Dancing elephant, prowling dragon
Dancing elephant, prowling dragon

Dancing elephant, prowling dragon

Africa is the new battleground for India and China to carve out their influence. Besides a lucrative market and source of raw materials, the continent offers India strategic significance in the Indian Ocean. India Inc. Consulting Editor analyses if India is close to winning this game of catch-up. It's a clash of two models. India, which has woken up belatedly to Africa's economic and strategic potential, is playing catch-up with China, but has consciously decided to approach African nations as a partner in their development. China, which has stolen a march over India in that continent, has often been criticised as an exploitative neo-colonial power more interested in extracting Africa's natural resources for its own benefit than in improving conditions in the countries it has invested in. But there's no denying that India is far behind China's curve in Africa. Many analysts claim that India is not even in the same game as China on that continent. Consider this: Bilateral trade between China and the 54 African nations was $220 billion in 2014. The comparable figure for India was $70 billion. Then, China is Africa's largest trading partner. India is in fourth position behind the US and the EU. Africa, incidentally, is India's sixth largest trading partner behind the EU, China, UAE, US and Asean. Why Africa matters Many people are not aware of Africa's economic potential. Contrary to popular perception, it is not a poor, backward place ruled by a succession of dictators. The continent as a whole has a GDP that is larger than India's, its populations is slightly smaller than India's, over half the 54 African nations have per capita incomes higher than India, more than 30 African countries are democracies and the number of states with better human development indicators than India are in double digits. Then, like India, about 60 per cent of its population is younger than 35 years old, making it a likely recipient of the so-called demographic dividend. That's just the economic potential. There's a strategic angle as well. Africa has 54 votes in the United Nations and Prime Minister Narendra Modi is actively wooing these nations to back India's case for a permanent seat on the United Nations Security Council. The response so far has been positive. Though the quid pro quo is never mentioned in stark terms, Modi has assiduously wooed the African bloc by announcing a $10-billion line of concessional credit, $600 million of special assistance and 50,000 scholarships for African students at the Third India Africa Forum Summit held in New Delhi last October.

Rising Indian presence Even today, diamonds from South Africa and oil from Nigeria form the bulk of Africa's exports to India. But India has varied economic interests in that continent. Apart from oil and mining companies, the Tata Group, Godrej Group, Mahindra & Mahindra, Kirloskar and Bharti Airtel have a large presence there. Indian companies have invested upward of $25 billion in Africa and number is expected to rise significantly in the coming years. It is not uncommon to find Tata and Mahindra vehicles jostling for space with US, Japanese and European vehicles on African roads. Godrej is among the leading cosmetic brands in Africa, the Kirloskar Group has a large presence in the irrigation sector and Bharti Airtel is among the biggest telecoms players in that continent. Africa is an important market for Indian companies, it is a long term source of raw materials, metals, minerals, uranium and oil and deep defence and strategic ties with African nations on the Indian Ocean coastline is critical for India to retain the Indian Ocean as its sphere of influence. Historically, India has had a presence in only a few African countries such as Uganda, Kenya and Tanzania in the east, South Africa, Seychelles and Madagascar in the south and Egypt and Libya in the north. But in recent times, as the size of the Indian economy has grown, so have the footprints of its private and public sector companies. Over the last decade or so, many Indian companies have set up bases in western Africa as well in the interiors of the continent. A partner and a friend

One of the reasons why China's presence in Africa is considered exploitative is its business model of flying in thousands of Chinese workers to build infrastructure such as dams, factories, ports, roads and railways. This often results in little or no local creations and very little local skill development. India, on the other hand, has laid stress on local capacity creation, skills training and employment generation. Indian companies have set up hundreds of skills development centres across Africa in a wide variety of fields ranging from nursing to industrial and technical training and this has contributed in no small measure to the development of a positive image for India. A new approach The Modi government has made a clean break with the pattern of previous engagements with Africa, which were essentially ideological in nature and marked by a belief in non-alignment, anti-colonialism and an inherent opposition to all things western. Instead, India is pushing for a relationship of equals based on mutual economic interest but with a strong developmental and strategic focus. This approach is helped by the fact that Africa and India are at similar stages of development, have similar levels of income and, therefore, similar requirements of goods, services and quality. This means that most products produced in India can be easily adapted for the African market. India's approach is starkly different from China's as well as the West, which is seen in Africa to be hypocritical for prescribing democracy and transparency as critical values even as it engages warmly with some of the most brutal, repressive and corrupt regimes in the world. Modi has wisely adopted an ideology-neutral approach in his outreach to Africa. The early indicators are positive and India has made much headway in that continent over the last two years. But it still has miles to go. Just one figure will suffice: India accounts for just 6 per cent of Africa's bilateral trade with the world compared to 17 per cent for China. Indian officials involved with the summit said they hoped to increase bilateral trade volumes to $100 billion within a few years. Even if that figure is achieved, it will raise India's share by only two or three percentage points. Obviously, much more ground needs to be covered. The next few years will be critical. Only then can it be judged if the Indian lion can compete with the dragon.

Arnab Mitra is Consulting editor, India Inc. He writes on business and politics.

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