India in the WTO

The sixth round of India-EU FTA negotiations in New Delhi has Indian NGOs demanding access to “secret” FTA negotiating texts. The Times of India reports that protestors were detained outside the office of the European Commission in New Delhi. A body called the Forum on FTAs (described elsewhere as an umbrella group of 75 organizations) is spearheading these Indian civil society protests. An entity called FTA Watch-India has sprung up recently.

While I cannot comment specifically on the demands of this group in the EU-India FTA context, a discussion on how India makes its trade policy and whether it adequately consults with domestic stakeholders in formulating negotiating positions is much needed. Domestic stakeholders who ought to be consulted include not only NGOs, but also parliament, business, labor unions, farmers groups and consumers. Not much literature is available on the Indian trade policy-making process. There is however an interesting paper by Biswajit Dhar on this in a publication by IISD available here.  See Biswajit Dhar and Murali Kallummal, “Trade policy off the hook: The making of Indian trade policy since the Uruguay Round”, in Halle and Wolfe (eds.) Process Matters: Sustainable Development and Domestic Trade Transparency, IISD 2007.

I had earlier posted on a news report on the low appetite in India these days for new FTA commitments given imminent elections and the domestic impact of the global economic downturn. An Economic Times story shows that the concerns about the EU-India negotiations are not limited to civil society, but also emanate from business and agricultural economic interests.

Speaking to ET last week, a commerce ministry official sought to allay the growing concerns in domestic circles over the proposed India-EU economic agreement. “There are strong complementarities between the EU and India. After all, we have not yet reached the stage of making the trade-offs and so the fears being expressed now are unfounded,” said the official, who was busy preparing for the sixth round of India-EU bilateral talks beginning Tuesday.
This, however, could be an over-simplistic view. There is clearly a need for greater involvement of all stakeholders in the negotiation process. The high-level trade group which had drawn the broad contours of the agreement was not representative enough.
The EU is India’s largest trading partner, accounting for a fifth of India’s total trade and also one of the largest sources of foreign investment in India. As opposed to this, India currently accounts for less than 2% of the EU’s total trade.
Clearly, as things stand now, India has much to lose (or gain) from the agreement as compared to the EU. Note that the agreement would cover a gamut of areas—trade in goods and services, IPRs, cross-border investments, competition policy, government procurement etc. So India’s policymakers ought to be more chary of the proposed pact than their European counterparts. There is a need for more transparency as well as greater involvement of all stakeholders in the negotiations.
Going by the high-level group’s report, India might need to go WTO-plus in the area of trade in goods, with no commensurate reciprocal gestures from the EU side. The agreement would, as things stand now, allow India to keep just 10% of the tariff lines—which include both agricultural and industrial goods—outside its scope.
It may be noted that India has been resisting the multilateral (WTO) trade liberalisation deal even as it did not have to cut tariffs on 5%f agricultural tariff lines and only make less-than-average reductions in another 7%, and looked close to getting the freedom to keep 5% of industrial tariff lines outside tariff reduction formula. Besides, India has already got preferential (zero) access to EU in case of several tariff lines under the GSP system, which reduces the scope for India to gain in terms of reduction in tariff barriers by the EU.

The Business Standard has an article with an update on India’s FTA negotiations. The outgoing government has only signed 1 out of the 15 proposed FTAs on which it initiated talks.

Here’s the article in full:

UPA’s FTA success rate 1 out of 15

Rituparna Bhuyan / New Delhi February 25, 2009, 0:56 IST

The United Progressive Alliance (UPA) government, which initiated talks on about 15 free trade agreements (FTAs), could sign only one of them during its current tenure.

Opposition from the domestic industry lobby in some FTAs and inconclusive negotiations in other cases were reasons for slow progress in finalising FTAs with trade partners, experts said.

Government sources said that at least three of the proposed trade treaties, negotiations on which were concluded last year, would be cleared by the new government that takes charge at the Centre in a few months.

The present regime signed the Comprehensive Economic Partnership Agreement (CEPA) — which covers goods, services and investment — with Singapore in mid-2005.

