Reshaping Business.
India Africa Trade Agreement
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India’s partnership with Africa based on a consultative model of cooperation, non-prescriptive, participative, and responsive to the needs of the African countries, witnessed an increase in bilateral trade of nearly 24% from the last year. Ranking as the third largest export destination in Africa, India-Africa trade has touched $ 62.66 billion for 2019-20.
The Duty Free Tariff Preference (DFTP) Scheme announced by the government for Least Developed Countries (LDCs) has immensely benefited African nations and contributed towards steady increase in the trade figures by extending duty-free access to 98.2 % of India’s total tariff lines. So far, 38 African countries enjoy the benefits of the DFTP Scheme.
Africa is a top priority for India’s foreign and economic policy and there has been a qualitative shift in country’s longstanding ties. Prime Minister of INDIA had recently articulated Africa policy in 10 broad principles emphasizing that India’s partnership with Africa will be driven by the aim of empowerment, access to Indian market, sharing of experience in the agriculture sector and support for Indian investments in Africa.”
PREFACE
Using descriptive statistical analysis, this book examines trade and investment opportunities between India and 41 African economies (mostly LDCs) by focusing on the latter’s export opportunities in the Indian market and on India’s EXPORTING opportunities in the selected countries. It also discusses barriers to realizing the identified trade and business opportunities between India and the selected countries, based on a review of the existing market scenario. This book has also undertaken a quadrant analysis to identify the products and services where the selected countries still have low shares in Indian imports despite a revealed comparative advantage in exporting to this market ….
The importance of least developed countries (LDCs) has been growing in India’s trade and investment flows over time. In fact, India has been strongly promoting trade linkages with LDCs, particularly those in Africa.
This book, explains not only rising trade flows from India to Africa in the decade of the 2000s, but also growing export business. While Africa is all set to emerge as a big investment partner for India, the book also mentions potential hindrances that can affect this rising trend.
Thank you..
Deepak Joshi
Ahmedabad.
ABOUT AFRICAN MARKETS.
Africa is no longer considered a “hopeless continent” as suggested by the Economist a decade ago, rather it possesses all the prerequisites to become a major growth pole of the world.
Export potentiality of Indian products in Africa...
India’s rapport with Africa is highly distinguished and unique. India-Africa relationship has been built upon deep bond of friendship and mutual faith beyond strategic ties. Apart from sharing one-third of the world population, both nations enjoy the favorable phase of the demographic dividend and rising per capita income.
India is Africa’s 4th largest trading partner, with a trade of USD 51 billion in 2017-18 which grew from USD 5.25 billion in 2001-02. India majorly imports commodities and exports manufactured products. Indian exports to Africa jumped to USD 24 billion in 2017-18, against USD 2.8 billion in 2001-01. Similarly, India’s imports from Africa rose to USD 27 billion in 2017 from USD 2.5 billion in 2010=11. More than one-third of the imports in Africa are Consumer goods, followed by capital goods (27.2%), intermediate goods (23.8%), and raw materials (11.9%) in 2015. In case of imports from India, Africa has revealed its demand in favour of consumer goods (63%), followed by Intermediate goods (19.5%), capital goods (14.6%), and raw materials (3.5%). Notably, the share of consumer goods in imports from India rose sharply from 50.2% in 2018 to 62.4% in 2019.
Africa is the second - largest continent in the world both in size and population. Also, it homes to over 1500 languages.
India is the fastest running economy in the world at 7.6% in 2016-17, as per the estimates of IMF.
EXPORT FROM INDIA
India-Africa bilateral trade carries a variety of export opportunities for both the countries. India’s partnership with Africa based on a consultative model of cooperation, participative, non-prescriptive and responsive to the requirements of the African countries, witnessed a rise in bilateral trade of nearly 22% from the last year. India-Africa trade has touched US$ 62.66 billion for 2017-18. India’s exports to Africa amounted to US$ 26 billion in 2018, which saw a drastic decline from the last five years. Through this article, learn India’s exports to African countries statistics on top trading commodities and partners with special focus on India Africa trade 2018.
Between India and Africa, there is a tight commercial connection which works for the benefit of both. There are a variety of export opportunities from India to Africa, and the trading market keeps developing. IMF (The International Monetary Fund) stated that the value of goods imported in Africa from India almost doubles in the past five years. And Indian economy is highly relying on the exports the country does to Africa which can be of many different types of goods.
Africa’s economy is growing slowly but surely, and India knows how to take advantage of the new trading opportunities available on the market. To develop the commercial relationship between India and Africa, the Indian government launched the programme “Focus: Africa” which boosted the trading market. Initially, the program included countries like Kenya, Ethiopia or Mauritius but in time it was expanded to many other African regions.
Since Africa is the second largest continent with millions of citizens, the demand is always high on the local market. Most of the African economy relies on imports and exports of different goods to satisfy the large population and this type of international trading also help the local development of the countries in Africa.
Main Products Exported To Africa are Pharmaceutical Products , Iron and Steel, Automobiles, Car, Textiles and Different Clothes, Food Grains Plastic Products and many more to add.
