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Enhancing India-Egypt Relations at the Cairo Summit

Context:

  • India and Egypt have a long history of shared civilizations that dates back to antiquity. However, despite years of friendly interactions, the two-way relationship has not produced significant results.
  • It is critical to pinpoint chances for increased significance and to fortify bilateral cooperation when the Prime Minister travels to Egypt for the Cairo Summit.
  • This year, Egypt’s President Abdel Fattah El-Sisi was the chief guest at India’s 74th Republic Day celebrations. Egypt has also been invited to serve as a “Guest Country” during India’s G-20 Presidency in 2022–2023. The two countries also decided to upgrade the relationship between India and Egypt to a “strategic partnership” during their meeting with the Indian Prime Minister.

Relevance:

GS Paper 2: Bilateral relations

Mains Question

How can India make the most of holding the G-20 presidency to deepen its relationship with Egypt? Discuss the potential advantages of Egypt taking part in the G-20 as a guest nation (250 words)


Background information:

Relations between Egypt and India date back to 2750 BCE, when the Pharaoh Sahure sent ships to the “Land of Punt,” which is thought to have been peninsular India.In the second millennium BCE, the transaction went on, with Egyptian mummies being wrapped in muslin that had been dyed with Indian indigo.

India places great strategic importance on Egypt for a number of reasons, including:

  • Strategic Location: The Suez Canal and Egypt’s geographic location, in particular, are important factors in global trade. The canal handles a sizable percentage of international trade and is a key transportation route. It serves as a significant commerce hub by giving India access to both the European and African markets. Egypt’s role as a production and reexport hub, notably in the Arab world and Africa, can be advantageous to India.
  • Energy Resources: Egypt is a major provider of natural gas and crude oil to India. India relies on Egypt as a dependable partner to meet its energy demands as one of the main importers of Egyptian petroleum products.
  • Egypt enjoys an important place in the Arab world, as indicated by its function as the Arab League’s administrative centre. This illustrates Egypt’s sway in the area and diplomatic clout. India views Egypt as a crucial ally in managing the regional dynamics and anticipates Egypt’s support as a responsible Arab nation.
  • Influence among Islamic Nations: Within the Organisation of Islamic Cooperation (OIC), a global organisation made up of 57 Muslim-majority nations, Egypt is seen as a moderate Islamic voice. India cherishes Egypt’s moderate attitude and sees Egypt as a friend within the OIC, which may promote understanding and collaboration between India and other OIC members.
  • Shared Concerns: India and Egypt have similar worries about the rise of extremist ideology, terrorism, and bloodshed. Both nations acknowledge these dangers as major obstacles to world peace and security.

Current Trade and Investment Scenario:

  • Despite a century of bilateral relations, India and Egypt’s trade volume in 2022–23 is $6,061 million, a 17% decrease from the previous year.
  • Products that relate to petroleum make up a sizable component of the market. Indian investments in Egypt are concentrated in 50 projects totaling $3.15 billion, while Egyptian investments in India reach $37 million. India is Egypt’s sixth-largest commercial partner, while Egypt is India’s 38th.
  • There are just a tiny number of Indians living in Egypt, and a large percentage of them are students.

Opportunities and Challenges:

  • Institutional channels for bilateral collaboration already exist, but their efficacy and intent need to be improved. With a 105 million-person population and a $378 billion economy, Egypt offers numerous prospects for cooperation.
  • Indian cooperation is possible in the infrastructure development plans of the Egyptian government, which include initiatives like New Cairo, a nuclear power plant, and a high-speed rail network.In addition, Egypt’s import demands for refined petroleum, wheat, automobiles, maize, and pharmaceuticals are compatible with India’s export potential.
  • However, problems still exist, mostly because of Egypt’s economic situation. The economy is sluggish, there is high inflation, the currency is depreciating, and there is a shortage of foreign cash. Due to a lack of foreign currency, the government has postponed making payments for imports of necessities like wheat.
  • The International Monetary Fund provided a $3 billion bailout package, but vested interests and crony capitalism have made economic reforms difficult. Due to worries about governance, Gulf Arab states, which traditionally played a vital role in supporting the Egyptian economy, have become wary.

Strategies for Effective Collaboration:

  • India must carefully assess its exposure to Egypt in order to successfully traverse these difficulties and take advantage of opportunities.
  • Investigating cutting-edge financial tools like EXIM lines of credit, barter agreements, and rupee trading can promote bilateral trade.
  • However, India should avoid the mistakes made in the past, such as in Iraq in the 1980s and 1990s, where taxpayers in India were burdened by delayed project payments.Instead, for projects in Egypt or other comparable nations, India can take into account trilateral funding agreements with Gulf partners, the G-20, or multilateral financial institutions.
  • In the 1950s, Egypt and India took the initiative to start the NAM. India and Egypt should work together to strengthen South-South Cooperation and advocate for a rules-based global order amid the current geopolitical unrest.India should try to broaden the scope of its defence cooperation beyond bilateral drills to include collaborative manufacturing and development initiatives. India may consider Egypt as a possible market for its defence exports.

Conclusion

Restoring India-Egypt relations is crucial as Prime Minister Narendra Modi travels to Egypt for the Cairo Summit. Both nations may improve bilateral collaboration and produce significant results by addressing issues, seizing opportunities, and using strategic finance strategies. A mutually beneficial alliance may be established between India and Egypt on the solid foundation of their historical links and shared cultures. This will open a new chapter in their cooperative efforts.


July 2024
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