After the hard landing of China, circumstances changed vastly in South East Asia – the area which received prominence in India’s foreign policy in 1991 along with economic reform. The plunge in South East Asia‘s economy lent a new thought to Modi-ruled BJP government to seize new opportunities in Africa, which remained untapped so far. Africa, once known as “continent that does not grow”, has changed into a new catchphrase, “Africa that means for rapid growth”. Africa turned a new destination for Modi’s second phase of foreign policy, after successfully accomplishing its neighborhood policy in the first phase.

Come May and June, a hoards of top VIPs will throng to Africa to churn out a new face of India’s foreign policy. President Pranab Mukherjee is likely to visit Western Africa. Vice-president Hamid Ansari will visit northern part of Africa and Prime Minister Narendra Modi is preparing to travel to Southern Africa. These visits are not merely to reciprocate Africa’s penchant for closer ties with India, reflected in Indo-Africa summit six months ago when a massive 42 African countries participated. India is assertive to explore the unexplored African market in the wake of downturn in South East Asian economy, using the Indian diaspora in Africa.

Owing to lackluster growth in ASEAN economy, the trade power of the biggest Asian economic block waned. The block posted a negative growth in imports in 2014. This imparted impact on India’s exports to ASEAN, despite having FTA. There was a static growth in India’s trade with ASEAN. During the past three years, exports to ASEAN recorded almost no growth on year-on-year basis. In contrast, exports to Africa witnessed 5-7 percent growth during the past three years. This growth in exports was commendable amidst the gloomy situation in world exports. Not only the high growth was marked in India’s export to Africa, but also, in terms of value, India’s exports to Africa surpassed exports to ASEAN in 2014-15.

Further, Africa also proved helpful to India’s trade structure, despite India having adverse trade balance with both Africa and ASEAN. India’s import basket from Africa includes mainly diamond and precious stones and crude oil. Diamond and precious stones are the main inputs for India’s export of gems and jewelry – second biggest item of exports.

World honchos are sitting on the drawing boards for their strategic entries in Africa. The countries like Japan and EU are in regular meetings with Africa for their strategic partnerships to penetrate in the African market. India is, however, late runner for African entry, notwithstanding large number of Indians have been migrants in Africa centuries ago. It was after Mr Narendra Modi’s assertiveness to bring Africa closer to India, with an eye on large number of Indian diaspora in this continent, special efforts are being made to find new strategies to enter Africa.

Africa is future destination for India’s export. It emerged important to set off the losses in exports of India, owing to the lackluster global situation. Africa’s share in India’s total exports increased to 10.6 percent in 2014-15 from 7.9 percent in 2010-11. In contrary, shares of major destinations of India’s export declined, excepting USA. Shares of EU in India’s total export declined from 20.85 percent in 2010-11 to 19.23 percent in 2014-15 and that of ASEAN, shares declined from 12.0 percent in 2011-12 to 10.3 percent in 2014-15.

South Africa + 4 (Kenya, Egypt, Tanzania and Nigeria) are the key drivers for India’s exports to Africa. More than half of India’s export to Africa is accounted by South Africa + 4. In 2014-15 , together these five countries accounted for 53.5 percent of India’s export to Africa.

There were dramatic changes in India’s export baskets to the African countries over a period of five years. Export to South Africa, which is the biggest destination of India’s export in Africa, included more value added products than traditional items like agricultural and textile products. In 2014-15, the two biggest items of India’s export to South Africa were Petroleum products (29.8 percent share) and motor cars (14.8 percentage share). As compared to these, in 2010-11, the major items of export from India to South Africa were petroleum products (22.1 percent share) textiles, pharmaceutical products and ships.

The Japanese foray in Indian automobile industry helped India to make a breakthrough in India’s export of motor cars to South Africa. Japanese big automobile companies are making beeline to make India as the base for export to Africa. ETIOS, made by Toyota Kirloskar company in India, is exported to South Africa. Maruti is preparing for small car exports to Africa from its new plant in Gujarat. Similar planning is underway by Honda Motor India to export car, made in India, to Africa.

Africa is projected as the next generation destination for foreign investment. According to a survey by Ernst and Young, Africa moved from eighth position in 2011 to second most attractive destination in the world in 2014. FDI in Africa increased by 64 per cent in 2014 to US $ 87 billion, according to FDI intelligence. France, Greece, USA, China and Belgium were the top five foreign investors in Africa in 2014.

Given the surge in trade and investment opportunities in Africa and against the backdrop of India’s emotional link, India stands for a better chances to reap the benefits of growing Africa. It is no wonder that even though Japan business leaders were in regular meetings with African counterparts, not much headway was made. Japanese are likely to use India platform to enter African market, as this was evidenced by the exports of ‘made in India’ cars by Toyota, Maruti and Nissan. (IPA Service)