by Institute for Global Dialogue
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The 2008 and 2011 India-Africa Forum Summits have proven useful in examining the factors that informed and underpinned New Delhi’s engagements with Africa. Indian enterprises and corporate ventures appear to have been the catalysts that set current Afro-Indian relations in motion. New Delhi has only come to streamline,
facilitate, and build on the relationships that Indian businesses initiated in Africa.
Undoubtedly, India’s vested strategic interests in Africa are aligned with its global economic presence as a major development partner that has fuelled corporate India’s global expansion. India’s presence in African investment and its market share can be felt in economic sectors ranging from the extractives, agriculture, and information and communication technologies (ICTs) to pharmaceuticals, manufacturing, and hotel and leisure.
Along with its economic interests, India also seeks to accomplish wider geopolitical goals through its engagement with Africa. The case in point is India’s continued campaigns for United Nation Security Council (UNSC) reforms aimed at achieving a more democratic UNSC that would reflect current geopolitical realities. More recently, India has championed the cause of the developing world in the World Trade Organization (WTO), where it took a hard line in defending the developing world’s case for food sovereignty and security.
But, is it really in the realm of economic dexterity that India’s African engagement is being realized?
Afro-Indian Trade
Afro-Indian trade grew steadily at a rate of almost 32 percent annually from 2005 to 2011. This growth was spurred by Indian private investments in ICT, energy, automobile manufacturing, and telecommunications.
In the span of less than a decade, since 2007, Afro-Indian trade has more than doubled from US$ 25 billion to US$ 57 billion, while two-way trade is estimated to have reached US$ 70 billion in 2014 and is projected to be US$ 90 billion in 2015.1
In what was described as a watershed moment in Afro-Indian trade relations, African leaders and Indian industrialists on the sidelines of the World Economic Forum hosted in New Delhi last year expressed their joint vision of realizing US$ 500 billion in trade between Africa and India by 2020. This is more than five times the official projected figures for 2015.
African exports to India are growing at a rate of 32 percent annually, while India’s exports to Africa are growing at a rate of 23 percent.
Angola, Egypt, Morocco, Nigeria, and South Africa account for about 89 percent of Africa’s total export trade with India.
African nations have also benefited to some extent from India’s Duty Free Tariff Preference (DFTP-LDC) scheme for least-developed countries (LDCs), which was implemented in 2008 over a period of five years. The scheme – until its revision in August 2014 – offered duty-free access to LDC exports on 85 per cent of Indian tariff lines. Following the scheme’s revision in April 2014, the duty concession was extended to 98 per cent of tariff lines. The implementation of the scheme has been gradual, with a 20 per cent reduction in the level of applied tariffs per year.2 The scheme, as demonstrated in previous analyses in this edition, has had only limited impacts given its current design.
Indian investment in Africa
Today, India is the fifth largest investor in Africa.
According to International Monetary Fund (IMF) estimates, in less than a decade leading up to 2011, Indian investment in Africa rose from US$9.2 billion to US$ 14.1 billion, that is 22.5 percent of Indian outward foreign direct investment (FDI). It is also estimated that the total of Indian investments in Africa is more than US$ 35 billion (CII/WTO, 2013).
The footprints of India’s multinationals in African markets are seen in infrastructure development and the energy sectors, leveraging India’s comparative advantages in ICT, agriculture, and energy.
At the same time, India, through its Focus Africa Programme executed by the Export Import (EXIM) Bank of India, has offered incentives to Africa to import Indian products.
India’s biggest African market is South Africa, which accounts for more than 22 percent of India’s exported goods to Africa. With a little more than 9 percent of India’s exports, Tanzania is also the fastest growing market for Indian goods. Exports into Tanzania grew at a rate of 40 percent between 2005 and 2011.
