CII believes India-Africa stand at the cusp of rapid acceleration in economic ties
Indian investment in Africa can go up to US$150 billion and boost bilateral trade to US$200 billion by 2030, projects the Confederation of Indian Industry (CII) in a report released on 20 July 2022.
The ‘India-Africa: Leveraging New Dimensions in Economic Engagement’ has projects a 12% compound annual growth rate as bilateral economic engagement will be redefined with the emergence of many new sectors of opportunity.
The report was released by Commerce and Industry Minister Piyush Goyal at the 17th CII-Exim Bank Conclave on India-Africa Growth Partnership in New Delhi.
“The resilience of the Indian and African economies and the many new emerging sectors driven by digital technologies and the green economy create a new set of opportunities between Africa and India that the businesses of both sides must leverage to the optimum,” CII Director General Chandrajit Banerjee said at the report release.
“With a strong synergistic economic cooperation agenda, CII believes that we stand at the cusp of rapid acceleration in bilateral economic ties.”
The report outlines recommendations on 5 emerging areas where India and Africa can work together.
One, the African Continental Free Trade Agreement (AfCFTA), instituted from 1 January 2021, connects 1.3 billion in 55 countries with a combine GDP of US$2.4 trillion.
The integration of the markets and the infrastructure requirements under AfCFTA can attract significant participation of Indian companies, notes the CII report.
To further expand trade between the two sides, the report suggests a 4-pronged strategy: i) Expand exports to top African economies; ii) Expand imports from these top African economies; iii) Diversify imports from other African economies; and iv) Invest in Africa to export to India.
The report looks at key items of export and import with the highest potential for 4 large economies, viz., South Africa, Egypt, Ethiopia and Algeria. Through a statistical tool, it identifies specific products at the HS 6-digit level that India can best export to these countries and import from them.
Under the Duty Free Tariff Preference scheme for least developed countries (LDCs), India provides duty free access to over 98% of its product lines for many African LDCs. CII has recommended that more products that are of interest to specific African nations can be included in the scheme.
Two, the report elaborates on key areas of investment in Africa including agriculture, construction and infrastructure as well as manufacturing.
Since April 1996, India has invested US$74 billion in Africa. However, these flows are concentrated in Mauritius and are mostly by public sector companies for energy and raw material assets.
CII suggests that agri business, agri infrastructure, post-harvest infrastructure, technology and food processing can benefit from Indian investments.
In the construction and infrastructure sector, AfCFTA will open up many new projects for cross-border movement of goods which Indian companies should bid for. India offers Lines of Credit for many projects as well. Also, Africa’s Programme for Infrastructure Development in Africa (PIDA) can be explored for project opportunities.
Under the manufacturing sector, the CII report states that India can pitch for India-specific special economic zones in Africa that can produce for the African, Indian and third-country markets, among other recommendations.
Regional production networks and local supply chains coming up under AfCFTA will be important destinations for Indian investments as well, according to CII.
Three, the services sectors of banking and financial services, healthcare and education will benefit both sides with greater Indian participation in the continent.
CII recommends that Indian banks consider setting up more branches in Africa to offer services to Indian companies. Export insurance and new instruments of financing should also be considered by India.
For healthcare and education, financing options from international finance institutions can help to drive new infrastructure creation as well as skill development. CII also suggested special skill programs for African women.
Four, with Africa’s growing digital footprint, Indian companies can collaborate on digital infrastructure and addressing new markets on the continent. Fintech, edtech, agri-tech and healthtech, apart from setting up physical facilities, are areas of growth in Africa.
Five, the green economy and green energy has great potential in Africa for Indian companies.
An average annual investment of US$70 billion in green energy is required in Africa and FDI in the sector is going up rapidly. CII suggested more lines of credit from India for green projects and sharing of knowledge as well as renewable energy goods manufacturing.
In 2021-22, India’s trade with Africa amounted to US$89.6 billion, the highest bilateral trade ever. Indian exports to Africa stood at US$40.3 billion and imports registered US$49.3 billion.
Indian exports to Africa include petroleum products, vehicles, pharmaceuticals, cereal and machinery. Mineral fuels, gems and jewellery, copper products, fertilisers and inorganic chemicals are India’s chief imports from Africa. fiinews.com