* Talks Completed with Asean (FTA on goods), South Korea and Sri Lanka

* Ongoing talks with Japan, European Union, European Free Trade Association, Southern African Customs Union, Gulf Co-operation Council, Malaysia, Thailand and New Zealand

* Joint study group formed with China, Australia , Russia and Indonesia

“The fact that not many FTAs were sealed shows the cautious approach of the policy makers,” said Ram Upendra Das, fellow, Research and Information System for Developing Countries (RIS). “But India has recognised that these duty-free agreements are the order of the day as other countries are engaging in similar deals. Indian exporters will be left out if the nation does not engage in these type of agreements with its trading partners”, he added.

Government sources said that the ambitious FTA with the Association of South-East Asian Nations (Asean) and a CEPA with South Korea were unlikely to be cleared by the Union Cabinet. Talks on both these agreements were concluded successfully in 2008. After successful conclusion of talks, the agreement has to be approved by the Union Cabinet before it can be signed.

“The call on these two agreements is likely to be taken by the next government,” said a government official, adding the Cabinet had met probably for the last time on Monday before dates for the elections are announced next week.

There was no announcement on the South Korean and Asean duty-free agreements. Once elections are announced, the Cabinet will not be able to clear any proposals.

Sources added that the government was facing a lot of opposition from the industry on these two FTAs, as it is wary of any cheap imports at a time when the domestic economy is going through a downturn in the wake of the global economic crisis. The Asean FTA was to be signed in December 2008, but was postponed because of a domestic strife in Thailand, an Asean member.

Moreover, a separate CEPA with Thailand could not materialise as India first wants to sign the deal with Asean. “Thailand has also asked for some additional concessions,” officials said. Meanwhile, Both the countries have are trading through a Early Harvest Scheme (EHS), which translates to duty free trade of about 84 goods.

Experts maintain that given the present economic situation, FTAs could wait. “We do not know how things will shape up in the near future. It probably makes sense at times of uncertainty to calibrate policy to suit domestic needs,” said Bishwajit Dhar, head of centre for WTO studies at Indian Institute of Foreign Trade.

But Das feels that as the United States and Europe see a downturn, India needs to diversify its exports and imports.

Significantly, a CEPA with Sri Lanka could not materialise because of the political developments in the island nation. The agreement was to be signed on the sidelines of the SAARC meeting in Colombo in August 2008. Government officials maintained that Sri Lanka did not want the CEPA due to opposition by some political parties. Both the countries already have an operational FTA, covering goods, since 1998.

An agreement with Japan, which was scheduled to be concluded by the end of 2008, is also stuck. The bone of contention was the reluctance of the island country to allow easy market access of Indian pharmaceutical products.

IPS in a report on the EU’s ambitions on FTAs with Asian partners writes about the FTA with India that the EU is currently negotiating. Some excerpts:

