Shweta Ved PG-17-117

International Business in India

Country Name: South Africa

Introduction:
South Africa, officially the Republic of South Africa (RSA), is the
southernmost country in Africa. It is bounded on the south by 2,798 kilometres
(1,739 mi) of coastline of Southern Africa stretching along the South
Atlantic and Indian Oceans on the north by the neighbouring countries
of Namibia, Botswana, and Zimbabwe; and on the east and northeast
by Mozambique and Swaziland; and surrounds the kingdom of Lesotho. South
Africa is the largest country in Southern Africa and the 25th-largest country in
the world by land area and, with close to 56 million people, is the world's 24th-
most populous nation.

South Africa is a multiethnic society encompassing a wide variety of cultures,

languages, and religions. Its pluralistic makeup is reflected in the constitution's
recognition of 11 official languages, which is among the highest number of any
country in the world. Two of these languages are of European
origin: Afrikaans developed from Dutch and serves as the first language of
most white and coloured South Africans; English reflects the legacy of British
colonialism, and is commonly used in public and commercial life, though it is
fourth-ranked as a spoken first language. The country is one of the few in Africa
never to have had a coup d'état, and regular elections have been held for almost a
century. However, the vast majority of black South Africans were
not enfranchised until 1994. During the 20th century, the black majority sought
to recover its rights from the dominant white minority, with this struggle playing
a large role in the country's recent history and politics.
Since 1994, all ethnic and linguistic groups have held political representation in
the country's democracy, which comprises a parliamentary republic and nine
provinces. South Africa is often referred to as the "rainbow nation" to describe
the country's multicultural diversity, especially in the wake of apartheid.

Objectives:

o To understand commodity trade (Export-Import) Between India and South

Africa
o To analyze the growth of trade between India and South Africa
o To figure out prominent marketers between India and South Africa
Commodities imported by South Africa from India
India- Africa Trade and Investment Relations
India and Africa share a long and rich history of interaction marked by cultural,
economic and political exchanges based on South-South cooperation and
common developmental challenges.

India has carried out a number of initiatives in the past decade to facilitate
economic relations between the two regions. The Government of India launched
the “Focus Africa” programme in 2002 with the objective of strengthening trade
ties with the African countries. The programme extends almost to the entire
African continent and the primary objective is to increase interaction by
identifying potential areas for bilateral trade and investment.

A major initiative by India in recent years has been the India-Africa Forum
Summits, held since 2008. The third India-Africa Forum Summit was held in
New Delhi in October, 2015. The Summit brought 41 African heads of state and
government to India with a view to strengthening the friendship and engagement
between the two regions.

In 2009, India launched the Pan African e-Network Project (PAENP), conceived
by former President of India, A.P.J Abdul Kalam. The project, with a budget of
approximately US$ 125 million, is entirely funded by India and aims to provide
satellite connectivity, tele-education and tele-medicine services to the African
countries. It also supports e-commerce, e-governance, infotainment, resource
mapping and various other services. The project has presently been
commissioned in 47 countries.

Besides, India has also created Lines of Credit to develop projects in the region.
India-Africa Trade in the Last Ten Years

Total trade between India and Africa increased almost five-fold between 2005-
06 and 2015-16, and stood at US$ 52 billion in March 2016-17. India’s exports
to Africa increased from US$ 14 billion in 2007-08 to US$ 23 billion in 2016-17
(Figure 1), registering an impressive compound annual growth rate of 5.6 per
cent. Indian exports to Africa were at a peak in 2014-15 at US$ 32 billion.

Indian imports from Africa, on the other hand, increased from US$ 20 billion in
2007-08 to US$ 28 billion in 2016-17 accounting for 7.5 percent of total Indian
imports. Indian imports from Africa grew at a compound annual growth rate of
around 4 per cent, reaching a high in 2011-12 at US$ 44 billion.

India’s Trade with Africa (in US$ millions)

Major Export and Import Partners

South Africa continues to be the leading export destination for India as of

March 2017 with total exports at $3.5 billion accounting for around 15.4 percent
of India’s total exports to Africa. India’s other major export partners in 2016-17
include Kenya, Egypt, Tanzania and Nigeria. These regions together account for
around 34 per cent of total Indian exports to Africa.

Major Export Items

India’s key export in April-February 2016-2017 to Africa was petroleum

products, which was around 17 per cent of the total. Other major export items
included pharmaceutical products, vehicles other than railway or tramway,
machinery and equipment, and cereals.

Analysis

India’s Export to South Africa

Exports
Machinery
6%
Cereals
7%

Vehicles and parts

10%

Others
Pharmaceutical 48%
12%

Petroleum
Products
17%
Major Import Items

Among the key imports from Africa to India, petroleum products dominated
India’s import basket in April-February 2016-17, with a significant share of 52
per cent of India’s total imports from Africa. Other major import items include
gems and jewellery, edible fruit and nuts, inorganic chemicals and
organic/inorganic compounds, and copper and articles.

India’s Import to South Africa

Imports

Copper and Articles Others

3% 15%
Chemicals and
Metals
4%
Fruits and Nuts Petroleum
5% Products
Gems and 51%
Jewellery
22%
India’s Investment Relations with Africa

Apart from trade, India has also undertaken significant investment initiatives in
recent years to strengthen its strategic partnership with Africa. India has become
one of the largest investors in Africa. The major investors include Indian
Multinational Enterprises (MNE’s), Indian construction and telecommunications
companies, and several auto industry majors. These investors have been
participating in diverse sectors including telecommunications, energy, computer
services, power, automobile, infrastructure, etc. in Africa.

Approved cumulative investments from India to Africa amounted to US$ 54

billion during April 1996 to March 2016. Among the African nations, Mauritius
is the leading country in terms of receiving highest FDI inflows, followed by
Mozambique, Sudan, Egypt and South Africa.

In addition to several investments in various sectors mentioned above, Exim Bank

of India has in place Lines of Credit (LOC) extended to a number of
institutions/agencies in Africa. The total number of operative LOCs to Africa
stood at 154 as on December 31st, 2016 amounting to US$ 7.7 billion as extended
to 44 countries.

Conclusion

Seeking expansion of economic ties with India, South Africa today said it is
targeting to increase bilateral trade volume to USD 20 billion by 2018 from the
current USD 15 billion.