Indian government struggles to develop new paths of import-export business between India and different African countries for years and finally starting with 2015, important results are seen. A profitable collaboration between the two would impact not only local economies but also their effects on the international trading market. And India has the potential to become an even better exporter than China or other Asian regions if the changes are done correctly. Both Africa and India have valuable and affordable working force as well as a large number of citizens in need of jobs. It increases the potential of both markets on the import-export process but also the power of production which is mandatory for such trades.
Major export sources in Africa (for top imported products)
(2017-18 V/S 2018-19 )
|
COUNTRY |
VALUE IN 2019 USD BILLION |
SHARE % |
GROWTH % |
|
CHINA |
77.33 |
18.91 |
8.22 |
|
FRANCE |
32.95 |
8.09 |
27.39 |
|
USA |
22.22 |
5.45 |
12.70 |
|
GERMANY |
25.10 |
7.53 |
7.55 |
|
INDIA |
22.51 |
6.63 |
19.83 |
India’s Major Export Commodities to Africa
BARRIERS FACED BY INDIAN EXPORTERS IN AFRICA
BARRIERS FACED BY INDIAN EXPORTERS IN AFRICA
Problem #1 High Government Control
One of the biggest problems faced by the Indian export sector is the high restrictions that the government has put on the trade. Not just the Indian government, but also the government of countries with which you are trying to make trade. A number of licenses and permissions need to be taken by both the countries that create confusion in the mind of the traders who refrain from making export due to this.
Problem #2 Inconsistent Trade Policies
The Indian trade policies are not on the same pace with the international trade policies or requirements. The international traders see India as a very complex market that has many barriers to trade. There are many reasons behind this complexity like paying high taxes, construction permits, cross-border trading, enforced contracts etc.
Problem #3 Import Tariffs
An increased import tariff dissuades many exporters to make trade in India. Increased import tariff leads to an appreciation in the real exchange rate of the country. Additionally, high import tariff encourages traders to lean towards illegal means of import/export. This leads to smuggling which today has become a full-fledged industry. Traders think Indian market to be corrupt and hesitate from making any trade.
Problem #4 Lack Of Proper Infrastructure
Another factor that leads to low export in India is the lack of proper infrastructure facilities. There is inadequate space, both at the seaports and airports for keeping and storing various goods. In addition to that, many goods require special facilities that India is, unfortunately, still trying hard to provide. India’s export trade would see considerable improvement if the infrastructure facilities are improved here.
Problem #5 Low Export Publicity Or Promotion
India has a pretty good inclination towards adopting means to substituting import and regards export promotion or publicity at a lower scale. Promoting export trade in India is one of the chief issues that Indian government should work on in order to have a considerable growth in terms of export trade. If people don’t get to know about the goods and services that the country has, then they would never be attracted to making trade relations. In fact, India should also implement many tax reforms and concessions to promote export business and set a step forward in Indian export growth.
Problem #6 Lengthy And Complex Process
It is an undeniable truth that trading in the international sphere calls for more time and energy. However, it is known that the export procedure of India is not only lengthier but complex too when compared to other countries. Various documents are required for export trade which makes the process more time as well as money consuming.
These were the major problems that are creating a hindrance in the India’s export business. In addition to that, there are many other factors like language difference, lack of information, jealousy among companies and corruption at borders that can be stopping people making an export trade with India.
INDIA'S EXPORTS - NEW OPPORTUNITIES & CHALLANGES
India’s exports: New opportunities and newer challenges
The global economy faces challenging times ahead. Even before Covid-19 brought the world to an unexpected standstill, global economic prospects seemed in a precarious state as debt-fuelled growth of the past decade was reaching its limits in developed and developing countries alike. The corona virus pandemic has accelerated and accentuated the inevitable crisis. In light of these trends, the need for export-led growth becomes more pertinent than ever. Even for a country as large as India that possesses an expansive domestic market, high growth can only be sustained with an export-oriented policy focus.
The government has made huge strides in facilitating an enabling business ecosystem through liberalisation of Foreign Direct Investment, ratifying WTO's Trade Facilitation Agreement, and other such reforms since 2014, which has improved India’s integration into the global economy. To further enhance India’s export preparedness to meet the needs of the post-Covid global economy, the Export Preparedness Index (EPI) 2020 examines the export ecosystem of Indian states and union territories.
As India begins on its journey of self-reliance and export expansion in these tumultuous times, the states need to take on the reins and adapt their efforts with the emerging trends in globalisation. The EPI 2020 can serve as a guide to the sub-national governments in creating an enabling framework and removing the bottlenecks that afflict their respective export sectors.
Future Of Indian Exports
- Indian Exports: A History
The history of Indian exports is very old. During ancient times India exported spices to the other parts of the world. India was also famous for its textiles which were a chief item for export in the 16th century. Textiles and cotton were exported to the Arab countries from Gujarat. During the Mughal era India exported various precious stones such as ivory, pearls, tortoise stones etc. But during the British era, Indian exports declined as the East India Company took control of foreign trade.