Mauro Petriccione, a director in the European Commission’s trade division, said on Oct. 6 that the lack of progress made in discussions with ASEAN has meant that the idea of negotiating a deal with just a few of its 10 member countries is being explored. ASEAN groups Singapore, Malaysia, Thailand, Burma, Vietnam, Laos, Cambodia, the Philippines, Brunei and Indonesia.
And while the European Parliament, the EU’s only directly-elected institution, called last month for an FTA with India to be finalised by the end of 2008, Petriccione acknowledged that attaining such a deal will be very difficult.
One of the problems is that the EU had started the negotiations on the tail of a reform movement in India, he told a seminar organised by the European Policy Centre, a think tank in Brussels. ‘’If it (the movement) is not stopping, it is at least slowing down.’’”
Petriccione was alluding to an economic liberalisation process initiated by Manmohan Singh, now India’s prime minister, when he held the finance portfolio in the 1990s. Under this process, the country’s investment rules were relaxed in order to entice multinational firms into the country.
In recent times, however, the Indian government has adopted a more cautious approach towards international commerce. India’s demand that it be allowed to restrict food imports in order to protect its farmers was blamed by the United States for the failure of efforts to revive the Doha round of world trade talks in July.
India has also taken a tough line in its bilateral dealings with the EU. It has, for example, been urging that the liberalisation of trade in services should enable its skilled professionals to work freely in the EU, despite efforts by the Union to curb immigration.
A paper published by the European Commission last year predicted that securing trade deals with Asia would bring major benefits to both continents. The combined effect of agreements with India, South Korea and ASEAN should be worth an extra 40 billion euros (54 billion dollars) to EU exporters per annum, the paper predicted. The Asian economies, meanwhile, should see their exports to the Union grow by between 18 and 36 percent, according to the Commission.
But a new analysis by ‘Traidcraft’, a British organisation promoting fair trade, contends that a free trade deal with India could have harmful consequences for the country’s poor. Losses in government revenue due to a lowering in tariffs on imports could lead to cutbacks in spending on health and education, says the report, while the opening up of the economy to large retail chains could jeopardise up to 40 million small shopkeepers or hawkers.
Sophie Powell, a Traidcraft campaigner and author of the report, said that the EU is wrong to depict India as its economic equal. Even though it has more than double the EU’s population size, India’s gross domestic product is only about six percent of the Union’s. Powell noted, too, that the EU’s own assessments of the likely implications of a free trade deal forecast that millions of Indians will lose their jobs in sectors ranging from paper to car-making.
The EC’s gung-ho approach to trade negotiations with India present clear risks to millions of India’s most marginalised people, she said. A fundamental rethink of EU trade policy is needed.”
Razeen Sally, an academic working in the University of Hong Kong, said it was probably a mistake to launch free trade negotiations between the EU and India.
India is not serious about FTAs, he claimed. Its unilateral reforms have stalled under the present government since 2004. India has been very defensive in the WTO (World Trade Organisation) and its track record on existing FTAs, except for one with Singapore, has been very bad, he added. ”

The Traidcraft report can be found here.

Continuing on the topic of the previous post, an American Professor of Strategy and Organization, School of Business, University of Maryland, (Ralph J Tyler) had an interesting opinion piece in the Economic Times earlier this year in January. He writes that by 2050, the bilateral trade relationship between India and China will be the most important economic relationship in the world. Tyler argues that India should grant China market economy status because:

While government subsidies do remain an issue in some industries in China, there is no evidence that this problem is endemic throughout large sectors of the Chinese economy. Also, other countries (such as Russia) which suffer from similar problems already enjoy a Market Economy Status.
Whether or not a country grants MES to China has minimal impact on trade balance with China. Take the US as an example. Even though the US has not granted MES to China, its trade deficit with China was $162 billion in 2004, $202 billion in 2005, and $232 billion in 2006. Thus, from China’s point of view, whether or not a country grants MES to it has little substantive value. The value is entirely “symbolic” and, as we know well, symbolism is a hugely valued commodity in China.
In any case, China will automatically get the Market Economy Status around 2015-16. Thus, for China, the symbolic value of getting MES goes down with each passing year. If India were to grant MES to China now (rather than after Japan, the US, or the EU have done so), the symbolic value to China will be much greater than if India were to be a mere follower.
Granting MES to China will not take away India’s rights to file legitimate anti-dumping cases. Even after China is granted MES, it has to provide verifiable information to the country filing an anti-dumping complaint. If such information is not provided, the latter retains the right to use the best information available, including third-country (surrogate) information. As it is, the current anti-dumping cases filed by India against China total less than 5% of China’s annual exports to India. In short, the substantive value of granting or not granting MES to China is insignificant not just for China but also for India. Yes, India will have a $9-10 billion trade deficit with China in 2007; however, MES has little if anything to do with the trade deficit.
Substance aside, if India were to grant MES to China before Japan, the US, and the EU do so, the symbolic value to China will be very high. If India is smart, it should exploit this opportunity to the maximum by getting quid-pro-quo concessions from China on issues that matter enormously to India (e.g., a settlement of the border disputes). In essence, India should look at MES for China as an issue whose salience rests almost totally in non-economic rather than economic domains.
We agree that, at the margins, granting MES to China will put greater pressure on Indian manufacturers to become more efficient (and on the Indian government to accelerate the elimination of India’s disadvantage in infrastructure).
However, this pressure is likely to be a net plus. India’s political and business leaders have always responded with vigour to external economic pressures and competition. Look at the country’s response in 1991. Or, look at the accelerated pace with which India’s IT giants are globalising their footprint and moving up the value chain in response to an appreciation of the rupee and growing competition from other countries.

