[Answered] “India-Africa relation and trade is crucial for India to achieve $5 trillion economic goal”. Discuss.
Red Book
Red Book

Demand of the question
Introduction. Contextual Introduction.
Body. Present trade scenario. Future prospects in Africa.
Conclusion. Way forward.

India and Africa have social and economic relations since centuries. Africa has vast market which provide opportunities for trade and investment. With India aiming to become a $5 trillion economy by 2025, Africa provide an opportunity to achieve it through exports, investments and exploiting resources of Africa. There exists an enormous potential for improving the India-Africa trade and investment partnerships.

India-Africa trade Scenario:

  1. Bilateral Trade: India is Africa’s third largest trading partner. Since 2000, the economic cooperation between India and Africa has increased, helped by the India-Africa Forum Summit (IAFS) process.
  2. Exports: India’s exports to Africa increased almost four-fold from $7 billion in 2005-06 to $25 billion in 2015-16 – accounting for 9.5% share in India’s total exports.
  3. Recent trends: Recent trends show a steady decline in the India-Africa trade in both actual and comparative terms from 2013 to 2017. India’s negative trade balance is mainly because of its high demand for oil and energy resources.

Africa as pivot to India’s $5 trillion economic goal:

  1. Robust Market for investment: Africa provide a number of opportunities for the Indian firms and investors to tap into a larger, unified, simplified and more robust African market. It is critical for India to view Africa not just as a destination for short-term returns but as a partner for medium and long-term economic growth.
  2. Investment destination: Africa has high mineral rich reserves like oil, metals, non-metals etc. The Indian Multi National Enterprises (MNEs) should venture into various sectors of investments viz. telecommunications, energy, computer sciences, power and automobile, among others. The major destinations of such investments are Mauritius, Mozambique, Sudan, Egypt and South Africa.
  3. Exports: Exports are the key to achieve the $5 trillion goal. India’s exports to the African countries is dominated by petroleum products. There are opportunities for India to export pharmaceutical products, computer services, automobile etc. In order to reap the benefits of African market, India needs to expand and diversify its export basket to include both primary and manufactured goods.
  4. Resource rich region: Africa is known as the land of untapped potential. It has incredible natural resources like oil, gas, gold, iron ore, manganese, uranium, diamonds, etc. This would help in boosting India’s manufacturing sector and Make in India initiative.
  5. Infrastructure opportunities: Africa also has countless opportunities for infrastructural development. For the fastest developing nation like India, which is eying an almost 9.0 percent growth rate, all this makes Africa a much desirable market for the growth of the Indian companies.
  6. An opportunity for MSMEs: MSMEs’ contribution is critical to India’s sustainable growth. Large, medium and SMEs need more presence in Africa on a war footing basis strategising an aggressive marketing and business plans for additional revenue as part of their linear business growth overseas.
  7. Medical Tourism: Affordable healthcare still remains a big challenge in Africa and thus remain the highest priority in every country in the continent.It open up medical tourism business opportunities for Indian healthcare stakeholders.

India should ensure that the full gains from Africa are being realised. As the next step, New Delhi can help the AU Commission prepare the requisite architecture, such as common external tariffs, competition policy, intellectual property rights, and natural persons’ movement.

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