Motivation African continent not once, but many times to

Motivation
for choosing the topic Africa and India have
had a long relation and are only separated by the Indian ocean. Africa India
relation has a very long and profound history in terms of economic, military,
political, cultural and other connections. The history of Africa and India
dates back to eighth century when Africans had arrived to India. Mahatma
Gandhi, the father of the nation arrived in South Africa in 1893, had served as
lawyer in SA and also stayed for a long time there and visited other countries
as well in Africa. Indira Gandhi, Manmohan Singh, and Prime Minister Modi have
all visited the African continent not once, but many times to boost and
increase the relation between India and Africa. The Indian diaspora in
southeast Africa is over 3 million people South Africa having the highest of
1.3 Million followed by Mauritius, Kenya and Tanzania.  Africa and India have
had a long economic relation especially since both India and the entire African
continent is currently going through exponential growth rates, both will
benefit from each other through international trade. The trade between India
has grown five times from the years 2005-06 to 2015-16 and is at $90 Billion as
of March 2016-17. A total of 7.5% Indian imports came from Africa and India is
the 4th largest trading partner of Africa and exported goods of over
$25 Billion to African countries and is growing at 5.6% rate. FDI from India to
African countries has increased from $12 Billion in 2006-07 to over $35 Billion
in March 2016-17 and additional $53 Billion are in the pipeline of investment.
Many Indian Multinationals are eyeing the African market due to rich natural
resources and outstanding growth potential.  The governments of
African countries and the Indian governments are working collaboratively
together to fight problems such as terrorism, money laundering, economic
problems and others. Indian Government in the Africa India summit has stated
that it will invest in over 350 projects across the continent. 125 agriculture
projects, 177 infrastructure projects, 40 energy projects and other projects
such as water, education and others. Along with this the aid from India to
Africa has increased to over $5 Billion and LOC have been increased by the
Indian government and is expected to increase more due to strong economic
growth. Both the governments of countries in Africa and the Indian government
now have strong relations and are supporting each other to build a strong bond.
 Origin
and Nature Africa and Indian
economic relations goes back to when Gujrati traders use to export spices from
Africa to India in the 1800’s. Economic trade between India and African
countries have had a long history and many challenges have come up due to differences
in policies, cultural heritage, nature of working and others.  There have been various problems of Money
laundering by Indian companies and people and send the funds to India. Another
problem has been India sending low quality products to African Countries that
have disrupted the relations and Indian companies dumping products into African
countries. A big problem that has occurred is that Indian mining companies have
not declared the minerals and have exported them illegally without declaring
and paying the taxes and duties to the respected government. Currently, there is
still a huge inflow of from India to Africa because both need each other to
grow and prosper and benefit. These problems are still there, but are reducing
due to the strong ties between the government and now strict laws that each
country have made to protect them. Also due to the PM Narendra Modi visiting Africa
twice now the relation has become stronger as he has shown full commitment and
support to the African countries through granting Aid and bringing other
investments into the country. Also the Indian government now has Exim laws that
promote export to countries in Africa like Kenya, Tanzania, Mozambique and
other countries. The government of India gives incentives to those countries
that export there. So currently even though there are these problems India is
still very keen to invest in India as the potential and growth rate is very
high and also Africa still has a lot of untapped resources that India can
benefit from such as Oil, Gas, Gold, Copper, Diamonds and other minerals as
well.   Literature
Review On May 2017, Malancha
Chakrabarty published a research paper on “Indian Investments in Africa: Scale,
Trends and policy recommendations” stated that most of the private sector got
only involved in manufacturing sector and 63% of the FDI was done in East
Africa, which are countries such as Tanzania, Rwanda, Kenya, Uganda and others.
