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| Source: istockphoto.com. Illustration of geopolitics. Geopolitics is a long game of chess. |
Introduction:
January 26, 2023 will be an important day for India in many aspects, on one hand it strengthens resolve of India’s commitment to its constitutional values of plurality, equality, liberty, freedom & enhancing its civilizational values over a period of time on the other hand it will mark a momentous occasion in the diplomatic history of India when the President of Egypt, Shri. Abdel-Fateh Al Sisi will be the chief guest for witnessing the grandeur of the Republic Day celebrations on the now renamed Kartavya Path looked in the heart of India, New Delhi.
Basics:
Diplomacy is seen as the presence of a structured communication system at a bilateral as well as at a multilateral level. A closer look at India’s chief guests for the last few years shows India’s commitment to properly use India’s incredible soft power to achieving diplomatic success either in the short run or long run. For example: In, 2018, the Narendra Modi government invited the heads of ASEAN countries namely Philippines, Laos, Cambodia, Myanmar, Indonesia, Malaysia,Thailand, Singapore, Vietnam & Brunei, since 2018 the relations between India-ASEAN have improved significantly with the trade between both the countries in the months between the 2 powerful blocs increasing from US$ 81.3 billion to almost US$ 274.50 billion according to data from newspapers & the ministry of commerce-trade, India is also looking at the ASEAN nations as a potential market for the defence goods manufactured in India along with securing India's startegic, security interests through SAGAR mission & attracting investments from ASEAN nations. The steps by India is also yielding positive results with Phillipinnes becoming first buyer of India's brahmos missile, Singapore becoming one of India's largest foreign investor & Indonesia president Jack Widodo passing the presidency to India for the important G-20 summit.
India-Egypt relations:
India-Egypt are the world’s 2 oldest surviving civilizations, while one is famous for its temples,cultural plurality the other is known for its pyramids, delicious food which act as important symbols for soft diplomacy in the world. Even during the ancient times, India-Egypt used to trade in abundance with multiple studies showing evidence of trade of commodities like lapis lazuli & food grains to name a few. After India's independence India-Egypt relations continued to blossom on all fronts even in the face of extreme changes in the political setups of both countries (Arab Spring in Egypt & Emergency in India can be considered as prominent examples) with India's export to Egypt rising to 3,473.92 billion$ in 2021-22 from a figure of 2,392.34 billion$ in 2017-18.
India mainly exports iron & steel, light vehicles,cotton yarn & imports mineral oil, petroleum products, fertilizers to name a few. It means that the policies of textile ministry of India is of significant importance for international trade with Egypt & the policies related to fertilizers, energy demand is of significant importance for India’s imports from Egypt.
Startegic industries:
With the scheme of One Nation-One Fertilizer scheme coming into force in India from late 2021 along with India’s rising population, India’s rising PCI, high agricultural growth rate which is forecasted to be above 3% for the next few years, India’s fertilizer demand is expected to rise as more farmers will be getting access to fertilizers at subsidized prices from the general market & applying simple demand-supply law, it will create a lot of stress on India’s existing fertilizer PSUs like RCF, NFL who are also looking to improve their production capabilities in such a situation the market is open for international players at least for a short period of time which will allow them to find a foothold in India’s fertilizer market as it can create a short term supply chain crunch for fertilizer industry, fertilizer industry is also important for India’s agricultural growth as fertilizer contributes to the significant amount of agricultural inputs in India, in such a situation at least for the very short run, India would like to import more fertilizers from countries & given Egypt's production capabilities, till the time India’s private players & PSUs ramp up the production capabilities, importing fertilizers from Egypt would be a good deal for Indian farmers. Also since, India is a market of more than 10 million farmers, it makes Egypt to seriously consider ramping up fertilizer exports to India as its too big a market to be ignored, when this will happen, India’s fertilizer industry will become more competitive & farmers will get fertilizers at a very cheap rate which is important for the agricultural development of India.
The second, important aspect is of, Egypt’s geographical location which is located near the Suez Canal from where a lot of international trade takes place, the route’s importance can be understood from the fact that 12% of the world trade happens through the Suez Canal which helps in boosting the Egyptian economy as Egypt can levy taxes along with development of its ports sector which gives Egypt a strategic leverage among many African countries, Egypt will be expecting India to help in the development of its ports along the Suez canal in exchange for India expanding its exports from the canal to the per capita wise rich European, Middle eastern countries & the western economies in general. India’s export bill touched almost US$34.37 billion in the month of October 2022, hence Abdel Fateh Al Sisi’s visit to India becomes more important & given India’s rising economic stature and retaining its position of one of the fastest rising economies of the world, its an offer which will lead to mutual benefit for both the nations, the law of absolute & comparative advantage given by David Ricardo holds true in this case. This will lead India to boost its exports of its products like electronics, electrical goods, textiles, port technologies to Egypt which will help India to achieve a quick rate of growth, it would also allow Western nations access to India's semiconductor industry in the future once the Vedanta plant in Gujarat's Ahmedabad is ready for operations.