African investment in India
Africa’s investments in India grew from US$ 1.5 billion to US$ 7 billion between 2000 and 2010, before falling to US$ 3.5 billion in 2011. Mauritius is Africa’s largest investor in India, accounting for about 40 per cent of total African FDI in India to the tune of US$ 64 billion (CII/WTO).
Morocco and South Africa are India’s second and third biggest investors with US$ 137 million and US$ 112 million, respectively.
South Africa has largely invested in service industries and retail industries, while Moroccan investments have been more in manufacturing.
Development cooperation and assistance
India’s development assistance to Africa goes hand in hand with its economic interests in Africa and its geopolitical positioning. India vehemently wants to shake off the ‘aid recipient’ image and take on a persona of self-sufficiency, securing a place in the international donor community. India also wishes to create good relations with African state agencies to secure access to African markets and natural resources.
India’s development policy also espouses cooperation with Africa economically and technically in various sectors, notably ICT, energy, telecommunication, and education.
During the 2011 India-Africa Summit in Addis Ababa, India pledged US$5 billion to help African countries meet the 2015 Millennium Development Goals (MDGs).
In the wake of the Ebola scourge in West Africa, India’s prime minister, Narendra Modi, pledged US$ 10 million to aid the United Nations (UN) in fighting the disease. India is also on record as giving US$ 2.5 million for protective gear and for anti-Ebola awareness campaigns in West Africa.
A rejuvenated African policy under Modi?
Since the new Bharatiya Janata Party (BJP) government took power, economic imperatives have been stressed as the apparent basis for India’s new foreign policy. In a speech delivered in October 2013, Prime Minister Modi stated: “I believe a strong economy is the driver of foreign policy…” In the same speech, he emphasised, “… we have to put our own house in order so that the world is attracted to us…”
Undoubtedly, India’s new head of state has set out the country’s strategic orientation in its foreign policy engagement. Moreover, efforts have been made lately to revitalize India-US relations alongside geostrategic regional issues fuelled by China’s presence in India’s backyard.
How and where Africa features in this foreign policy hierarchy remains a point of uncertainty for many observers and commentators.
The indefinite cancelling (owing to the Ebola crisis) of the third India-Africa Forum Summit, which was supposed to be hosted in 2014, opens up a more direct issue of where Africa fits in this new foreign policy orientation. If indeed the Modi government is to rejuvenate India’s Africa policy, there is a need for clarity about who will
drive this engagement: India Inc. or the policy mandarins.
Conclusion
It is within this context that India’s Africa policy needs to be reviewed. Whether the Modi government will continue the engagement put in place by its predecessor or provide more coherence in how it seeks to strengthen relations is the pending question for most observers. One possible area of immediate resonance and cooperation is linked to how a ‘rejuvenated India’ will become enmeshed with the grand and convenient narrative of a ‘Rising Africa’ (Suchitra Vijayan, 2014).3
For both sides, the engagement is definitely more about pragmatism and less about lofty ideals.
China has already upped the ante by setting up a permanent mission at the African Union. While India may not want to be perceived as playing ‘catch up’ with Beijing in Africa, the Modi government will be hard pressed in demonstrating how serious it takes its Africa policy. For African leaders, the opportunity now exists to define how they would like to influence Africa-India engagement. Only when the India-Africa Forum Summit is hosted will there be a sense of what informs this pragmatism.
Authors: Sanusha Naidu is the Programme Manager of the Emerging Powers in Africa project based in Fahamu. She is also a senior research fellow at the Institute for Global Dialogue associated with Unisa in Pretoria and a research associate in the Department of Political Science at the University of Pretoria.
Edwin Rwigi is Programme Officer of the Emerging Powers in Africa project based in Fahamu.
1 Daniel Large, India Africa Engagement (LSE IDEAS SR016 – Emerging
Powers in Africa, June 2013), 32.
2 Focus: Africa, (February 17, 2015).
3 Article can also be accessed at:
http://www.ictsd.org/bridges-news/bridges-africa/news/india’s-africa-trade-policy-under-the-modi-government-business-as