On the growing importance of India China trade he writes:

Each country’s aggregate international trade is expanding by 23-24% annually. In comparison, India-China trade grew at a 50% rate during 2002-2006 and will increase by a further 54% during 2007 to reach $37 billion.
Second, after adjusting for partner GDP (i.e., bilateral trade divided by the trading partner’s GDP), India’s trade with China is greater than that with Japan, the US, or the entire world. After similar adjustments, China’s trade with India is only slightly below that with Japan, the US, or the entire world.
Third, China already is (or will shortly become) India’s number one trading partner. From China’s side, India already is one of its top ten trading partners. Also, China’s trade with India is growing much faster than with any of the other nine. Thus, India is rapidly becoming an increasingly important trading partner for China.
Fourth, India’s overall international trade is significantly below that of China’s, in terms of both absolute figures (for 2006, $306 billion vs $1,760 billion) as well as relative to GDP (34% of GDP vs. 65% of GDP).
Fifth, even if the growth rate in India-China trade slows down to 25% annually (a conservative projection) from the current rate of over 50%, bilateral trade between them will be almost $75 billion in 2010 and $225 billion in 2015, i.e., as large as China-US trade just three years ago. These are very large numbers. Political and business leaders need to start getting ready now for this radically different world.
Trade theory tells us that, in an increasingly flat world, trade between two countries should be a multiplicative function of their GDPs. Since it is almost certain that, by 2050, China and India will be the two largest economies in the world, it is inevitable that bilateral trade between them will become the most important economic relationship in the world.

Tyler offers an interesting stance on investment ties between India and China:

At present, investment links between the two countries are relatively modest. Haier and Huawei have significant presence in India. Similarly, Bharat Forge, TCS, and Infosys are building a noteworthy presence in China.
These types of greenfield investments will continue to grow. However, the quantum leap will come as some of the bigger companies from India and China acquire third-country companies that already have a significant presence in the other country (e.g., if an Indian auto company were to acquire a western auto company with significant presence in China). It is certain that, over just the next five years, we will see a growing number of foreign acquisitions by Indian and Chinese companies. As these acquisitions materialise, it is inevitable that investment linkages between India and China will grow rapidly.

According to CCTV.com, India China trade was 39 billion US dollars in 2007 (a 50% increase over 2006). Both countries want to raise this to 60 billion US dollars by 2010. A high level business delegation is visiting India and a number of deals have been signed to help achieve this. CCTV.com writes:

The deals signed covered different sectors including textile machinery, garments, steel, agriculture, and electronics. The total value was about 370 million US dollars.

Besides bolstering two way trade, the deals are also considered a way to escape the deadlock that scuppered ministerial talks at the World Trade Organization in July.

G. K. Pillai Indian, Commerce Secretary, said, “India and China have had a very close cooperation in the WTO as we have supported each other in ensuing a development dimension to the Doha round of talks and we hope to take this cooperation further in our bilateral relationship to increase trade between our two countries.”

The Chinese delegation says the documents signed can help reduce the trade deficit, by at least nine billion dollars, if not more. India has accused China of dumping at WTO conferences, and the Chinese side said increased negotiation and cooperation is important to resolve the problem.

The Financial Express has more:

Opening a new chapter in the India-China business relations, the two countries are expected to sign at least 36 memorandum of understandings (MoU) in different sectors that would be worth $370 million during the maiden Chinese business delegation’s visit to India scheduled for next week.

Talking to FE, sources in Ficci said that the 60-member delegation coming from China will be inking MoUs in various sectors including: Textile machinery, garments, steel, agriculture, science and technology and electronics.

