Trade relations between India and Africa have historical antecedents. They can be traced across several millennia through archaeological as well as documentary evidences on trade and navigation. The Periplus of the Erythraean Sea, a Greco-Roman manual from the 1st century CE, refers to reciprocal trade in mainly textiles between ports along the coast of Gujarat and ports in Eastern Africa. Indian cotton and silks were prized commodities in the international trading systems of the ancient world. Trade with West Africa, initially, took place through the trans- Saharan land routes. The onset of technology alongside opening of sea routes during the colonial period further intensified the relations between Africa and India. Some of the most vivid images of these merchant voyages across the Indian Ocean have been narrated in the Arabian Nights. Subsequent to the liberalisation of the Indian economy in the 1990s and the resultant economic growth led the Indian companies to search for new markets, globally, for the exports and imports of goods and services.
Energy security: The government of India has sought to diversify its import sources for energy security and reduce her excessive dependency on the Persian Gulf region, which has been politically volatile for decades now. Globally, India is the 4th largest importer of crude petroleum and allied products. About 15-16% of India’s petroleum and related products are sourced from Africa. Nigeria, situated in the Gulf of Guinea, is the major exporter followed by Angola, supplying about 62% and 20% respectively, of India’s total imports of crude oil. Sudan, Equatorial Guinea, Egypt supply much smaller quantities of oil.
Trade: Import and export between India and Africa has grown about 10 fold from US$7.2 billion in 2001 to about US$78 billion in 2014, before moderating to about US$63 billion in 2019, as the result of a decline in commodity and oil prices. India’s top five export products to Africa are; petroleum and related products, medicinal and pharmaceuticals, road vehicles, cereals and its preparations, and textiles and allied merchandise. The major five imports comprise of; petroleum, gold and ores, coal and coke briquettes, non- metallic mineral manufactures and natural gas.
Opportunities for Indian companies: Given the predominance of petroleum in bilateral trade, the West African region assumes great significance, in particular, with countries around the natural resources rich Gulf of Guinea in the Atlantic Ocean. Of these, Nigeria, the leading exporter of crude petroleum is the single largest trading partner of India. It accounts for about 60% of the total trade with the region followed by Ghana, Africa’s second major gold producer, which exports gold to India. India also sources gold from South Africa and Tanzania. India’s trade deficit in the region with Nigeria is the largest while a negative trade balance also exists, for instance, with Angola and Equatorial Guinea, which export crude petroleum. Cereals and medicines are the top two items exported to West Africa and account for a third of total exports to the region. A shortfall in these two items of trade, offers opportunities for Indian companies in the agriculture and agro-processing, climate resilient agro technologies, farm and irrigation equipments, medicines, primarily affordable lifesaving generics and pharmaceutical products, that also have a market across several countries on the continent. Other sunshine sectors with a growth potential in Africa are; renewable and clean energy, oceanic resources, ICT, education and skills development, infrastructure, defence, manufacturing, power and energy, mining, health and others.
Bolstering India- Africa trade: Cognizant of the significance of Africa as a trading partner, in 2002, the Government of India (GoI) announced the Focus Africa Program to accelerate exports to countries in Sub-Saharan Africa. India has been building human resources capabilities in Africa since 1964, through the Indian Technical and Economic Cooperation (ITEC) program. In 2004, the Techno-Economic Approach for Africa–India Movement (TEAM–9) initiative connected eight resource rich West African countries in the Gulf of Guinea. At the same time, from 2005 to March 2019, the CII- Exim Bank has organised the India-Africa Project Partnership Conclaves to provide access points for appropriate technologies and link private and public sector enterprises in India with potential partners in Africa. The Conclave has also provided a platform where policy dialogues on business matters are shaped within India and Africa via B2B meetings. The three India-Africa Forum summits (IAFS) (2008, 2011 and 2015) have reinforced the economic and diplomatic engagement. The duty free tariff preference schemes (DFTP), launched at IAFS, have provided zero duty market access to the least developed countries in Africa. Lines of credits extended by the Exim Bank, at the behest of the GoI have been financing development across sectors and regions in Africa and thus bridge Africa’s infrastructure funding gap.
Challenges: There is an urgent need for accurate country databases for enabling; informed decision making, risk analysis, knowledge of regulatory frameworks in target countries in Africa. Improved infrastructure, increased access to trade finance and insurance, access to larger markets through regional integration, better phytosanitary standards, understanding of local customs and land rights, democratic regimes and good governance, ease of doing business, stable policy and liberal visa regimes are critical inputs for accelerating trade between India and Africa.
Renu Modi is a Professor at the Centre for African Studies, University of Mumbai.