Why Is It in the News?
Recent high-level political engagement, including Prime Minister Narendra Modi’s visit to Ethiopia on December 16th and 17th,2025 and India’s renewed economic outreach towards Africa, amid global uncertainties, have brought India – Africa economic ties in to focus.
Introduction:
India – Africa relations have traditionally been rooted in political solidarity and cultural ties. However, recent global economic shifts have positioned Africa as a major growth pole in the global economy. In this context, India is increasingly viewing the continent not merely as a development partner but as a strategic economic collaborator for long -term and sustainable growth.
Why Africa Matters to India?
- Economic Diversification
- Over-dependence on the US and EU markets, that is, 40% of India’s exports.
- This makes India vulnerable to economic slowdowns and policy uncertainties in Western markets.
- Africa offers India an alternative market – strengthening India’s trade resilience amid global economic volatility.
- Growing Consumer and Industrial Demand
Africa has a young population with rising incomes and expanding consumer markets.
This expanding demand offers Indian firm competitive advantage offering opportunities to integrate in to local value chains. - Trade And Investment Potential
India is Africa’s 4th largest trading partner.
Scope to move beyond petroleum to manufacturing, pharmaceuticals, engineering goods and services.
Provides an opportunity to India to set up production units within Africa to benefit from local incentives and preferential market access. - Geopolitical Relevance
Africa is central to India’s aspiration for Global South leadership and multipolar world order.
Stronger economic ties complement India’s political and developmental engagement on the continent.
Also India’s support for African representation in global institutions reinforces its diplomatic credibility.
Eg : African Union’s G20 membership - Counter China’s Dominance
China’s trade with Africa far exceeds India’s particularly in manufacturing and infrastructure.
India’s strength in skill development, MSMEs, digital public infrastructure provides a credible alternative to China’s approach.
Challenges In India – Africa Relations:
- Limited Trade Concentration
India – Africa trade remains concentrated mainly in petroleum and primary commodities.
Also weak manufacturing linkages reduce long-term economic integration. - Infrastructure Constraints
Poor port infrastructure, storage facilities and internal connectivity in many African countries increase logistics costs. - Limited Access to Trade Finance
Indian firms face difficulties in accessing trade finance, credit lines and export insurance.
Eg : MSMEs - Regulatory And Institutional Barriers
In some African countries, uncertainty and barriers persists.
Eg : Complex regulations, bureaucratic delays, weak contract enforcement - Strong Competition from Other Powers
China’s much larger trade and investment footprint in Africa creates stiff competition for Indian companies.
Around 21% of imports to Africa in 2024 came from China.
Also Africa-China bilateral trade exceeded $200 billion.
What Can India Do to Strengthen It’s Relations with Africa?
- Trade Strategy
Reduce tariff and non-tariff barriers for Indian exports.
Preferential trade agreements with AfCFTA. - Manufacturing Partnerships
Shift from commodity trade to joint manufacturing and value addition in Africa.
Encourage Indian firms to set up production units in Africa by leveraging Indian local incentive regimes and preferential market access. - MSME Engagement
Improve MSMEs access to trade finance, credit lines and export insurance to help them enter African markets.
Promote local-currency trade + Risk-mitigation mechanisms. - Infrastructure And Logistics
Invest in ports, freight corridors, storage and internal connectivity to reduce logistics costs. - Services And Digital Cooperation
Expand cooperation in IT, digital public infrastructure, healthcare, education and skill development where India has comparative advantages. - Public Sector Leadership
Enabling Indian PSUs to lead investments in renewable energy, mining, agro-processing and infrastructure.
This ensures public sector participation and long-term partnership credibility.
Conclusion:
In a rapidly evolving global economic order, deepening long-term sustainable partnerships with Africa will be crucial for India’s global economic ambitions. This makes it imperative for India to recalibrate its approach, innovate its engagement strategies and deepen its economic footprint across the African continent.
