutions and businesses working in separate silos, India has no coordinated Africa policy, nor does there seem to be an avenue where the strengths of both actors can be leveraged.
- India is not alone in having an Africa-centered strategy. Our competitors on the continent, such the European Union, China, Japan and the U.S. also have IAFS-type processes and often commit even more resources than we do.
- India s political and economic relations with African states have generally been overshadowed by the more prominent Sino-African relations
Economic ties with Africa are mainly left to private operators and middlemen in India
- Security threats and conflicts in North Africa have brought to the fore the high risk nature of investments in the African region
- Growing influence of Islamic state and other terrorist organisations also present risk for Indian investments
- Piracy related concerns and kidnapping of the vessels in the littoral areas are also areas of concern for India
Present status of Trade
- India’s total trade with the African region during 2017-18 was USD 62.69 billion (8.15% of India’s total trade with the World).
- India’s share of exports to African countries as a percentage of India’s total exports to the world was of the order of 8.21% in 2017-18.
- Africa region’s share in India’s total imports from the World accounted for 8.12% in 2017-18.
- India became Africa’s fourth largest trading partner, with the trade turnover of $72 billion.
Third India-Africa Forum Summit in 2015:-
- The tempo set with the summit has been carried forward and sustained to a large degree. Currently, India’s forte in the continent has been developmental initiatives such as Indian Technical and Economic Cooperation (ITEC), Team 9, and Pan Africa e-network among others are aimed at building institutional and human capacity as well as enabling skills and knowledge transfer.
- Indian businesses are active across geographic spaces and sectors in Africa. Agri-business, engineering, construction, film distribution, cement, plastics, and ceramics manufacturing, advertising, marketing, pharmaceuticals, and telecommunication are only some of the sectors that have Indian players.
- Indian investment in Africa is also being ramped up, with over 140 Indian enterprises (from Wipro to Mahindra and Mahindra) investing over $4 billion in South Africa alone. Sub-Saharan African countries have also reached out to India to undertake rural electrification from financing and technology transfer, to detailed project reports and execution.
- Years of diplomatic neglect of the continent is being addressed with the top echelons of Indian leadership regularly visiting the continent. Most notably, Indian president’s first overseas visit since taking office was to Djibouti and Ethiopia in October 2017.
- Similarly, when Indian PM stopped by Mozambique during his four-nation tour of Africa making him the first Indian PM in 34 years to visit the country.
- India has extended 152 lines of credit to the tune of almost $8 billion to 44 African countries, for developing agriculture, infrastructure, clean energy, and manufacturing.
- New Delhi will need to start delivering on the ground if the India-Africa partnership has to move beyond high level visits.
- Indian investments in Africa need to expand and diversify towards ‘broad’ range and not remain restricted to traditional sectors of investments.
- In order to keep the momentum of building political and economic ties with this increasingly important region, steps should be taken towards tailoring and funding joint projects for the sustainable development of the Africa.
- Sooner rather than later it has been realized in Indian economic and trading circles that Africa is a region that India cannot afford to ignore anymore which has been manifested in increasing bilateral and multilateral visits
- Huge complementarities exist to strengthen bilateral collaboration in diverse areas and upgrade India-Africa engagement.
- It is high time that the goodwill enjoyed by India among African nations should be leveraged in our advantage through economic diplomacy.
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