India Investments

by Robert Lavinsky
by Robert Lavinsky

SITA (Supporting India’s Trade Preferences for India)’s goal is to increase exports in Ethiopia, Kenya, Rwanda, Uganda and the United Republic of Tanzania. The organization’s focus is on the following sectors: pulses; edible and essential oils; spices; business process outsourcing and information technology-enabled services; coffee; cotton, textiles and apparel; and leather. Given that all the countries listed above (except Kenya) are given special access to the Indian market (under the preferential tariff treatment New Delhi accords), such investment is becoming increasingly popular.

According to SITA’s recent workshop participants, it is private sector based development – supported by Indian business investors – that will be the driving force of more trade between East Africa and India. There will also be an attempt to increase the value of East African products by getting more Indian-based investment opportunities.

Moving across to China, a substantial shift in its cohesion with India from trade to investment needs to happen. This is because, according to General Didar Singh, Ficci Secretary, it is only with an escalation in investments that the issue of trade imbalance can be addressed between China and India.

He explained: “Our trade with China is doing fine. There are some imbalances in the bilateral trade, but in the global context that does not mean much. The real important question is how open we are about our investments.” Indeed, the total trade amount between India and China in 2013 was $65.50 billion. However, the trade surplus was “heavily tilted in China’s favor.”

Vis-à-vis Tanzania, trade with India has been growing at an impressive rate. The only negative of that is that it has been in favor of India, which did not aid Tanzania’s manufacturing sector much. For example, even though tanzanite is mined in Tanzania, it seems that India is the largest exporter of the gem. In addition, Tanzania’s deficit remains “huge.”

So it seems that India is doing well but needs to assist its Asian neighbors in trade and deficit for the east to continue to thrive.