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India China Trade and Investment competition in Africa

India China Trade and Investment competition in Africa

Relevance:

  • GS 2 || International Relations || India & Rest of the World || Africa

Why in the news?

India and China are taking deliberate steps to strengthen their ties with Africa. However, they’ve taken quite different ways to strengthening their bonds.

Introduction:

  • The commercial links between the Nile and Indus valleys are part of a long and rich history of interaction between India and Africa that stretches back to ancient civilizations.
  • Surprisingly, after being overlooked by India for decades following independence, Africa has now become a major area of Indian diplomacy.
  • India and Africa have particular links, which are intimately connected by their shared colonial history, geography, socioeconomic commonalities, and developmental problems. In the last two decades, India’s connections with African countries have accelerated.
  • Simultaneously, India has several problems as a result of its competitiveness with China, which has become one of the most crucial concerns for Indian diplomacy in Africa.

India- Africa relation:

  • Political Ties between India and Africa:
    • India and African states have had regular high-level bilateral visits and multilateral summits, which have aided in the building of political ties.
    • Many African countries have benefited from India’s agricultural, educational, and health specialists. India has also provided low-cost generic medicines for AIDS and other illnesses with African countries.
    • India has also participated in UN peacekeeping missions in Africa, particularly in the conflict-torn countries of Congo and South Sudan. Almost 6000 Indian soldiers are now stationed in the African continent as part of UN peacekeeping missions.
    • India has also collaborated with a number of African countries on programs aimed at strengthening institutions and improving governance, such as the Pan-African e-Network Initiative in the education and health sector.
  • Economic Ties between India and Africa:
    • India has launched the Indian Technical and Economic Programme to support training and technical assistance in African countries, allowing India and Africa to create capacity and share expertise.
    • Energy acquisition is a major aim in India’s economic diplomacy.
    • It’s no surprise, then, that three of India’s top four African trading partners (Nigeria, South Africa, Angola, and Algeria) are oil-producing countries.
    • ONGC Videsh Limited, a subsidiary of India’s ONGC, has purchased a 25% interest in the Greater Nile Petroleum Operating Company.
    • Egypt has requested India to join petro-projects in the Suez Canal Economic Zone.
    • The Indian private sector has purchased a large number of assets in Africa, including oil refineries, agriculture, automobiles, and other industries.
    • The Blue Economy for sustainable development of maritime resources is one of India’s main economic diplomacy projects, given to the country’s expanding maritime connections with Africa.
  • Trade Ties between India and Africa:
    • With a trade volume of $72 billion in 2014-15, India is Africa’s fourth largest trading partner.
    • The majority of this commerce involves primary commodities exported from Africa, such as crude oil, pulses, leather, and gold, while manufactured items, such as pharmaceuticals, vehicles, steel, plastic, refined petroleum products, and ICT services, are primarily imported from India.
    • Indian investment in Africa is increasing, mostly in agriculture, refineries, telecommunications, and information technology. Over the last decade, Indian firms have spent more than $35 billion in Africa.
  • Geo-political ties between India and Africa:
    • Indian diplomacy in Africa is strategically designed to build goodwill through gestures such as grants and concessional lines of credit to African states that can be counted on as allies in multilateral negotiations and can also help to better influence international institutions such as the World Bank, IMF, WTO, and UNSC, among others.
    • African governments have remained steadfast in their support for India’s ambition for a permanent membership on the United Nations Security Council, as well as broader UN reforms such as the anti-terrorism pact.
    • Africa has lent its complete support to India, among other countries, in forming the first International Solar Alliance of its type (ISA).
    • India has participated in peacekeeping missions in African countries. Because of their professionalism, our soldiers are well-liked across Africa.

India’s approach to Africa different from China:

