Squaring the circle at the India-Egypt summit

Source– The post is based on the article “A doorway to an entrepreneurial university” published in “The Hindu” on 24th June 2023.

Syllabus: GS2- Bilateral groupings and agreements

Relevance- India and Egypt bilateral relationship

News– Prime Minister Narendra Modi is visiting Egypt (June 24-25, 2023).

What is the status of the bilateral relationship between India and Egypt?

Historical and civilisational connect– Historically, India-Egypt ties are perhaps the oldest civilisational link. In 2750 BCE, the Pharaoh Sahure sent ships to peninsular India.

By the middle of the second millennium BCE, Egyptian mummies were wrapped in muslin dyed with indigo, both from India.

Past centuries of contacts produced plenty of goodwill and verbal shibboleths. Both countries advocated for decolonisation and favoured non-alignment.

Trade and investment– India’s trade with Egypt stood at $6,061 million in 2022-23. It has declined by 17% over the previous year. Nearly a third of it was petroleum related.

India was Egypt’s sixth largest trading partner, while Egypt was India’s 38th. Indian investments in Egypt were spread over 50 projects totalling $3.15 billion. Egypt has invested only $37 million in India.

Bilateral institutional mechanisms– India has a Joint Commission, Foreign Office Consultations and at least nine joint working groups.

Its Defence and External Affairs Ministers visited Egypt during the past year. It had a bilateral summit less than five months ago when the Egyptian President, Abdel Fattah El-Sisi, visited India.

What are the opportunities that can be leveraged for improving bilateral relationships?

Egypt is a large country having a population of 105 million and an economy ($378 billion). It is politically stable, and its socio-economic conditions are quite like India.

Egypt’s largest imports are refined petroleum, wheat, cars, corn and pharmaceuticals. India has the potential to supply all these.

The Egyptian government has an ambitious infrastructure development agenda, with 49 mega projects including the construction of a New Cairo ($58 billion), and a $23 billion high-speed rail network.

During 2015-19, Egypt was the world’s third-largest arms importer.

What are the challenges in the India and Egypt bilateral relationship?

The Egyptian economy is in a crisis. The huge financial commitments have coincided with a static economy, pandemic, global slowdown and the Ukraine conflict. Tourism has dropped and imports such as cereals have become costly.

Annual inflation is above 30% and the currency has lost more than half its value since February 2022. Foreign exchange scarcity has forced the deferral of payments for such essentials as wheat.

The Gulf Arab states initially supported the Egyptian economy with nearly $30 billion. But, they have been lately reluctant due to various governance issues in Egypt.

Egypt’s foreign debt is over $163 billion (43% of the GDP) and its net foreign assets are minus $24.1 billion.