India and Africa's partnership has entered a new era. Close political relationships are being invigorated by a flourishing trade and investment relationship. This new trade and investment relationship could be crucial in the struggle to lift millions out of poverty.
Africa-India trade has followed the upward trend in South-South trade and investments over the last decade. Bilateral trade has grown at a robust 31.8% annually between 2005 and 2011, through the economic crisis. There has been a surge in Indian private investment in Africa with 'big ticket' investments in the telecommunications, IT, energy, and automobiles sectors.
Trade growth is being led by a vertiginous expansion in natural resources trade. This expansion tends to mask a wider story of sustained growth in a cross-section of other products groups, some with "value added".
The Confederation of Indian Industry (CII) and the Export Import Bank of India (EXIM Bank) initiatives through the India-Africa Conclave and other Government of India initiatives are spurring on the burgeoning trade and investment relationship. In addition to more traditional development approaches, such as through Indian Technical and Economic Co-operation, the business- oriented 'development compact' pioneered by CII and the EXIM Bank seems to be positively impacting directly on bilateral trade.
To understand the dynamics of this vibrant relationship, CII surveyed some 60 key Indian and African companies and business associations - a survey undertaken in collaboration with the WTO. Results highlight a number of factors getting in the way of expanded business and investment ties. Access to Indian buyers and trade finance emerges as major concerns for African traders. Transport and logistics costs and poor business environments are cited as major difficulties by Indian traders - a factor also cited as holding back further investment.
Further expanding India's investment-led trade approach and addressing trade irritants on both sides could help sustain this dynamic trade growth - and help extend it both in terms of the number of partners involved and also the range of goods and services traded.
Joint CII-WTO report concludes with a series of recommendation on how development assistance and investments in tandem could help smooth out potential bottleneck towards a more sustainable investment-led trade growth relationship.