India-Africa Economic Relations
The recent decade has seen a rejuvenated momentum in the economic relations between India and African countries, highlighted by several high-profile visits by Indian Prime Minister and the significant entry of the African Union into the G-20 during India's presidency in 2023.
Economic Significance
- India is Africa's fourth-largest trading partner with bilateral trade reaching nearly $100 billion in FY24.
- Key exports from India to Africa include petroleum products, engineering goods, pharmaceuticals, rice, and textiles.
- Africa imports around 6% from India, while China remains Africa’s largest trading partner with 21% of imports.
Strategic Initiatives
To enhance economic ties, a five-point strategy has been proposed:
- Removing Trade Barriers: Engage in negotiations for preferential trade agreements and comprehensive economic partnerships with major African economies.
- Value Addition: Transition from low-value exports to value-added and cross-border joint venture manufacturing.
- Trade Finance Accessibility: Scale up Lines of Credit and improve trade finance access, focusing on the MSME segment.
- Lowering Logistics Costs: Invest in port modernisation and develop India-Africa maritime corridors.
- Enhancing Services and Digital Trade: Leverage strengths in IT, healthcare, and skill development to boost services exports and stimulate goods trade.
Investment and Policy Recommendations
- Strengthen investments in manufacturing, agro-processing, infrastructure, renewable energy, and critical technologies in Africa.
- Address bureaucratic hurdles, political instability, and financing costs to encourage Indian firms to invest in Africa, particularly in mining and mineral exploration.
Future Prospects
The relationship between India and Africa must evolve beyond transactional trade to long-term sustainable partnerships. Africa remains central to India's goals of becoming a global economic power amidst the global shift towards a multipolar economic order.
