Dr Narasimha Rao’s Look East policy paid dividends. At present, India’s half of exports are shipped to Asia. India entered into FTA deal with most powerful zone ASEAN in Asia. Today, India is a prominent member of AIIB (Asian Infrastructure Investment Bank) - an alternative to IMF- and a member in RCEP (Regional Comprehensive Economic Partnership) with a big say in the biggest free trade block.

Aspiring similar gains from Africa - an untapped market with immense potential of trade and investment opportunities and an area with a scope for a bigger political footprint , the visit of Mr Modi is viewed as a pragmatic approach to Africa - once known as “continent that does not grow” , but is now chanted with “ Africa that means for business”. Practically, Modi’s inclination heightened with the African keenness in tandem, which was exemplified by the 3rd India- African Summit held in October 2015. It drew a hope for new synergy in cementing India – Africa relations. The 3rd Indo-Africa Summit was buzzed with 55 African nations’ participation. The first two summits, held during UPA regime, failed to get response from the continent, with less number of African nations participation. In addition, the strong emotional link, established in the pre-independence period and the existence of a large number of Gujarati NRIs, perk up Mr Modi’s special interests for a strong ties with Africa.

African economy made a phenomenal change from a negative growth during 1980s and 1990s to a surging growth during the 10 years period between 2001 and 2014. The average annual real GDP growth of sub-Saharan Africa was one of the highest in the world with 5 percent during 2013-2014, notwithstanding the fact that the global economy slipped into a gloomy growth of 2-3 percent. Its nominal GDP rose from US $ 580 billion in 2001 to US $ 1.97 trillion in 2011. It is forecasted that GDP will rise by an average of over 5-6 percent till 2023. The high rate of GDP growth warrants for a strong domestic demand. .

Buoyed by a strong domestic demand and a transition from resource supply to manufacturing activities, Africa emerged a potential destination for India’s export. Hitherto, Africa was an import sourcing destination. India’s export to Africa spurred by over 66 percent over a period of five years in between 2010-11 to 2014-15. In fact, Africa was a gearing force to drive India’s export amidst the gloomy world market, engulfed by long recession in EU, USA and Japan. Africa’s share in India’s total exports increased from 7.9 percent in 2010-11 to 10.6 percent in 2014-15. In comparison, shares of major destinations of India’s export showed a downturn, excepting America. Shares of EU in India’s total export declined from 20.85 percent to 19.23 percent and that of Asia declined from 49.84 percent to 48.81 percent from 2010-11 to 2014-15 respectively.

Historically, East Africa (particularly Kenya, Tanzania, Uganda) and Southern Africa (South Africa, Mauritius, Madagascar and Seychelles) are the centre for Indian descendants. However, in terms of trade, five African countries are the major trading partners of India. They are South Africa, Kenya, Egypt, Tanzania and Nigeria. More than half of India’s export to Africa is shipped to these five countries. In 2014-15, together these five countries accounted for 53.5 percent of India’s export to Africa.

During the last five years, there were qualitative changes in India’s export baskets to the African countries. Exports to South Africa, which is the biggest destination of India’s export in Africa, have changed to more value added 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 India’s exports to South Africa were textiles and, pharmaceutical products.

India has an adverse trade balance with Africa. But, the adverse trade balance proved benign to India in catalyzing its exports buoyancy. India imports mainly diamond and crude oil from Africa. Both these products are the main inputs for India’s major export items , viz, gems and jewelry – the second biggest item of exports and petroleum refinery products – the biggest product group in export to the world.

Africa is projected as the next attractive destination for 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 percent 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 spurring growth in investment opportunities in Africa and against the backdrop of historical relation established by the presence of large Indian Diaspora, India stands for a good opportunity to invest in Africa. In Africa, India’s investment was US $ 30 billion. They are in telecommunications, hydrocarbons, IT, water treatment, drugs and pharmaceuticals.

Indeed, India’s export to Africa geared up the trade relation with Africa. Even then, India failed to make a dent in Africa. A big scope is available to penetrate the market. India accounted for 4-6 percent of total global imports of Egypt, South Africa, Nigeria and 14-19 percent of Kenya and Tanzania. To this end, the recent visits of Africa by three top leaders, including President, Vice-President add Prime Minister, will add vigour to India – Africa relation.

The momentum of growth in India and Africa trade relation has catapulted India to a platform for opportunity to developed countries to enter African market. Japan is a case in point. It is wonder that Japanese business leaders, even with their powerful trade and investment channels, could not make a headway in Africa. They are now reinventing the possibilities of using India platform to enter Africa. Their cars, made in India, are now finding easy passage in Africa. The big Japanese automobile manufacturers, viz. Toyota, Maruti and Nissan, are exporting cars, made in India, to Africa. (IPA Service)