The author stated that there was very minimum research done in this topic and
very little information was available, due to many African countries not
maintaining or uploading data regarding FDI in flows. To conclude, the author
states that a big bulk of the investments were done in Mauritius and it being a
Tax haven most of the investment does not contribute to the African countries
meaning that a huge part of the investment hasn’t helped in developing the
countries as the money earned is sent back to India. The author recommended
that there should be an institutional body that can help support the ties and
clearly help each other develop.  Ruchita Beri published a
research paper on November 2014 “India and Africa: an evolving partnership”
stated that the relation of India is not just of an economic one, but of
cultural one too. There has been an increasing and significant partnership that
has helped two way visits of leaders, businessmen, officials, students,
workforce and others. The trade has increased from $967 Million in 1990-91 to
over $68 Billion in 2011-12. The continent of Africa and India will both work
hand in hand to fight global issues such as global warming, terrorism and other
problems and help each other to gain in the world. To conclude, India will play
an integral and key part in transforming African countries especially in fields
of manufacturing, which is what Africa needs now Industrialization so that it
can prosper and people can get jobs. On March 2008, SK
Mohanty and Sachin Chaturvedi published their research paper on “India-Africa
Economic Partnership: Trends and Prospects” stated that most of the government
projects focused on agriculture in Africa because it having lots of fertile
land, its potential for crops is very high also being that it grows pulses that
many Africans do not eat such as Daal, Moong but there is a high demand of
these pulses in India. So India and many African countries such as Tanzania can
benefit from this. Also the author states that majority of the spices are not
used by the people of Africa such as red chilies and these are also exported to
India. The author concluded that India will emerge as an important export
destination for many countries in Africa because of the demand Indians have for
such products not just agriculture but also goods such as gold, precious stones
and others. Also these African countries have the ability to produce them of
the best quality due the natural resources.  Sukalpa Chakrabarti and
Ishita Ghosh in 2014 published a research paper on “FDI in Africa: A comparison
of the Indian and Chinese Experience” stated that FDI that was traditionally
done by western countries have now shifted to the BRICS especially China and
India leading the way forward for investment in Africa. The problems that are
faced are of exploitation of natural resources and dumping done by China and
India into the African markets. The slowdown of the western countries has led
to the increase in investment by the BRICS in Africa. To conclude, India and
China will both benefit investment into the continent and the support of BRICS
will benefit the world economy overall as many countries will grow at an
exponential rate in the African continent.  On April 2007, Sushant K
Singh published his research paper on “India and West Africa: A Burgeoning
Relationship” stating that there has been a growth in India’s interest in West
Africa particularly in Nigeria and mostly due to the increase in trade coming
from Oil exports from Nigeria to India. Also there is rich natural metal ores
that are being mined by MNC’s such as Mittal are now facing problems as the
government are not happy with the working conditions or the taxes that they are
receiving. The author has said that many problems have happened in west Africa
and Indian companies aren’t very keen in entering and investing as many giants
such as Mittal have faced problems like a $900 Million mining deal in Liberia.
Also due to huge theft and terrorism by militant groups in west Africa due to
its oil Indian companies avoid investing there. To conclude, that despite there
are so many problems, there has been an increase in investment in FDI largely
because Nigeria produces crude oil and India will benefit from this.  Current
Situation  The current situation of
India and Africa relations is very prosperous and developing in a positive way
forward, however this is not the case with all the African countries, but it is
with a very good number of countries especially in sub-Saharan Africa. There
are many issues that are happening such as many Indian companies have done
illegal practices in various sectors such as mining, by under declaring goods
and exporting. Also many have opened their head offices in Mauritius and then
operate in other countries to save tax. There have been various incidences of
Indian origin people being caught money laundering and committing economic
offences and illegal practices, which has caused hindrances in the India –
Africa relation.  Another problem is the
rising relation between Africa – China leading to problems for India. China has
also invested heavily into the African and much more than what India has. Also
China has a more hold on the continent and a larger presence in Africa. China
has also tried to take over some of the projects that India are currently
undergoing so that they would benefit from the rich natural resource continent.
