India should take advantage of the upcoming Tripartite Free Trade Area (TFTA) in Africa as a springboard towards greater trade, industry body Associated Chambers of Commerce and Industry of India (Assocham) said on Tuesday.
In a report on India-Africa trade, Assocham marked out the TFTA as a major area of interest with regards to future trade with the continent. Its other recommendations include specific push to trade and investment treaties and concerted effort towards removing instances of double taxation.
The third India-Africa Forum Summit, which concluded on October 30 was attended by heads of states and government representatives of 54 African countries.
Prime Minister Narendra Modi announced concessional credit of $10 billion over the next five years for Africa, over and above India's current credit programmes. However, a concerted government policy push towards greater investments and trade in the area is still awaited.
The report said Africa's share in India's total exports and imports stood at 10.18 per cent and 9.24 per cent, respectively, during the April-July period of the current financial year. India has already signed bilateral free-trade agreements with 19 African nations and preferential trade agreements with 13 more. These have had a significant impact, with total trade rising from $97million in 1991 to more than $71billion in 2014-15, with a compound annual growth rate of 31 per cent.
The report also pointed out that currently India's primary markets are Nigeria, Egypt, Tanzania and Kenya. However, it added, it would be beneficial for the country to diversify its product basket and expand to other markets such as Algeria, Togo, Cameroon, and Ghana, all having demonstrated high growth rates in the recent past. Indian investment in Africa is mainly in commodities such as oil, gas, and mining, as well as in telecom and fertiliser industries. The report said greater sectoral diversification was the need of the hour.
It pointed to the high potential of the pharmaceutical market in the continent but warned low access due to lack of awareness and health standards proved major restrictions.
The report stressed that African nations needed to coordinate with India so as to improve non tariff measures in trade, which are currently inefficient and complicated.
On the banking front, it welcomed the african business community to expand its presence in India, where only a handful of players exist. Other potential areas of investment in India were in food and hospitality, it said.
However, it said the government would have to remove constrictions on the free flow of capital.
The report also recommends the increase of trust building measure from the Indian side. This would involve the establishment of skill building institutes and research facilities, incorporating more direct business interactions between India and Africa.
According to the Financial Times, Africa is the fastest growing destination for FDI, with investment coming into the region rising by 65 per cent in 2014, totaling approximately US$ 87 billion.
