INDIA- AFRICA TRADE RELATIONS CURRENT SCENARIO AND FUTURE TRENDS Anita Prakash Tripathy

Upto1960s IndiasAfricapolicywaslargelypoliticalwithtwodominantstrands SupportforfightagainstRacialism/Colonisation Principleofnonalignment;Mostofthecontinentsnationbecamepartofthe NonAlignedMovement(NAM) Majorlowinthe1960s(towardstheendofNehru'stenure) DefeatintheSinoIndianwarin1962 asetbacktotheimageofIndiaasaleader. India'shesitationinfixingadatefortheendofinAfricaattheBelgradeNAM Summitin1961 IndiasinsistenceonAfricanliberationmovementstoadoptpeacefulmeans(as opposedtoChina'sovertgesturestowardsarmsassistance)

Background

Reassessment of Africa Policy - Some Fresh Initiatives.

IndiadiscontinuedseeingAfricaasabloc becameselectiveinitsfriendship Launchedaconsciouspolicyofeconomicdiplomacy IndianTechnicaland EconomicCooperation(ITEC)Programme in1964,primarilytocounterChina'said diplomacy. ITECprovidedtheinstitutionalframeworkforenhancingcooperationwith developingcountriesthroughtechnicalandeducationalassistance Bythe1970sIndiaAfricarelationsonceagainturnedforthebetter TheIndoSovietTreaty(1971), The1971war,TheGreenRevolution,and ThePeacefulNuclearExplosion(PNE)in1974contributedtowards thischange. MostImportantly,arealisation amongdevelopingcountriesinAsiaandAfricaof theneedforeconomiccooperationamongthemselves.(SouthSouth Cooperation)

Increase in India's Trade with Africa

AnupswinginIndia Africatradeturnoverstartedonlyafter200001

Initiatives in the New Millennium

TradeengagementwithAfricaexpandedtosectorsofhydrocarbons,mineralsandmetals, pharmaceuticalsandSmallandMediumEnterprises(SMEs) CoverageofIndianTechnicalandEconomicCooperationalsogrewwiththenumberofavailable slotsfortrainingofAfricans. Indialaunchedaninitiativein2004 theTechnoEconomicApproachforAfricaIndiaMovement (TEAM9)witheightenergyandresourcerichWestAfricancountries Senegal,Mali,CotedIvoire,Chad,EquatorialGuinea,GuineaBissau,GhanaandBurkinaFasoare themembersofTEAM9 EngagementofunderdevelopedyetresourcerichWestAfricawhich requiredlowcost technologyandinvestmenttodevelopitsinfrastructure. Creationofinvestmentclimate,particularlyintheextractiveindustrieswheretheratioof profitabilityasaratiooftotalturnoverhasreached27.5% UnderTeam9,IndiaextendedlinesofcreditamountingtoUS$500milliontotheeightWest Africancountries.

The Current Scenario

IndiasAfricapolicyingeneralandtradepolicyinparticularisbeingshapedbythese multipledevelopments. FiercecompetitionforresourcesinAfricaledaggressivelybyChina. ImportanceofAfricanenergytotheworldparticularlyemerginghighdemand centerssuchasIndiaandChina,inlightoftheproblemswithexistingsourcesinthe MiddleEastandLatinAmerica. ThestrengthofAfricannumbersintradenegotiationsatWTO,andtheircollective bargainingpowerinconcertwithIndiaandBrazilattheDohaRound. ConcernsovercurrentstateofhealthinAfrica HIV,AIDS,Avianflu,Malariaetc.

Africas Share in Indias Trade Two Important Trends

Africas increase in share of Indias imports has been more pronounced and dramatic, than the increase in shareinIndiasexports. TheTradeBalancehassharplyswung infavour ofAfrica,particularlyafter 200506.
(InUS$Million)

Distribution of Indias Trade in Africa

WithinAfrica,till20002001,SouthernAfricawasIndiasmostimportanttrading region By200708,WesternAfricahadreplaceditasthemostimportanttrading region. Duringthisperiodofdramaticchange,IndiastraditionalpartnerregionEastAfrica continuedtoremainIndiaslargestexportdestinationinAfrica

RegionWiseDistributionofIndia'sTrade
(inUS$Millions) 2000-01 Export Africa Southern Africa West Africa Central Africa East Africa North Africa 2,356.38 1,060.63 768.19 75.93 555.52 554.92 Import 2,059.94 401.82 446.51 3.91 92.5 456.39 Total Trade 4,416.32 1,462.45 1,214.70 79.84 648.02 1,011.31 Export 14,196.10 3,609.23 3,476.63 257.51 4,202.93 2649.8 2007-08 Import 20,497.65 4,835.39 9,745.30 49 319.34 5548.62 Total Trade 34,693.75 8,444.62 13,221.93 306.51 4,522.27 8,198.42

