Johannesburg: The African Union is India’s fourth largest trading partner after the United States, China and the United Arab Emirates, supported by the diversification of Indian exports to the continent, says a senior State Bank of India official at a seminar here.
With a share of 8.52% in global trade, India’s total trade with Africa in 2019-2020 was valued at $68.33 billion.
India has a negative trade balance with Africa, which implies a predominance of imports over exports. In 2019-20, India’s trade deficit with Africa was valued at $9.1 billion, which was nearly 6% of India’s total trade deficit in the case of trade in goods, a said Syam Prasad, CEO of State Bank of India in South Africa. Wednesday.
In terms of bilateral trade, the African Union is one of India’s biggest trading partners after the United States, China and the United Arab Emirates, he explained.
India’s trade with Africa has diversified from exporting mainly textile yarns to petroleum products, pharmaceuticals, chemicals and manufactured goods, he said.
At the same time, India’s import basket, although dominated by primary commodities and natural resources, remains diverse given the large natural resource base in Africa, he said.
Within the African Union, India’s largest trading partner is Nigeria (20.91%). Ten countries account for almost 60% of India’s total trade with Africa.
Among them, India enjoys a positive trade balance with Egypt and Mozambique, while being in deficit with the rest of the countries.
About 61% of India’s imports from the African Union are fuels, mainly crude oil from Nigeria, Angola and Algeria.
This is followed by precious stones and glass (20%) from Ghana, South Africa and Botswana.
Other imports include vegetables, metals and minerals from various African countries such as Benin, Sudan, Zambia, South Africa, Morocco and Ivory Coast.
There is more diversity in India’s exports to Africa. About 20 percent comprises fuels, including non-crude oil for Mozambique, Togo, Tanzania, Kenya and South Africa; chemicals (18.5 percent), including pharmaceuticals in Nigeria, Egypt and Kenya; and machinery and electrical appliances (12.59%) in Nigeria, South Africa and Egypt, Prasad said.
Looking ahead, Prasad said SBI has been reinvesting its own capital on the continent over the past 25 years to expand its footprint in Africa.
This has brought in dollars for investment in Africa through an indirect role in African trade by financing South African banks through syndications by providing bilateral lines of credit to multilateral institutions such as Afri-Exim Africa Finance Corporation , and others, he said. .
We offer bilateral lines in the form of commercial loans to other major banks present in African countries and also offer lines of credit guaranteed by the IFC to small banks and those present in small countries. Funding from these institutions indirectly reaches small businesses in African countries, where a direct reach would have been difficult, the banker added.
India’s consul general in Johannesburg, Anju Ranjan, said his consulate supports Indian businesses in South Africa on issues such as securing their investments, expediting business visas and preventing double taxation.
Despite the advent of the COVID-19 pandemic and the global downturn over the past two years, trade between India and South Africa has actually increased to the point where we have surpassed the target set by the leaders of the two countries by 111% to $11.6 million. , Ranjan said.
The diplomat added that she was also very encouraged by the increase in applications for new corporate visas.