8 - 14 February 2001
Issue No.520
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Al-Ahram Weekly On-line 8 - 14 February 2001 Issue No.520 |
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Long way to go
Suketo Mehta's family has been selling imported Indian-made irrigation pumps in Egypt since 1962. In 1996, to get around increasing import costs, they began producing the pumps in Egypt. Mehta's company is one of around 30 projects worth some $330 million set up by Indians alone or with Egyptian partners. In fact, according to Egypt's General Authority for Foreign Investment (GAFI), India is the 12th largest investor in Egypt. Nevertheless, as Indian Minister of External Affairs Jaswant Singh put it this week, "The scope for economic cooperation is larger than what we have today."
A partnership agreement between the two countries was expected to boost economic cooperation and joint investments, but since the agreement was initialled two years ago, it remains on the table with no date set for its signature.
Egypt has traditionally been one of India's main trading partners on the African continent. Indian exports to Egypt -- cotton yarn and fabrics, machinery, transport equipment, pharmaceuticals, chemicals, tea, tobacco, sesame seeds and lentils -- have risen steadily to reach $269 million in 1999, more than double the $128 million recorded in 1994.
Egyptian exports to India are at a similar level, having increased little during the same period. In 1999 they amounted to $235 million, up from $224 million in 1994. Egypt's exports are largely limited to raw materials such as petroleum and its by-products, raw cotton, organic and inorganic fertilisers, metal ores and metal scrap.
Sherif Delawar, Egyptian businessman and former honorary consul for India, explains that Egypt's exports to India consist primarily of raw materials because the two countries have a similar industrial structure, with India's being more developed. As a result, whatever Egypt produces may already be found in India -- and possibly at a cheaper price. In fact, as Suketo Mehta, chairman of the Kirloskar-Egypt Engineering and Diesel Pumps company puts it, "Exporting manufactured goods to India would be a futile exercise."
To Delawar, relations with India should not revolve around exports alone. "Joint investments are more worthwhile," he says, pointing out that Egyptian and Indian businessmen working together could provide for the needs of both the Egyptian and Indian markets, as well as produce exports to other countries. Moreover, Egyptian businesses could gain Indian technical know-how and expertise by participating in joint-venture projects.
Combining forces to target exportation could be the key to success for Egyptian-Indian cooperation and the way to encourage Indian businessmen to enter the Egyptian market. According to Mehta, what would really attract Indian investors is seeing the actual implementation of the free trade agreements which Egypt has signed with the European Union and the Common Market for East and Southern Africa. Once put into effect, these agreements would make Egypt the "springboard into these markets".
Some Indian investors have already grasped the opportunity. Ken Agarwal, managing director of Alexandria Carbon Black (ACB), believes that even without any free trade agreements Egypt is in an excellent geographical location, a factor that is vital for business. "Both the Egyptian authorities and the private sector need to market this asset more aggressively," Agarwal says. ACB, an Indo-Egyptian joint venture that manufactures carbon black, which is used in the tyre and rubber industries, began production in 1994. Today it exports around 90 per cent of its production to major tyre makers in more than 30 countries.
Other Egyptian-Indian joint ventures include one producing laminated toothpaste tubes for Procter & Gamble Egypt, Dabur India manufacturing hair oils and other cosmetic products in 10 Ramadan City and others making auto valves, water-storage tanks, pickups and trucks.
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