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: China’s first-ever summit with leaders of 48 African countries in Beijing is a diplomatic triumph for the country in deepening its political and economic cooperation with the continent. China’s aggressive strategic stance should be a wake-up call for a relatively lethargic India. As rising powers, both India and China have similar stakes in the continent, which is clearly emerging as a new destination both for exports and investment. As research reveals, an increase of 1% in FDI inflows to Africa leads to a 0.66% rise in its imports from India—and, Africa currently offers a far higher return on FDI than other regions of the world. Our stakes also include the need to secure access to oil and raw materials. Yet, consider how India’s Oil & Natural Gas Corporation (ONGC), which is involved in oil exploration in Sudan, lost out on important deals in Nigeria and Angola to the more fleet-footed Chinese oil giants. ONGC is trying to make up with its recent agreement with Norway’s Norsk Hydro to secure a stake in the latter’s exploration block in Angola in exchange for allowing Norsk Hydro a holding in its exploration block in Cuba. But the Chinese are way ahead in this game, and their trade with Africa is currently five-times larger than India’s $9.5 billion in 2005-06.
Note that India has a certain edge over China which it must promote with aggressive economic diplomacy—the Indian diaspora, especially in south and east Africa. As pointed out in these pages (FE Insight, November 1), this diaspora’s contribution to India’s trade is significant, as they own distribution channels, manufacturing facilities and mines in these countries. This potential has hardly been tapped, although India Inc, for its part, has invested in apparel, food processing, retail, fisheries, real estate, tourism and telecom. We also need to facilitate SME trade ties with African countries, as these enterprises are the key contributors to India’s exports. More aid and development cooperation, which can extend to building universities, sports stadia, etc (as the Chinese are doing) can also further India’s economic engagement with Africa.
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