- Leading Export Items of India
In the past ten years, Indian exports have grown at a rate of nearly 22%. Some commodities have enjoyed faster export growth than others. Some of India's main export items are cotton, textiles, jute goods, tea, coffee, cocoa products, rice, wheat, pickles, mango pulp, juices, jams, preserved vegetables etc. India exports its goods to some of the leading countries of the world such as UK, Belgium, USA, China, Russia etc.
- Export Trends
If the Indian economy grows at the same pace, India would most definitely export goods worth US $500 billion by 2013 and may supersede the exports of other large developing countries like Brazil.
- Problems of the Indian Export Sector
There are few problems which need to be solved before India makes a mark for itself in the export sector. The Indian goods have to be of superior quality. The packaging and branding should be such that countries are interested to export from India. At the same time India must look for potential market to sell their goods. The government should frame policies which gives boost to the exports.
- The Opportunity
It is very clear that Indian exports have still not achieved their true potential and there exists immense opportunities for expanding the basket of India’s exports. With a strategic attention on the new markets that are evolving due to free trade, India is witnessing a boom in both manufacturing and services.
After six months of continuous fall, India's goods exports posted a 5.27 per cent growth in September 2020 (year-on-year) to $27.4 billion, with crucial sectors such as readymade garments, engineering goods, petroleum products, pharmaceuticals and carpets on an upswing
- India’s exports: New opportunities and newer challenges
The corona virus pandemic has accelerated and accentuated the inevitable crisis. In light of these trends, the need for export-led growth becomes more pertinent than ever. Even for a country as large as India that possesses an expansive domestic market, high growth can only be sustained with an export-oriented policy focus
As India begins on its journey of self-reliance and export expansion in these tumultuous times, the states need to take on the reins and adapt their efforts with the emerging trends in globalization.
India has the potential to increase its goods and services exports to Australia to $15 billion by 2025 and $35 billion by 2035, according to Ambassador Anil Wadhwa, a former senior Indian Foreign Service (IFS) official.
Bilateral trade in goods and services between Australia and India stood at $23.3 billion in 2018, of which goods accounted for $17.8 billion while services contributed about $5.5 billion.
India is having tremendous opportunity in export. Which can be grabbed by individuals and small businesses.
ATMANIRBHAR BHARAT ..
The government’s focus on Atmanirbhar Bharat, accompanied by its introduction of production-linked incentives (PLIs) for manufacturing, has attracted criticism as well as praise. Critics have characterized it as an inward-looking import substitution policy that is likely to produce negative outcomes, while supporters have touted it as a game-changer which will finally allow Indian manufacturing to acquire its rightful place. A brief dive into the history of developing nations that have emerged from poverty would suggest that it is likely to be neither. In all probability, it will end up as just another middling policy of the sort that has defined India’s economic decision-making process for decades.
Historically, most developed countries have followed a mercantilist model to enrich themselves at the expense of others. Britain ruthlessly exported finished goods to its colonies while keeping its domestic industry protected behind high tariffs throughout the 1700s and mid 1800s, till it achieved significant industrialization. The US had also imposed high tariffs on imports, reaching a peak of over 40% in 1870. In fact, US import barriers did not come down till the end of World War I, which generated huge surpluses for the US economy as it became the primary supplier of war material to the Franco-British alliance. Tariffs were again raised in the 1930s, as the US economy slipped into depression. Both the UK and US followed a policy of protecting domestic industry, building industrial capacity and absorbing technology, before opening their markets to the rest of the world.
In sum, while self-sufficiency may be a commendable target, India’s development goals can’t be met without facing the world armed with a robust export strategy.
PROSPECTS FOR EXPORT - MADE IN INDIA
Exports are a vital component of a dynamically growing economy like India. Supported by market resilience and dynamism, India’s exports have undergone significant changes in the recent years in terms of volume, structure and direction. The Government of India has been undertaking several measures to boost the exports growth trajectory. However, the growth of exports has been at around 9% to 10% during the last few years. Going ahead, improved global demand along with recent reforms in policies and procedures at domestic front have created a great opportunity to strengthen the exports growth trajectory.
In a nutshell, if India continues to move in the direction of the past several years, a new virtuous circle of increased exports and improved economic performance should ensue. A broad strategic policy to pursue comparative advantage in a more thorough going way will have very major advantages for India by promoting exports in the most efficient possible way.
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Tag der Veröffentlichung: 05.02.2021
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The pandemic has reinforced pre-existing economic trends. For instance, global goods trade had contracted by 0.1% in 2019. The World Trade Organisation expects it “to plummet” by anywhere between 13 and 32% in 2020. Similarly, India’s export dependence on EU and US markets, will only grow as incomes shrink more rapidly in developing markets. Despite decades of trade policy rhetoric to diversify exports to markets in Africa and Latin America, India could not achieve such goals in the past. There is no reason to believe it can do so now. It must instead find ways to enhance exports to its primary markets.