A major challenge and threat for India – Africa relation is China if India
doesn’t step up its game then India could miss the huge untapped market of
African countries. China Africa trade is of over $200 Billion. China has also
further forgiven debt of over US $10 Billion that African countries owed to
them, furthermore creating a stronger relation.  A major problem is that
India dumping old goods into African countries because they are cheap and the
African people will buy them as most of them lack the knowledge. Also cheap
goods of not very good standards are exported to Africa which isn’t very good
and is using Africa to dump and send cheap products. Bajaj for example after
the demand of its 100cc bikes in India went down they went and started
exporting the same model with old technology and no new innovation into the
Kenyan market where it had received a good response as it was cheap and the
technology was very old. Many MNC are still scared of entering into the African
market due to economic problems such as fluctuation of exchange rate, security
problems, infrastructure problems and many other.  Many MNC have been
facing problems in operating in Africa. A recent MNC going under investigation
of illegal and improper practices is Bharti Airtel Africa. One of the biggest
deals was when Bharti Airtel acquired Zain Africa for $10.7 Billion in 2010 and
this the biggest takeover of an Indian company into Africa, however now there
are problem and acquisitions being held that Airtel in Tanzania was undervalued
and that the Government of Tanzania had a stake in previous Zain, also it had
not received any payment over its stake in Zain over the years. Now the
government of Tanzania is demanding rights of ownership over Airtel Tanzania
due to the fraudulent events that have been claimed. Jindal, Mittal, Tata and
various other MNC’s of India have faced problems in operating in Africa, due to
many reasons. However, despite all the problems there is still an exponential
growth and increase of India – Africa relation because both will benefit from
each other.  Despite all these
problems there is still huge scope and opportunity in the India-Africa
relation. The trade between India has grown five times from the years 2005-06
to 2015-16 and is at $90 Billion as of March 2016-17. Indian Government in the
Africa India summit has stated that it will invest in over 350 projects across
the continent. 125 agriculture projects, 177 infrastructure projects, 40 energy
projects and other projects such as water, education and others. The Indian
government has passed over $7 Billion in aid for Africa. most of the private
sector got only involved in manufacturing sector and 63% of the FDI was done in
East Africa, which are countries such as Tanzania, Rwanda, Kenya, Uganda and
others Many corporates have increased investment in Africa. FDI from India to
African countries has increased from $12 Billion in 2006-07 to over $35 Billion
in March 2016-17 and additional $53 Billion are in the pipeline of investment.  The government of India
is also supporting exporting to countries in Africa such as it has amended Exim
laws and created a better environment by providing incentives to those
exporters to countries such as Tanzania, Kenya, South Africa and others who
have strong ties with India and are working efficiently and effectively with
India hand in hand. With many new projects set to come and more and more trade
between the two there will be a better relation in the future. Also many more
companies are still trying to enter into the African markets, but there are
still hurdles that are present however over time these hurdles will reduce and
both will bring huge economic, social, political progress to each other and
make a stronger relation. Lessons
Learned The India-Africa is a
very critical important for both India and Africa, but more for India because
if it doesn’t strengthen its ties with Africa then China will further go into becoming
stronger economically as they will earn huge amounts from the natural resources
in Africa. Many Indian companies are exploiting Africa in a wrong manner and
not following the laws and environmental regulations. This is very wrong as if
this continues to happen India will face problems with its relation of Africa.  Many Indian companies
are investing only in Mauritius due to it being a Tax haven. More than 40% of
the private sector of India have invested there and then rerouted their funds
to India, which hasn’t helped the development of the African continent and that
also means that the figure of actual investment is lower by India in Africa. Also
many Indian companies have used this tax haven for money laundering and saving
tax in India as well.  Most of the Investments
done in Africa are in East Africa. This is mainly due to the reason that these
countries are only of the fastest growing in the world and also because they
have been politically stable over the years and these nations are more peaceful.
