What Is India's Current Economic Presence in Africa?
Trade and Investment
- Bilateral Trade: In FY23, India's bilateral trade with Africa reached almost $100 billion, whereas China's trade with the continent was nearly $282 billion.
- Foreign Direct Investment (FDI): In 2021, India was among the top 10 countries with the highest FDI flows to Africa, with $14 billion, while China ranked fifth with $44 billion.
Key Sectors
- Telecommunications: Indian telecom giant Airtel is a leading mobile service provider in Africa and has recently launched affordable 4G smartphones in Rwanda.
- Automobiles: Mahindra and Bajaj have a significant presence, with Mahindra Scorpios used by Nairobi's police force and Bajaj rolling out a compact quadricycle in South Africa.
How Is India Leveraging Its Strengths in Africa?
MSME Sector
- Filling Economic Gaps: Indian MSMEs are crucial for providing basic goods and services, bridging gaps that large-scale investments may overlook.
- Digital Public Goods: Initiatives like India Stack are being extended to African countries, offering open-source digital infrastructure.
Strategic Investments
- Triangular Projects: Collaborating with countries like the UK, France, and Germany to launch development projects in Africa, focusing on sectors such as agriculture and technology.
- Private Capital: Unlike China's state-led investments, India's investments are largely private, minimizing political strings and aligning more with African sensitivities.
Why Is India's Approach Effective?
Historical and Cultural Ties
- Long-Standing Presence: Indian entrepreneurs have deep-rooted knowledge of African markets dating back to pre-colonial times.
- Language Advantage: English proficiency in eastern and southern Africa aids in smoother interactions with government and business entities.
Pragmatic Cooperation
- Geopolitical Neutrality: India is seen as a trusted interlocutor in the geopolitical tussle between China and the West, maintaining good relations with both sides.
- Focus on Local Needs: India's investments focus on intermediate goods and services rather than advanced technology, aligning with Africa's current development priorities.
Future Prospects
- Growing Influence: Despite being behind China in trade volume, India's strategic use of its strengths and 'trump cards' like the MSME sector and triangular collaborations could significantly enhance its influence in Africa.
- Sustainable Development: India's emphasis on sustainable and viable development financing contrasts with China's controversial debt-trap diplomacy.
SRIRAM’s
Fill the below form to get free counselling for UPSC Civil Services exam preparation