Syllabus: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
Background and Context
- India–Africa relations have witnessed renewed momentum over the last decade.
- High-level political visits in 2025 reaffirmed Africa’s rising strategic and economic importance.
- Africa’s inclusion as a permanent G20 member (2023) strengthened Global South representation.
- Economic cooperation has emerged as a central pillar, beyond historical cultural and political ties.
Rationale for Deepening Economic Engagement
- Nearly 40% of India’s exports are directed to the U.S. and European Union.
- Heavy dependence on Western markets exposes India to external economic slowdowns.
- Diversification towards Africa is crucial amid uncertainty in advanced economies.
- Africa offers high growth potential, expanding consumer markets, and industrialisation prospects.
Current Trade and Investment Landscape
- India is Africa’s fourth-largest trading partner, with trade nearing $100 billion.
- In FY24, India exported goods worth $38.17 billion to African countries.
- Major destinations include Nigeria, South Africa, and Tanzania.
- Key exports comprise petroleum products, engineering goods, pharmaceuticals, rice, textiles.
- Africa sourced nearly 6% of total imports from India in 2024.
- China dominates African trade with over $200 billion bilateral volume.
- Around 21% of Africa’s imports originated from China in 2024.
- A significant share falls under HSN 84 and 85, reflecting China’s industrial capacity.
India’s Trade Ambition with Africa
- India aims to double bilateral trade with Africa by 2030.
- Achieving this requires a strategic shift beyond commodity-led exports.
Five Strategic Pillars for Expansion
- Trade Agreements and Market Access
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- Prioritise preferential trade agreements and comprehensive partnerships with African blocs.
- Engage regional groupings to reduce tariff and non-tariff barriers.
- Manufacturing and Value Addition
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- Shift from low-value exports to value-added manufacturing and joint ventures.
- Utilise African incentives to establish local manufacturing facilities.
- African manufacturing ensures preferential U.S. market access and regional integration.
- Engagement with AfCFTA can unlock continent-wide market opportunities.
- MSME Integration and Trade Finance
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- African markets provide better entry opportunities for Indian MSMEs.
- Expand Lines of Credit and improve trade finance accessibility.
- Promote local currency trade and joint insurance mechanisms to mitigate risks.
- Logistics and Connectivity
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- Reduce trade costs through investment in ports, hinterland connectivity, maritime corridors.
- Efficient logistics are vital for competitive and sustained trade growth.
- Services, Digital Trade, and People-to-People Links
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- Leverage strengths in IT, healthcare, professional services, skill development.
- Services exports stimulate goods trade and deepen economic interdependence.
- Existing policies inadequately support services trade, requiring significant improvement.
- Role of Indian Public Sector and Investment
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- Strengthen investments in manufacturing, agro-processing, infrastructure, renewables, mining.
- Public sector enterprises must lead investments, especially in mineral exploration.
- Address barriers including bureaucratic hurdles, political instability, and financing constraints.
Conclusion
- India–Africa ties must evolve from transactional trade to long-term partnerships.
- Africa remains central to India’s global economic ambitions in a multipolar order.
- Strategic recalibration and deeper integration are timely and necessary.