Business delegation from China, comprising all the major Chinese companies, is arriving here next week on the first-ever ‘government procurement’ mission to India that Beijing hopes will reduce the nine-billion dollar plus trade gap that exists between the countries. Chinese vice minister of commerce Gao Hucheng is leading the impressive delegation that will have senior executives of China Chemicals, China Petrol, China Machinery, China Grid and Sino Steel, Sinochem Corporation—all leading state-owned enterprises—as well as other representatives of key Chinese companies.

Representatives from some of the Indian companies which will be signing the MoUs include Reliance Industries Ltd, Allianz India, Bharat Mining Co, Ranbaxy Laboratories Ltd and Kotak Ginning and Pressing Ind Ltd.

The EU is at present India’s largest business partner with trade worth 56 billion Euro. Indian trade with both China and the EU is targetting 100 billion $/Euro by 2013. It is also being reported that a feasibility study for an India China FTA is now complete.

The Economic Times had a few weeks ago, reported on how Indian buyers were increasingly sourcing from low-cost China to beat inflation.

India importers are looking to China manufacturers more and more to fight rising costs, according to dual surveys released by trade publisher and trade show organizer Global Sources.
The surveys, conducted in July and August, tracked the views of thousands of volume importers and purchasing managers who supply India’s retail distribution channels. The surveys focused on consumer electronics and hardware and building materials – two of India’s fastest growing segments.

…

“Supply-chain management is becoming more efficient in India. And these buyers are looking to China manufacturers to supply this ever-changing need for products.” Around 90 percent of survey respondents said they felt China suppliers offered end-consumer a wider selection of products at reasonable prices. Over 95 percent of respondents to both surveys indicated they would increase their purchases of products from China in the coming year.

This report also has some more statistics on India China trade:

Last year, China became India’s largest trading partner – overtaking the United States. While Indo-US aggregate international trade is expanding by 23-24 per cent annually, India-China trade grew at 50 per cent during 2002-2006 and increased by 54 per cent during 2007 to reach 37 billion dollar.

And here the Economic Times writes about how China and India need to understand each other better:

Two “distant” neighbours. Decades of communication gap. Lack of connectivity. Inadequate understanding of each other’s cultures, systems and orientation. This is the India-China relationship, or lack thereof, since the early 60s.

In the late 90s, Indian Industry was running scared of competition from China, partly out of ignorance and partly because of lack of competitiveness.
Much of this is past — trade and investment have taken quantum leaps. From $40 bn bilateral trade in 2007 its heading towards $60 bn now. But the basic problem remains. There is still lack of understanding of the Chinese — and China — in India, among Indians.

Kamal Nath and the Singapore trade minister announced the successful end of the talks in Singpore today. Read more here. Some facts:

Total trade between the 10-member ASEAN and India amounted to 37 billion US dollars in 2007, up 29 percent from the previous year.

India is seventh on the list of ASEAN’s biggest trading partners, trailing Australia, South Korea, China and others, according to ASEAN figures.

The FTA covers only goods, but talks are expected to follow on a services and investment agreement.

The Business Standard reports on the renewed urgency that the Geneva Doha failure of July lent to these talks being finally concluded after having been delayed. It also has more information on what the deal contains:

India, on its part, has agreed to lower import duties on nearly 96 per cent of the items it trades with Asean, while protecting nearly 490 highly sensitive products in the agriculture, textile and chemicals sectors. Asean, too, has shown ample flexibility in accepting some Indian positions though it had, in the last annual India-Asean summit in Singapore in November, virtually ruled out further negotiations until India came up with substantially better offers. Most of the group’s members were unwilling to allow protection for over 400 items and especially not to the ones of interest to them in agriculture as well textile and chemicals. These included, besides palm oil, items like pepper, tea and coffee. However, all that is past, though in the process Asean has also got concessions from India to shield its turf when it comes to automobiles and steel. In the case of the almost intractable issue of duties on palm oil and its derivatives, equally critical for a major importer like India as it is for exporters like Malaysia and Indonesia, the two sides have agreed to follow a middle path, agreeing to a tariff ceiling of 37.5 per cent for crude palm oil and 45 per cent on its refined version. In the event, this turned out to be the clinching point for the pact.