Region Wise Trade Share 2000-01 and 2007-08

InPercentage

Region Wise Trends - West Africa

NigeriaisthetopoveralltradepartnerofIndiainAfrica GhanaandCotedIvoireinWestAfricaareamongthetoptenoveralltradepartnersof IndiainAfrica. Oilconstitutes84.57%ofIndiasimportsfromWestAfricain200708. IndiasuneventradewiththeindividualWestAfricancountriesisdirectlyrelatedtothe lattersrelationshipwiththeirformercolonists andbydefaulttothedeveloped countries. IndiastradeinthisregionlargelyfollowedthetradingpatternofBritishIndiaandwas tiltedinfavour oftheCommonwealthmemberslikeGhanaandNigeria. ThedifferencesbetweenAngloandFrancophonecountriesofWestAfricaremain evidentinbilateraltradepatterns

Region Wise Trends - Southern Africa

SouthAfricain200708accountedfor74percentofIndiastotaltradewith SouthernAfrica(74percentofexportsand75percentofimports). AngolaisthesecondlargesttradingpartnerinSouthernAfrica withhugeoiland diamondresources. Petroleumproductsaccountsformorethan30percentofIndiasexportto SouthernAfrica Amongimports,goldaccountsformorethan50percentofthevalueofimports.

Region Wise Trends - North Africa

EgyptwasIndiaslargesttradepartnerinNorthAfricaaccountingfor38.51 percentofIndiastradeintheregionand63.26percentofIndianexportstothe region. GlobaltradeofNorthAfricaismarkedbyhighgeographicconcentrationandweak diversificationofexports. Indiasdependenceonlongstapledcottonfromtheregionhasdeclined sharply, whileitsdependenceontheregionforcrude,inorganicchemicalsandfertilizers continues.Thistrendislikelytocontinue.

Region Wise Trends - East Africa

EastAfricaoccupiedprimacyasIndiasregionaltradingpartnerinAfricaduetothepresence ofalargeIndiandiaspora,proximitytoIndianshoresandalongstandingtrading relationship. KenyaandMauritiusaremajortradepartnersaccountingfor37%and24%respectively(in 200708)inIndiastotaltradewithEastAfrica. Tanzaniafollowsasaclosethirdaccountingfornearly17%ofIndiastotaltradewithEastern Africain200708. Strategically,itwouldbenefitIndiatoinvestinprocessingunits(technologicallyand financially)inthisregion.

Region Wise Trends - Central Africa

CentralAfricasshareinAfricastotaltradewithIndiahasdeclinedfrom2%in200001to1% in200708. Theremarkabledevelopmentinthelastfiveyearshasbeentheincreaseintradeshareof theChad,DemocraticRepublicofCongoandRwanda Atthesametimetherehasbeenanactualdeclineintheshareoftraditionalpartnerslike UgandaandMalawi. Thissuggestsawideningoftradeengagementintheregion. AnaggressivedevelopmentanddeepeningoftraderelationswithChadandtheDemocratic RepublicofCongothroughincreasedinvestmentsinfossilfuelsandmineralsisrequired.

Major Findings Policy Recommendations

AfricaisenjoyingitsbestperiodofsustainedeconomicexpansionsinceIndependence. AfricasimprovedeconomicperformanceisalsoreflectedinthesmartgrowthinIndiastradewiththe continent WesternAfricawouldcontinuetobeourmostimportantimportpartneruntilatleastinthemediumterm onaccountofitswealthofnaturalresourcesandourcomplementarydependenceontheregionforoilin particular. EastAfricahoweverisnotlikelytoremainIndiasmajorexportdestinationintheAfricancontinentand willverysoonyieldthespacetoSouthernAfricafollowedbyWesternAfrica. NorthAfricawillcontinuetoremainanimportanttradingpartnerofIndiaonthewealthofitsoiland chemical/fertilizerresources. TheSouthernAfricanregionwillcontinuetobethemostimportantnonoiltradingregionforIndiaonthe basisofitsmarketdepthandsize. ThescaleofinvestmentinAfricawilldependontherelativesizeofitsnaturalandmineralendowments andnotmerelyitsmarketsizeanddepth InvestmentinAfricawillprecedetrade.

Africa Is The New Need Of Indias Political Economy

AsIndiaseconomygrows,Africawillincreasinglybecomeimportantasacriticalproviderof Indiasburgeoningenergyneeds Itisanticipatedthatinthefuturebetween2025%ofIndiasoilimportswillbesourcedfrom Africa upfromthecurrentlevelof16% ThenewneedsofIndiasemergingpoliticaleconomyandtheabilitytoeffectivelyaddress theneedsthroughsupplyofvitalnaturalandmineralresourceswilldictateanddecidethe relativeimportanceoftheAfricannationsinIndiascommercialpeckingorder. GivenIndiasdependenceonAfrica,itisanticipatedthatAfricaisfinally goingtoforceIndia togiveitthedesiredimportanceinitscommercialstrategicthinking ThisisespeciallytrueforincountrieslikeSudan,Angola,CongoDRandsomeofthe FrancophoneWestAfricanStates.