  • Focused on the general public: While trade and investment are essential, India’s involvement focuses on long-term ties.
    • Improving Africa’s productive capacity, diversifying skills and expertise, and investing in small and medium-sized businesses are all on the table.
    • India’s efforts to increase cross-border connectivity with Eastern African countries are a natural extension of the country’s goal of improving people-to-people connections.
    • India thinks that this will improve investment-led trade and commercial opportunities while also strengthening bilateral ties. India is also seeking to revive its cultural connections with East Africa through Project Mausam, a Ministry of Culture initiative.
    • The program intends to re-establish lost links to the “Indian Ocean globe,” which includes East Africa, the Arabian Peninsula, India, and Southeast Asia.
    • China, on the other hand, follows a more traditional strategy, focused on resource extraction, infrastructure expansion, and the production of elite-level wealth.
  • Connectivity: There are three major kinds of India’s African cross-border connectivity initiatives: maritime-port connectivity under the government’s “Security and Growth for All in the Region” (SAGAR) project, and the SagarMala initiative.
    • As part of the Pan African e-Network program, digital connection for tele-education and tele-medicine (launched in 2004).
    • Direct flights between Indian and African cities provide air connectivity.
    • China, on the other hand, is entirely focused on large-scale investments that will give it strategic dominance over its economy.
  • Joint Initiatives: The Asia Africa Growth Corridor is a trilateral project initiated by India, Japan, and a number of African countries (AAGC).
    • This aims to create ‘industrial corridors’ and ‘institutional networks’ for Asia and Africa’s growth, as well as to encourage development cooperation.
    • In contrast to China’s BRI, the AAGC is a consultation effort involving three equal partners (India, Japan, and Africa).
    • BRI is organized as a top-down, unilateral strategy to safeguard and strengthen China’s economic and strategic interests, which is notable.
    • East Africa and the Indian Ocean Region are important target regions in China’s ambitious Belt and Road Initiative (BRI).
    • Under the Indian Technical and Economic Cooperation (ITEC) initiative, India is investing in capacity building by offering more than $1 billion in technical support and training to employees.
  • Africa and the International Solar Alliance (ISA): The International Solar Alliance (ISA) includes 25 African nations among the 48 countries that have signed and approved the ISA Framework Agreement. India Summit of the Africa Forum (2015): The formal platform for African-Indian relations is the India–Africa Forum Summit (IAFS).

Importance of Africa:

  • Africa is home to nearly half a dozen of the fastest developing countries of this decade such as Rwanda, Senegal, and Tanzania etc making it one of the growth pole of the globe.
  • Real GDP in Africa and Sub-Saharan Africa in the past decade has increased by more than double the pace in the 1980s and 90’s.
  • With a population of over one billion people and a combined GDP of 2.5 trillion dollars, Africa is a massive prospective market.
  • Africa is a resource-rich continent, with crude oil, gas, pulses and lentils, leather, gold, and other metals dominating the landscape, all of which India lacks in adequate numbers.
  • India is looking for ways to diversify its energy sources away from the Middle East and Africa can play an important role in India’s energy matrix.

Chinese Challenge in Africa:

  • Despite these accomplishments, India’s enormous social capital among African nations has not translated into tangible ties, and China’s commercial and investment footprint in Africa has long outpaced India’s.
  • With over 10,000 Chinese businesses working on the continent and China being Africa’s top commercial partner, China’s economic impact in Africa surpasses that of India.
  • China’s Belt and Road Initiative (BRI) initiatives are fundamentally an attempt to give African countries an alternative authoritarian economic model.

Opportunities associated with India-Africa relations:

  • Enabling strategic convergence: Through the Asia-Africa Growth Corridor, India and Japan have a common goal in forming a cooperation for Africa’s development. In this scenario, India can use its global clout to help Africa gain a place on the global strategic map.
  • Becoming the voice of the developing world: Equitable as India and Africa worked together to defeat colonialism, they may now work together to create a just, representational, and democratic global order that represents the interests of the roughly one-third of humankind who reside in Africa and India.
  • India as a balancer: China has been pushing Africa’s chequebook diplomacy and contribution diplomacy aggressively. Chinese investment, on the other hand, is viewed as neocolonial in character. India’s strategy, on the other hand, focuses on developing indigenous capacities and forming an equal relationship with Africans, not just with the African elites. Despite the fact that Africa has been actively involved with China, it wants India to act as a balancer and net security provider.
  • Avoiding global rivalry: In recent years, a number of global economic actors have increased their engagement with African countries, citing growing economic potential in areas such as energy, mining, infrastructure, and connectivity. As global participation in Africa grows, India and Africa can work together to ensure that Africa does not become a battleground for competing interests.

Conclusion:

India has a vested interest in assisting Africa in making progress. However, if India’s investments in Africa had kept up with China’s, it may have achieved more progress today.

Mains oriented question:

Africa’s worldwide outreach used to be mostly focused on the Western world, but India, Japan, and China have lately joined the fray. Explain in context of China approach towards Africa. (200 words)