Is the future an Asian common market, with Asean already having signed agreements with South Korea, China and Japan, and negotiating with Australia and New Zealand?

According to The Australian, Minister Kamal Nath would like India to conclude an FTA with Australia by 2010. India and Australia are carrying out a joint feasibility study for an FTA. Here’s an extract from this report:

In an interview with The Australian, Mr Nath said that because the Indian and Australian economies were so complementary, an FTA should be relatively easy to achieve.

He believed it should cover trade in merchandise and services and two-way investment.

“We should try and conclude it by mid-2010, or even by the end of next year,” Mr Nath said.

India also wants Australian Uranium for its civil nuclear energy program and Nath touched on this issue as well.

Mr Nath also wants Australia to sell uranium to India, although the Rudd Government has reversed Howard government policy and said it will not sell uranium to India, even if India completes its nuclear energy deal with the US and wins approval for this from the International Atomic Energy Association.

“We do ask Australia to take a practical and realistic view (of uranium sales),” Mr Nath said.

“Australia is not the only source of uranium for India, but (it should be viewed) in the larger context of global warming and the larger relationship between Indian and Australia.”

And what do we make of this comparison with China. (It always used to be India versus Pakistan and now comparisons with China are common.)

Mr Nath said he wanted a much stronger relationship between India and Australia.

The New Delhi Government is known to believe the Rudd Government is obsessed with China and has an unbalanced foreign policy. Mr Nath would not be drawn on such subjects, but said: “The China story is an old story, while the India story is a new story. China opened up earlier so it obviously got a head start.”

Another interesting India related paper on SSRN:

Julien Chaisse, Debashis Chakraborty, Arup Gupta, “Prospects for a Multilateral Framework on Investment – The Indian Bolt” NCCR Trade Regulation Working Paper No. 2007/37

Abstract:
The potential inclusion of a multilateral framework for investment at the WTO aims to coordinate the global regulation on trade and investment. In addition to the difficulties arising during these negotiations, one major concern is the fact that certain countries like India do not have an interest to go for a full-scale Capital Account Convertibility. As a part of the G4, India is currently a major player in the trade-related international regulatory framework. It is argued here that the question of a multilateral framework for investment cannot be solved without taking into account the Indian reluctance to a freer investment regime. There is a historical reluctance of developing countries to establish freer investment regimes. The project on a New International Economic Order already put as a pre-eminent point the sovereignty of States and their necessary control of the private sector notably of foreign capital. But that political approach is reinforced by objective arguments analysed here. First we briefly discuss the debate on having a freer investment framework and foreign investment regime in India. India’s submissions to the WTO on this front are reviewed next. Finally in order to evaluate the legitimacy of India’s concerns, through an empirical model the potential impact of a destabilizing shock on her capital account is analysed. Finally based on the findings, the policy lessons are drawn.

The Financial Express reports that India wants the EU to address concerns that the EU’s notification systems for food and non-food safety related concerns operate as significant non-tariff barriers against Indian exports. The EU systems in question are called RAPEX ( Rapid Alert System for non-food consumer products) and RASFF (The Rapid Alert System for Food and Feed). Here’s what the report has to say:

India has now called for lifting of the EU’s Rapid Alert System for Food and Feed (RASFF) and a similar system called RAPEX for non-food consumer products. These rapid alert systems restrict the marketing and use of any such product that is found to be posing serious and immediate danger to consumers’ safety and health by swiftly exchanging information.

According to India, this could be seen as a paranoid reaction from the EU authorities that would potentially harm exports from India. India has pitched for a joint appeal system, whereby affected exporters can file an appeal against a laboratory report given by either EU or India, on the basis of which the consignments are rejected. It has demanded incorporate the two new proposals in the final draft of the FTA.

RASFF and RAPEX fall under both health-related trade restrictions like Sanitary and Phytosanitary measures (SPS) and Technical Barriers to Trade (TBT). While SPS deals with health protection measures of foods and drinks, TNT measures include technical requirements and procedures on most topics from shape of food packages to car safety and energy saving equipments.

