Model Question and Answers for APSC | How does India see its place in the economic space of rising natural resource-rich Africa?
How does India see its place in the economic space of rising natural resource-rich Africa?
Ans: The African Union is India's fourth largest trading partner after the United States, China, and the United Arab Emirates, a position propped up by diversification in Indian exports to the continent.
A partnership between a billion-person nation with rising resource demand and an underdeveloped continent rich in natural resources would benefit all parties. This is the fundamental premise of African-Indian relations.
India sees its place in the economic space of rising natural resource-rich Africa:
- For a resource-constrained country like India, an entire continent in its early stages of development like Africa offers limitless opportunities.
- Beneath the surface of Africa lies a wealth of mineral resources of enormous value. In 2019, the continent produced almost 1 billion tonnes of minerals worth $ 406 According to the United Nations, Africa is home to about 30 per cent of the world’s mineral reserves, 12 per cent of the world’s oil and 8 per cent of the world’s natural gas reserves.
- While India exported goods worth $40 billion to Africa in FY22, its imports were higher at $49 billion, partly due to oil purchases from countries like
- In the pre-Covid year of 2019, over 60% of India’s imports from the African Union comprised fuels, mainly from Nigeria, Angola, and Algeria; this was followed by precious stones and glass (about 20%) from Ghana, South Africa and Botswana.
- About a fifth of India’s exports to the continent were petroleum products, and over 18% were pharmaceuticals. A trade agreement will enable seamless movement of these products at zero or concessional duties, helping both sides.
- Similarly, as ICRIER points out, between January 2015 and May 2021, about $23.3 billion has been invested by Indian firms in Africa.
- Financial services, telecommunications services, and mining sectors in Africa are among the largest recipients of FDI from India.
- India and Mauritius signed the Comprehensive Economic Cooperation and Partnership Agreement (CECPA)
- India Japan Asia-Africa Growth Corridor
- Pan Africa e-network
- Vaccine Maitri
- In 2021, African nations launched the African Continental Free Trade Area (AfCFTA) with the objective of creating a single African market for the free movement of goods, services, labour, and capital, and increasing intra-African trade. AfCFTA may be able to provide Indian firms and investors with certain opportunities to tap into a larger, unified, and robust African market.
The renewed emphasis on Africa comes as New Delhi seeks to strengthen its trade with relatively small and medium-sized economies, as key markets such as the United States and the European Union experience significant growth slowdowns. African nations will benefit greatly from this engagement as well because India's trade and investments in the continent are not intended to lead the countries into a "debt trap," as China has frequently been accused of doing.