Hand-in-hand
Despite a flurry of activity between Egypt and India, experts say more needs to be done to significantly boost bilateral trade relations. Eman Youssefreports
A new agenda has begun to emerge in Egyptian-Indian relations. Experts say that although the two countries have long enjoyed close trade and investment ties, Egypt is now especially keen to capitalise on the booming Indian economy.
In a symposium organised last week by the Economic Committee of the Egyptian Syndicate of Journalists in cooperation with the Indian embassy, senior Egyptian and Indian officials highlighted the various fields of cooperation for investment and trade between the two countries.
Vishnu Prakash, the Indian embassy's minister of political and economic affairs, said an Egyptian-Indian free trade agreement is in the works. Bilateral trade registered an increase of 45 per cent in 2002 compared to the previous year. The growth in Indian exports to Egypt was 28.5 per cent while Indian imports from Egypt increased by 63 per cent. For the first time since 1994 the trade balance shifted in favour of Egypt by $46.25 million.
"This was mostly due to a 57 per cent increase in our oil imports from Egypt," Prakash said. He added that India is the second largest export destination for Egyptian goods after Italy. "There is a substantial presence of Indian projects and joint ventures in Egypt," Prakash told Al-Ahram Weekly.
India is the 12th largest foreign investor in Egypt, with a total investment of about $330 million in 43 projects. Egypt mainly exports cotton, petroleum, coal and marble, while importing tobacco, textiles, pharmaceuticals, iron and steel from India.
In the first six months of 2003, however, trade between the two countries fell substantially. Indian exports stood at $75 million compared to $365.48 million during the same period in 2002. Meanwhile, Egyptian exports to India decreased to $229.07 million from $411.73 million during the first six months of 2002.
"We have to find ways to improve our bilateral trade relations -- the figures were considerably low when compared to the two countries' total trade volume," said Ahmed Arafa, president of the Egyptian-Indian Business Council and chairman of Goldentex Group, who cited a free trade agreement as the way to increase volume.
The business council aims at aggressively boosting business relations and establishing new joint ventures and bilateral investment projects, according to Arafa. It comprises nine top Indian businessmen and 15 Egyptian businessmen. As usual, regulations and restrictions on trade and investment are critical areas of concern for these businessmen.
"Too many regulations and too much bureaucracy will spoil the soup," said Arafa, adding that this is why Indian businessmen are attracted more to the Chinese market.
During the first quarter of 2004 the business council will convene a meeting in India to address free trade and other aspects of the bilateral business climate.
"We have to find ways to increase the Egyptian exports to India," said Nabil El-Shimi, first undersecretary of the Ministry of Foreign Trade. "This might be achieved by facilitating the export process through diminishing the procedures that burden exporters."
The leading example of a successful Indian-Egyptian joint venture, is Alexandria Carbon Black (ACB). It exports 93 per cent of its product, bringing about $61 million of foreign exchange revenue into Egypt annually, according to K N Agarwal, managing director of ACB.
"A new acrylic fibre factory with an investment cost of $110 million will be established, allowing Egypt to utilise its products without having to import them from Italy or Spain," Agarwal said of ACB's latest project.
There are, of course, not-so-successful attempts to forge strong business ties between Egypt and India. The two began negotiations in October 2002 on the importing of wheat from India, but the initiative never really got off the ground.
"Egypt has well-trained personnel in the fields of bilateral concern," said El-Sharkawy Hefni, chairman of the Egyptian Commercial Service, an office affiliated to the Ministry of Trade. "And though we have signed many economic agreements between the two countries, we fail to obtain the maximum benefit from these agreements."
Yehia El-Agami, chairman of the Small Enterprise Development Organisation, said that Egypt must study the highly successful Indian experience in the small and medium enterprise sector. To that end, a delegation of young Egyptian leaders in this sector will visit India to meet their counterparts and discuss the possibilities of cooperation, according to El-Agami.
Amit Gupta, chief operating officer of NIIT- VirgiTech, an Indian Information Technology training company, is convinced of the benevolence of Indian companies in Egypt.
"We are here to cooperate, not to compete with Egyptian companies," Gupta said.
Though this kind of attitude in bilateral push is encouraging, "the question remains whether Egypt is ready for a free trade agreement," El-Shimi said.
