India aims to deepen economic ties with Africa

India is increasingly asserting itself as the leader of emerging countries. This reflects India’s growing dissatisfaction with the international order led by developed countries, and India is trying to increase its clout on global issues by deepening cooperation with other emerging countries. Among these other emerging countries, India is emphasizing its relations with Africa in particular, and is trying to deepen those relations by, for example, hosting international conferences, but whether it can gain the trust of other countries depends on whether it can deepen its economic ties in real terms, such as trade, investment, and aid.

Currently, India’s economic relations with Africa are concentrated in specific countries and sectors, and India’s presence in the continent is limited compared to China’s. India’s main exports to Africa are petroleum products, transport equipment, and pharmaceuticals, and its main export destinations are large economies such as Nigeria and South Africa. Its main imports, meanwhile, are mineral resources such as crude oil, coal, gold, and diamonds, with key suppliers being Nigeria, South Africa, and Angola, which are rich in these resources. Against the backdrop of economic growth in both India and Africa, trade is expected to expand over the medium to long term, though there has been no noticeable increase in direct investment or aid. As China revamps its foreign policy, the scale of its lending to Africa and the number of Chinese workers in the continent have declined sharply in recent years, and gap in terms of presence between India and China is narrowing as a result.

When considering the future outlook for the economic relationship between India and Africa, it is important to look at the economic growth and business environment in each of them. In Africa, population growth, urbanization, expansion of resource exports, and economic integration within the continent are the drivers of economic growth. However, it needs to be noted that African countries are at risk of economic downturn due to inflation, monetary tightening, and political instability. In addition, for India to tap into Africa’s economic growth, it will need to raise its international competitiveness by improving its business environment, but with the Bharatiya Janata Party (BJP) led by Prime Minister Narendra Modi now lacking a majority in the Lok Sabha (lower house), it will not be easy to carry out bold institutional reforms that are controversial.

Amid growing interest in India-African business, Japan is trying to expand exports to Africa from Japanese companies in India and promote cooperation between Japanese and Indian companies in the African market. However, given the economic environment surrounding India and Africa, it will be necessary for Japan to support efforts to develop soft and hard infrastructure in India and to consolidate peace and stability in Africa before expanding exports from India and pursuing collaboration between Japanese and Indian companies.

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