India has become one of the leading investors on the African continent, with investments in joint ventures and wholly-owned subsidiaries touching the US$33 billion mark.
The India-Africa relationship is not new. It draws on a long, shared history of struggle against European colonialism, and a determination to ensure equality in the post-colonial world order.
Growing trade relations between India and Africa have achieved thriving business partnerships across key African economies. Various Indian companies are now increasing their business reach within the African region through adopting organic growth measures.
It is evident that economic optimisation, increased government support, a strong pipeline for new products launches and resource abundance, are the key enablers which will drive the investments to Africa. Fundamental differences in the resources, labour, and capital endowments of Africa and India make them complementary business partners – meaning that the trend will likely be sustained.
Annual trade between India and Africa increased 15-fold within a decade to US$46 billion in 2010, from US$3 billion in 2000.The Indian government is determined to achieve a target of US$70 billion in trade well before 2014. The investment covers sectors such as oil and gas, pharmaceuticals, petrochemicals, IT, fertilisers and infrastructure. India's investments in agriculture and telecommunications may also have more of a direct economic impact on the lives of ordinary Africans, 70 percent of whom are engaged in some form of agriculture, and at least 30 percent of whom have access to a mobile phone.
Commercial relations between these two countries have flourished since the establishment of diplomatic relations in 1993. On the trade front, the value of bilateral trade has trebled from US$2.5 billion in 2003-2004 to US$7.5 billion in 2008-09. During the visit of President Zuma to India, both sides agreed to work towards a target of US$10 billion in bilateral trade by 2012. The trade target was revised to US$15 billion by 2014 during the visit of the Commerce and Industry Minister in January, 2011 to South Africa, as it was estimated that the bilateral trade target of US$12 billion would be achieved in FY 2010-11.
Recent bilateral trade figures are as follows: There is substantial potential for trade growth between the two countries. Exports from India to South Africa include vehicles and components thereof, transport equipment, drugs and pharmaceuticals, computer software, engineering goods, footwear, dyes and intermediates, chemicals, textiles, rice, and gems and jewellery, etc. Imports of South Africa into India include rock phosphates, precious stones and minerals, fertilizers, steel, coal, transport equipment, pulp and pulp manufacturing, etc.
Investment from South Africa to India from April 2000 to December 2010 was estimated at US$109.88 million [Source: DIPP]. Further, cumulative investment from India into South Africa from January 1994 to January 2011 was estimated at US$212 million. Major investors include Tata (automobiles, IT, hospitality, and ferrochrome plant), UB Group (breweries, hotels), Mahindra (automobiles) and a number of pharmaceutical companies, including Ranbaxy, CIPLA, etc as well as IT companies and some investments in the mining sector.
Download the full report for more information.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.