Paper: GS – II, Subject: International Relations, Topic: India’s Relations with Major Powers, Issue: India–Africa Relations.
Context:
Prime Minister Narendra Modi’s recent visits to African nations highlight the growing importance of India-Africa economic relations.
Key Highlights:
The inclusion of the African Union as a full-time member of the G-20 during India’s presidency in 2023 further underscores this significance.
Why Africa Matters to India:
- Africa is among the fastest-growing consumer markets.
- India is Africa’s 4th-largest trading partner.
- India–Africa bilateral trade: ~$100 billion.
- India’s exports to Africa (FY24): ~$38 billion. (key destinations including Nigeria, South Africa, and Tanzania)
- Africa accounts for only ~6% of India’s total imports, indicating untapped potential.
- China dominates Africa trade (>$200 billion), highlighting India’s lag.
- A significant portion of China’s exports to Africa falls under the HSN 84 and 85 product categories (machinery, boilers, electrical machinery, and semiconductor devices), indicating China’s industrial strength.
The Need for Diversification:
- India’s reliance on the United States and the European Union for approximately 40% of its exports in FY24 exposes it to vulnerabilities due to the unpredictability of these markets and potential economic slowdowns.
- Therefore, diversifying trade partners, particularly towards African economies, is crucial for India’s economic resilience.
The Role of Indian Public Sector:
- Strengthen investments by Indian firms in African manufacturing, agro-processing, infrastructure, renewable energy, and critical and emerging technologies.
- Address barriers to investment, such as bureaucratic hurdles, political instability, and financing costs.
- Encourage Indian firms, particularly public sector units, to take the lead in investing in the African continent, especially in mining and mineral exploration.
India’s engagement with Africa must evolve beyond transactional trade towards building long-term, sustainable partnerships. As global supply chains restructure and the world move towards a multipolar economic order. The time is ripe for India to recalibrate, innovate, and deepen its economic footprint across the African continent.
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