As per the officials, what is troubling India is that after one such rapid alert by a country, all other EU member countries would do a thorough check of several subsequent consignments. This adds to delays and costs of exports from India, especially since the EU has not yet unified and electronically linked the customs procedures of member countries.

Belgium, which is the most lenient, does such checks on three subsequent consignments. Greece, the strictest in this regard, has not put any limit on subsequent checks after a rapid alert. Moreover, European buyers are reluctant to purchase any item put on such a rapid alert.

Officials said EU’s measures were acting as non-tariff barriers (NTB) meant to protect their domestic industry. Analysts say that the EU is a leading user of such SPS and TBT measures. India sees it as a non-transparent and protectionist measure, rather than a genuine safety one.

…

Biswajit Dhar, head of the centre for World Trade Organisation (WTO) studies at Indian Institute of Foreign Trade, reckons that the main reason for India insisting on including these new proposals in the FTA would be to create a window for quick disposal of disputes bilaterally, rather than take it to the WTO, which could be a long-winding process.

 

The EU runs training programs on the RASFF. A workshop is scheduled in Thailand on 12-14 June which will be attended by Indian representatives. For more information on this training program see http://training.rasff.com/eventos.aspx

An India-Africa forum in early April is all set to follow in the foot-steps of last years Africa summit in Beijing. According to a report

India is likely to announce duty free import of select items from some African countries at its first-ever summit with 14 African countries in April here.
The April 8 summit will come out with an action plan for reinvigorating India-Africa ties and a political declaration that will encapsulate broad directions of this partnership in the 21st century, a top official source said.
The action plan will include a broad spectrum of areas, including trade, investment, education, agriculture, mining, infrastructure, education and culture.
‘We are working on a package of duty concessions that may cover some agricultural items for least developed countries of Africa,’ official source said.
Total trade with Africa for 2006-07 was estimated at around $20 billion with exports to Africa growing by more than 180 percent.
The duty-free and quota-free regime for some African countries will be a big step to energise trade ties between India and Africa.
India is leaving no stone unturned to make the upcoming India-Africa forum summit a big success and expects it to be a precursor to a bigger summit with the 53-nation African continent.
Algeria, Burkina Faso, Democratic Republic of Congo, Egypt, Ethiopia, Ghana, Libya, Nigeria, Senegal, South Africa, Uganda and Zambia are among the countries to attend the summit. The participating countries have been chosen by the African Union.
The summit has been structured as a three-tier interaction between senior officials (April 4), foreign ministers (April 7) and 17 heads of states/government of the two sides…

Indian officials differentiate between China’s approach to Africa and that of India. The same report continues:

Although the move appears to have been inspired by a similar summit China held with African states, Indian officials are keen to distinguish their approach, of capacity building and empowerment towards Africa, as different from the trade-driven Chinese approach.
India sees its partnership with Africa as one of empowerment and meeting genuine African needs. Nearly 15,000 African students study in India every year.
‘The summit will showcase the brand image of India in Africa. Africa has changed and so has India. The forum will be appropriate to give a new direction to the partnership between the two sides,’ said an official.
It will also be attended by heads of sub-regional groupings like the Southern African Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA) and the Economic Community for West African States (ECOWAS).
India’s help in setting up the Pan-Africa e-network that will electronically link 53 countries of Africa and bring them benefits of tele-education and tele-medicine highlights the new thrust of Indian diplomacy in Africa.
Besides, India has given generous lines of credit to assist the New Partnership for Africa’s Development (NEPAD) and written off the debt owed by the African countries under the HIPC (Heavily Indebted Poor Countries) Paris Initiative.
India has also spent more than $1 billion on providing training to more than 1,000 officials from sub-Saharan Africa under the Indian Technical and Economic Cooperation Programme (ITEC).

Here is what another source had to say

Recognising the immense opportunities for cooperation with Africa, India is likely to announce duty cuts for certain imports from Africa and assistance in developmental projects. As per the official sources, the core of the discussion will be how India and Africa can develop partnership in the first part of 21st century.