Rwanda, Tanzania, Kenya, Mozambique, Uganda are the countries that have
received huge FDI from India. Rwanda being small and corruption free is a huge
reason India is interested in investing there. All these countries also have a
growing population by 2025 Tanzania will have the 14th largest
population in the world and not just Tanzania, but the entire East African
nations has a growing population and most of them being under the age of 25
meaning it’s a youthful population.  The Africa and India
relationship is growing and growing and will keep on doing so because both need
each other to grow as India has expertise in Manufacturing and Technology over
the African countries and these countries have rich natural resources that can
be utilized to grow their economy. India is helping Africa now to manufacture
and export finished and semi-finished goods rather than exporting raw material
so that they can gain from value added goods and earn more in foreign exchange.
 Overall, India and
Africa will help each other and in the coming years India will become a bigger
partner as the growth rate of trade is growing at over 6% year on year and is
predicted to grow at 8% in the coming years, which will benefit and help
prosper both India and African country goal and development.  Recommendation
for the future India and Africa need to
come with an individual body that will help support the investments of Indian
MNC’s in Africa. If such a body is made there will be an increase in the inflow
as many Indian companies are struggling where to invest and how to invest. Also
this body should keep records and statistics regarding those countries and the
demand for products so that Indian companies can invest there as they will know
how much to Invest. This is because most of the African countries don’t
maintain this, so it becomes hard to know the trends and prospect of various
industries.  Another body has to be
developed to fight the illegal activities that are being done. This body will
play a crucial role as it will support Africa and India both as many try to not
pay taxes in both India and Africa so this body will control it. Also they will
set laws that help support both India and African countries. The body should
also take into consideration and teach the Indian companies to operate in a
clean and efficient manner as it causes problems to the relation of
India-Africa if it continues this way. This body should also educate the Indian
corporates of the working environment, culture, benefits, opportunities, tax
laws and others to help guide the Indian companies so they operate effectively
in Africa. Indian companies should
also focus on what Africa wants and what its people want rather than just
dumping old cheap products. Once they understand this they can develop and
create products that will help them grow and sustain in Africa more because now
the trend is changing and even the population of Africa is changing from low to
medium class and the medium class population is the fastest growing in Africa
and will grow faster in the coming years. So for Indian corporates to succeed
and tap into the middle class population, which is very important for sectors
such as household, FMCG and others to succeed in. Overall, India and Africa
have to work together and a body has to be kept and set whereby Investments
will be supported and companies will get educated and a single portal for
investment to ease the FDI inflow and to make Africa an Investment destination
for Indian corporates.  References   Alden, E. S. (2015). New materials: Indian
foreign policy and India-Africa Relations. Retrieved from African
Perspectives:
http://www.saiia.org.za/news/new-working-paper-indian-foreign-policy-and-india-africa-relations Beri, R. (2014). India and
Africa: An Evolving Partnership. CHAKRABARTY, M. (2017, May).
Indian Investments in Africa: Scale, Trends, and Policy Recommendations. Chaturved, S. K. (2008,
March). India-Africa Economic Partnership: Trends and Prospects. GUPTA, G. (2017). The
India-Africa Relationship is Beyond Strategic Considerations’. Retrieved from THE WIRE:
https://thewire.in/13932/the-india-africa-relationship-is-beyond-strategic-considerations/ India Africa Relations. (2016). Retrieved from Insights into Issues:
http://www.insightsonindia.com/2016/11/30/insights-issues-india-africa-relations/ Roy, S. (2014). India and
Africa ties. Retrieved from India and Africa ties: challenges and
opportunities:
http://blogs.lse.ac.uk/africaatlse/2013/07/03/india-and-africa-ties-challenges-and-opportunities/ Singh, S. K. (2007, April).
India and West Africa: A Burgeoning Relationship. 

Sukalpa Chakrabarti, I. G.
(2014, Nov). FDI in Africa: A Comparison of the Indian and Chinese
Experience. International Relations Conference on India and Development
Partnerships in Asia and Africa: Towards a New Paradigm. 

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