Greater economic cooperation between the two can serve the cause of the global South
The 3rd India-Africa Summit being held at New Delhi is a significant reminder of the growing relationship evolving between the two. It is a landmark event in the sense that, for the first time, 50 African nations are participating in this summit and exhibiting a deep sense of commitment towards promoting economic, trade and cultural relations.
Though India’s engagement with Africa dates back to the early 20th century, when Mahatma Gandhi faced a racist assault in South Africa and saw the reality of apartheid, and then decided to launch a struggle against colonialism.
But the dynamics of the Indo-Africa relationship has changed a lot since, and at present, India looks at Africa as an equal trade partner. The Indian government’s determined effort to evolve strong economic and trade relations with Africa is obvious in the former’s initiatives. In 2008, India held the 1st India-Africa summit. Thereafter, the 2nd Summit was held in 2011, in Addis Ababa (Ethiopia) and various conclaves and meetings indicated that both sides were eager to establish and nurture a strong relationship.
Africa is currently well positioned in the global scenario. It is a reservoir of energy resources, a near-virgin land suitable for economic and trade opportunities, and a continent that can side with emerging economies to offset the dominance of the Global North. Unsurprisingly, emerging industrialising economies, such as India and China are looking at Africa for growth and survival.
First, to trade. India-Africa economic and trade relations have witnessed a surge. Pegged at $68 billion in 2015, it is poised to rise further, as is clear from the fact that the first two quarters of this financial year have already registered significant volumes in bilateral trade. India’s major African export destinations are South Africa, Mauritius, Nigeria, Egypt, Tanzania, etc, and its major importing partners are Nigeria, South Africa, Congo and Tanzania. According to department of commerce, region-wise distribution of India’s exports to Africa currently witness East Africa receiving about 31%, followed by Southern Africa (27%), West Africa (21%) and North Africa (17%). Similarly, imports from Africa to India registered about 38.5 billion and major imports came from West Africa(52%) and Southern Africa(33%).
Of late, the basket of exports has diversified. Africa has exported mineral fuels, mineral oils and products, copper ore, natural or cultured pearls, precious and semi precious stones, coffee, coconut, edible fruit and nuts, etc. India, the world’s largest importer of rough diamonds, sources most of what it requires from Africa. Similarly, India’s exports constitute a wide variety of products, including cotton, iron, steel, nuclear reactors, boilers, machinery, mechanical appliances, frozen bovine meat, etc.
As part of measures to promote bilateral trade, India has committed itself to a duty-free preferential tariff scheme for 49 least-developed-countries. Of these, 33 are in Africa. India’s efforts to attain developmental goals through the Doha round for all developing and least-developed-countries is largely supported by African countries in the G-20, G-33 blocs. It is promoting South-South cooperation. The government has identified certain potential areas of co-operation between the two regions. These include information technology, telecom, agriculture, agro-processing, irrigation, mining, power, pharmaceuticals, etc.
Overseas investment is becoming an instrument of global integration. This is the context in which the impact of India’s drive to invest in Africa must be read. More than $40 billion, according to UNCTAD, of investment has gone into Africa. The energy sector has received a large chunk of this and so have the manufacturing and services sectors. Rapidly industrialising India’s quest for resources as a means of energy self-sufficiency has been an important reason for investing in Africa.
In terms of African manufacturing, Indian investment has gone into apparel, agro-processing, power generation, road construction and the growing services sector. This last includes e-education and telecommunications. Indian businesses have found Africa to be a familiar ground in that it is similar to other emerging markets and also easy to compete in, unlike industrialised countries. Major investors include ONGC, Essar, Tata, Bharti Airtel, Zydus, Ranbaxy, TCS and Infosys, among others.
This investment has produced many positive results. It has contributed to the welfare of African nations. Leading pharma companies like Ranbaxy and Zydus have provided low cost generic drugs; TCS and Infosys have delivered at low rates; sourcing of raw material for Indian companies has put pressure on price levels because of competition from China and this in turn, has benefited Africans. Many Indian companies have gone into the extraction sector and this has provided employment to many Africans. Besides, Indian operations in Africa have helped African countries to integrate with the global market.
In the background of this, the current summit promises to scale new heights and can further deepen the engagement with Africa. Both sides are poised to benefit. Indian industry’s confidence has risen enormously despite law and order problems and the non-transparency that still prevails in most of African politics and, and to some extent, in the legal and administrative structure there, as well. It could be a win-win situation for both sides and provides a great platform to promote South-South cooperation which should in a way challenge and counter the moves of the global North, like Trans Pacific Partnership agreement (TPP).
The author is a former faculty member, IIFT, New Delhi