“We don’t want our approach tainted by the West approach. We’ll talk about Africa to Africans; we will talk to Brazil about Africa but not to these countries. We should not be seen as exploiters in Africa. We want to be partners in the genuine sense of the word,” said a senior official of the External Affairs Ministry.

While 48 African nations had participated in Beijing summit, only 14 are going to be a part of the Delhi summit. But these countries will have the mandate of the entire continent as they have been chosen by the African Union itself.

However, the significance does not lie in number; in fact it lays in the opinion that Africans hold themselves and who are eager to balance China’s overwhelming and aggressive moves in their continent with India’s gentle touch.

The Beijing summit produced wave of growing concerns for the western countries that realised grip over Africa has been steadily slipping into Chinese hands.

The Beijing summit had culminated into the commercial deals worth $1.9 billion with the African countries and eventually China offered credit lines worth $5 billion. It also declared that it would double aid to Africa by 2009 and pledged to push trade to the USD 100 billion mark by 2010.

Comparatively, India is a rather nervous investor in Africa in all sectors comprising petroleum. Over the past few years, China has managed to edge India out of many contracts. That must change. Indian companies must overcome its fear and lethargic way of dealing trade with foreign countries. They must go forward and forge aggressive step in their engagement with African nations for mutual advantage.

Very few countries in Africa are moving forward with development. Rest of the African countries has been sluggish in mobilizing private sector participation in infrastructure development.

What is significant here is Africa’s development can be accelerated with investments and technology transfer. It has plenty of natural resources comprising crude oil and minerals and the closer relations with the African continents will be proved beneficial for both the nations-India and Africa.

Africa’s demand for manufactured goods and services is on the elevated scale. The region also has millions of young literate and talented people who can be employed in the manufacturing and services sector.

As per the official sources, an Action Plan for furthering cooperation in areas like environment, health, education, energy and mining will be announced at the Summit, which could form a precursor for broader India-Africa Summit.

India has been having low-profile engagement with Africa for the last six decades mainly in terms of assistance in developmental projects and peacekeeping operations. Now the apt time has arrived for the country to grow financial relations with the African countries and Indian companies need to expand their presence overseas, step up and diversify trade with Africa.

Jairam Ramesh, India’s Minister of State for Commerce will visit Africa in March with a trade delegation. The focus will be on collaboration in diamond production and polishing. He was quoted as saying:

“We will visit diamond producing countries of Namibia, South Africa, Botswana and Angola from March 21 to 28 and explore possibilities for partnership for the Indian diamond industry,” Ramesh said on the sidelines of Gems and Jewellery Export Promotion Council function on Friday.
The four African countries are emerging as the key diamond producing regions, with several global firms planning to set up polishing units in the region.
India has been a traditional cutting and polishing hub for diamonds and in return for the rough diamonds that it would import from the African countries, it would provide training in cutting and polishing as well as technical assistance to set up local units there, he said.

Lower freight rates between India and Africa provide an advantage to Indian agri exporters. The Economic Times reports

The low freight advantage that India enjoys over other Asian countries especially China, has boosted commodity exports to Africa. Also substantial quantities of maize and soybean meal have been contracted for exports to South East Asia and Middle East due to low freight costs.
“In addition to other benefits a big factor for trade with India are the low freight charges,” Samwel E Dyelu, the general manager of a Tanzania based company told ET. Citing an example he said, a 20 ft container from China to Africa attracts a freight charge of $2000 while a container being imported from Mauritius would cost around $1000. The Indian freight cost should be around the Mauritius figure, he said.

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The commodities that are now been imported by the African countries include meat, eggs, processed food, non basmati rice and milk powder. “Earlier China had the price advantage but now with increase in freight cost it is losing its share to Indian products which are better in quality,” Agricultural and Processed Food Products Export Development Authority (APEDA) director S Dave said.

 

Meanwhile talks are on for a possible free trade pact between India and the five member Southern African Customs Union (SACU). See report.