The third aspect where the policymakers of both the nations would like to concentrate is improving the investment portfolios in both the countries, as of 2022, India invests US$ 3.15 billion ranging from industries like garments, packaging firms, chemicals, F&O whereas Egypt invests US$ 37 billion in India with investments in industries like coatings, electric meters to name a few. India- Egypt would like to boost this mutual investment portfolio & with India’s Oil & Gas Minister Shri. Hardip Singh Puri indicating that India will be seeing an upward trend in the investments in oil sector to 58 billion$, it is widely expected that Egypt would also be investing for the development of oil & gas industry in India which would reduce India’s dependence on other nations in the oil sector, it would also create multiple employment opportunities for India's youth in the oil & gas sector, India would also look forward to invest in Egypt’s renewable energy sector, textile, logistics & tourism sector as Egypt looks to diversify its economy to safeguard itself from geopolitical uncertainties of the world along with climate change factor due to Egypt can be one of the first countries to get affected, as was suggested by the African Development Bank in its annual report published in the year 2022.
Advantages to India:
1. Filip to Atmanirbhar Bharat project for agriculture sector specifically.
2. Boost to oil & gas sector of India
3. Boost to ports development of India
4. Making fertilizer industry more competitive
5. India becoming one of major foreign investors in the world.
6. Direct access to markets of the developed world.
Advantages to Egypt:
1. Boost to Egypts inflow of FDI
2. Can get help in resolving Suez Canal & Nile Valley dispute with its neighbours.
3. Economic diversification of Egypt
Suggestions from my side to improve Indias penetration in Africa:
Given the economic conditions of both the nations it becomes imperative for India & Egypt to think about converting this important visit by Abdel Fatah Al Sisi for long term gains in which both the countries can benefit, some steps that can be taken from Indian side can be as follows:
A. Increasing India's pledging for the development of African nations, industries India can concentrate should be related to infrastructure project funding through NBFC's,allowing Indian PSU's to open more foreign branches in the North African countries which lack in financial literacy, inclusion. In poor countries like those in Africa such as Senegal, microfinancing schemes by India's big companies like Mannapuram Finance, Aditya Birla Capital, L&T Financial Holdings can be a gamechanger. DTAA agreements along with reduction of CRR-SLR for foreign investments by NBFC's can be seriously thought about by the RBI & Government of India. If required the idea of AADHAR which is digital identity can be developed by India in a guiding role with the African governments.
B. India can increase its investments in the education & health sector, this will allow African countries to come out of serious problems like malnourishment, AIDS control, TB control in Africa which will lead to India winning the hearts of African common people.This will lead to a chain of events which would be beneficial for India in the long run. Special incentives like DTAA agreements with African Union & Egypt especially for India's edtech sector firms can be provided & the expansion of Indian edtech firms in African nations should be startegic in nature, first investments can be done in economically well off nations like Morocco,Egypt, Algeria,South Africa, Zimbabwe which would help India in engineering the psychology of quick sustainable development among other African nations. The cost of course for graduation in STEM courses in India can be provided at a discount of 3-5% in central government aided colleges.
C. A strong focus by Government of India on the agricultural growth of African countries can be focused upon for a period of 6 years, where India's agricultural exports to select african nations like Togo, Cape Verde, Libya,Senegal,Namibia,Mozambique,Kenya,Mali,Burkina Faso,Ghana,Angola & Nigeria at ration or cheap rates can be considered. Along with providing food, a serious boost to India's Food Manufacturing Industries can be given to encourage them to set up manufacturing units where they can be given tax rebates in India along with DTAA with these nations can be seriously considered. The custom import duties on certain products produced by these nations in agriculture can be reduced in India & given India's domestic demand the African countries would like to have more trade in agricultural products with India. The other step can be helping the African countries in sustainable agricultural practices, modern drip irrigation schemes like PM-Kusum Yojana can be extended to the African nations where farmers are provided solar hand pumps at a cheap cost, along with various good schemes from India.
Advantages for India from these suggestions:
i. Growth in foreign exports
ii. Growth in asset profile of Indian banks which will help them give loans to producers in India this will boost India's growth in the long run.
iii. Boost to India's education sector.
iv. Boost in agricultural production of India. Food processing industries can also grow which will help in generating a food surplus in India.
v. Boost to India's food producing industries.
vi. Boost to India's cybersecurity setup.
vii. India getting a very long term market.
viii. counterweight to China.
Advantages for Africa from these suggestions:
i. Rise in financial inclusion.
ii. Rise in agricultural production for Africa.
iii. Rise in educational levels for Africa.
iv. Rise in health facilities in Africa.
v. As India is not an exploitative power it will lead to sustainable growth of Africa.
vi. Fast economic growth for Africa also achieving SDG's.
vii. Infrastructure development in Africa will also occur.
Conclusion:
The visit of Abdel-Fatah-al Sisi will induce sector wise economic growth in India & Egypt which makes this Republic day celebrations interesting for watchers of diplomacy around the world as it can improve India’s outreach & winning the hearts of African countries
To conclude, India-Africa relations can go to a whole new level in the next few years. The government of India should reinnovate, relook its policies from time to time in order to create a vibrant foreign policy for India. In India's outreach to African nations we must not remove our focus from making India as the world's most sustainable economy.
Sources:
