A REPORT

ON
“International, Economic and Trade Analysis of India and Kenya”

Submitted To
Faculty of Management
In partial fulfilment of the requirement of the award for the degree of Integrated
Masters of Business Administration

GLS University
UNDER THE GUIDANCE OF
Prof. Avani Patel

Submitted by:
Aatmi Shah- 201800510010328

Class: PG-I B
Semester: VII
Batch: 20180-2023
 STEEPLED ANALYSIS
The Republic of Kenya is an underdeveloped state of East Africa lying at the equator. On the
south E it is surrounded by the Indian Ocean and on the others, it is surrounded by Somalia,
Ethiopia, Sudan, Uganda and Tanzania. The state is named after Mount Kenya, the state ‘s
highest extremum. Its economic system is the largest by GDP in the E and cardinal Africa. Its
capital, Nairobi is a major commercial hub. All these factors make Kenya as an emerging and
developing African state.

1. Social Factors

Demography

 The population of Kenya is around 39002772 which have been reduced

significantly due to AIDS. But the birth and the population growing rate in the
state has been significantly high and the population continues to turn.

 There are more than 70 tribal groups among the Africans in Kenya. Although
differentiations between many of them are blurred now each of them has left an
important impact on the Kenyan civilization. Western cultural values are going
more deep-rooted and the traditional values are disintegrating.

 The life anticipation in Kenya is around 54 old ages. The literacy rate in grownups
(people age above 15) is 87 %. 27 % of the urban population has entree to
sanitation installations. The infant mortality rate in Kenya s lower as compared to
other African states

Population

The one-year population growing rate in Kenya is 2 %. The population of Kenya is a

turning population with around 42 % of the population in the age group of 0-14 old
ages and 54.5 % in the age group of 15-64. It has an immense work force which can
be tapped. Besides the male female ratio is about 50 %. More than 905 of its
population live in small towns. The growing rate of rural population is about 2 %
while that of urban population is 4 %.

1
 Language

Linguistic Affiliation The official linguistic communications in Kenya are the Swahili
and English. Swahili which is a mix of Arabic and African linguistic communication
Bantu is spoken by the folks in Kenya. English is the official linguistic
communication used in authorities and concerns. It is spoken non merely by the elect
but people with a formal instruction. There has been accent to do Swahili as the
instruction linguistic communication.

Class and Caste

 There is a great trade of poorness in Kenya. The affluent people are the Kikuyu
followed by Leo folks. Among the folks such as Masai wealth is measured in the
figure of cattle people own. In the urban countries people dress in western vesture.

2. Technological Factors

 As compared to the 1990s Kenya has made some important promotion in the field
of engineering particularly the IT sector. With the aid from Indian authorities,
Kenya has been able to set up e-government services in the state.

 Many schools of international criterions have been established in Kenya which

impart instruction to the Kenyan pupils. All these schools have good equipped
computing machine labs and instruments.

 State owned KenGen is the chief power company in the state. Kenya is taking
stairs to tap its immense geo thermic energy militias. Besides geographic
expedition work is gain on the Banks of Lake Victoria for gold.

 Noteworthy scientific establishments in Kenya include the UNESCO Regional

Office for Science and Technology for Africa, in Nairobi; java and tea research
foundations; grasslands and plant-breeding research Stations; and legion centres
for medical, agricultural, and veterinary research. Medical research focuses on the
survey of leprosy and TB. The National Council for Science and Technology
 advises the authorities on scientific affairs, and the Kenya National Academy of
Sciences promotes promotion of learning and research
3. Environmental Factors

Kenya ‘s climate varies from semiarid in the northern portion to the high rainfall
countries in the cardinal, western, and coastal parts. This assortment in climate,
coupled with high rates of rural-to-urban migration and urbanisation, has given rise to
diverse cultural scenes in the state, each with its unique demands and development.

The equatorial climate in Kenya has resulted in a rich vegetation and zoology which is
a major tourist attraction for people around the globe. This foreign population is an
immense beginning of foreign gross for the state. A portion of Kenya lies in the
coastal part. Lots of beautiful beaches and resorts have evolved in that country due to
this.

4. Economic Factors

Kenyan economic system is market based with a few provinces owned endeavours
and a liberalized trade system. Harmonizing to the UN Human Development Index,
Kenya stands at 147th place. Kenya ‘s economic system is extremely dependent on
agricultural industry whereas industrial sector still remains developing. Most of the
foreign assistance received by the state is used to import a bulk of consumer goods.

As previously noted, the country’s per capita GDP in 2019 was $1,816 in 2019
(World Bank), but unemployment and poverty remain high with an estimated 40% of
the population living below the poverty line. It is estimated that 38% of Kenyan youth
(18 – 35 years) are unemployed.  Due to current economic uncertainties, BMI further
forecasts Kenya’s overall unemployment rate to increase by 5.2% in 2020.

Obtaining a title to land is uncertain.  This reduces the borrowing capacity of families
and businesses and constrains Kenya’s ability to broaden its capital base.  Land
reform is a divisive and emotional issue, complicated by tribal traditions, land sale
scams, and perceived historical injustices, which Kenya has so far been unable to
resolve.
5. Political Factors

Ethnic-based political divisions, interference in key institutions, corruption, and

impunity have posed challenges to Kenya’s democracy. In the wake of widespread
violence following the disputed 2007 presidential election, Kenyans adopted a new
constitution in a national referendum in August 2010, which mandated devolution of
some political authority and funding to Kenya’s 47 counties. Kenya’s 2013 and 2017
elections were more peaceful, though concerns remain about the independence and
credibility of democratic institutions and the government’s adherence to the rule of
law. Kenya’s next election is scheduled for 2022.

While the Kenyan business environment continues to improve, challenges remain. 

The top five challenges are 1) Corruption; 2) IPR enforcement; 3) Unemployment and
poverty; 4) Land reforms; and 5) Security.  

The following information gives greater detail on these challenges.

According to Transparency International 2019 Global Corruption Perception

Index, Kenya ranked 137 out of 180 countries (180 being the most corrupt), with a
score of 28 out 100 points.  Claims of corrupt dealings, particularly in land purchases
and large government contracts persist.  Other governance issues include government
efficiency and weak regulatory and judicial systems.  Despite the implementation of
some reforms, courts remain subject to significant case backlogs, and cases can take
years to resolve.  Allegations of serious corruption within the judiciary persist.

6. Legal Factors

Judicial

 Kenya has a common judicial system which is similar to that of Britain. There are
besides systems of Arabic Law and Tribal Laws. Citizens are not normally granted
free legal assistance except in capital instances. This has resulted in many helpless
 Kenyans being jailed merely because of deficiency of legal defence. The mass media
and communicating sector still remains rather vulnerable. The weak, irresponsible and
the unequal legal model in the state still remains a cause of concern.

Trade Barriers

 Non-tariff barriers include the requirement to obtain a Certificate of Conformity from

a Kenya Bureau of Standards appointed pre-export verification of conformity (PVoC)
partner and the obligation to obtain an Import Standards Mark (ISM) for a list of
sensitive products imported into Kenya. In January 2015, Intertek was awarded a
further contract by KEBS to operate the PVoC program on KEBS behalf in regions
such as parts of Europe including the UK, North America, Latin America, China,
Australasia, Western Africa, Indian subcontinent, and the UAE.

Custom Regulations

 The Customs Services Department (CSD) under the Kenya Revenue Authority

(KRA) has the primary function of collecting and accounting for import duty and
VAT on imports.  Other taxes collected by the Customs Services Department on an
agency basis include the Petroleum Development Levy, Sugar Levy, Road
Maintenance Levy, Import Declaration Fee, Road Transit Toll, Directorate of Civil
Aviation fees, Air Passenger Service Charge, Kenya Airport Authority Concession
fees, and various fees associated with motor vehicle permits.
 The CSD implements bilateral, regional, and international trade arrangements.  The
department also supports global enforcement efforts against smuggling, the illegal
importation, and exportation of arms, and drugs of abuse, as mandated through
various international legal instruments. For example, Kenya is a member of both the
East African Community (EAC) and the Common Market for Eastern and Southern
Africa (COMESA).  Membership in these two regional blocs entails extending
preferential tariffs to goods imported from EAC and COMESA member states subject
to pre-agreed conditions (the Rules of Origin).  Goods originating in Kenya also enter
into member countries on preferential rates.
7. Ethics

Code of Ethics is an initiative by the business community of Kenya to promote and

enhance the ethics of business conduct in Kenya in line with the ten principles of the
UN Global Compact in the areas of Human Rights, Labour Standards, Environment
and Anti-corruption. Applies to private companies who expect their business partners
likewise to adhere to it and does not replace, but complements, individual company
codes of ethics.

8. Demographic Analysis

Kenya's population was reported as 47.6 million during the 2019 census compared to
38.6 million inhabitants 2009, 28.7 million in 1999, 21.4 million in 1989, and 15.3
million in 1979. This was an increase of a factor of 2.5 over 30 years, or an average
growth rate of more than 3 percent per year. The population growth rate has been
reported as reduced during the 2000s, and was estimated at 2.7 percent (as of 2010),
resulting in an estimate of 46.5 million in 2016.

Kenya has a very diverse population that includes most major ethnic, racial and
linguistic groups found in Africa. Bantu and Nilotic populations together constitute
around 92% of the nation's inhabitants. People from Asian or European heritage living
in Kenya are estimated at around 200,000.

Kenya's largest ethnic group is the Kikuyu. They make up less than a fifth of the
population. Since Kenyan independence in 1963, Kenyan politics have been
characterized by ethnic tensions and rivalry between the larger groups. This devolved
into ethnic violence in the 2007–2008 Kenyan crisis.
 FOREIGN TRADE POLICY INDIA

India’s Foreign Trade Policy

The Department of Commerce has the mandate to make India a major player in global trade and
assume a role of leadership in international trade organizations commensurate with India’s
growing importance. The Department devises commodity and country-specific strategy in the
medium term and strategic plan/vision and India’s Foreign Trade Policy in the long run.

India’s Foreign Trade Policy (FTP) provides the basic framework of policy and strategy for
promoting exports and trade. It is periodically reviewed to adapt to the changing domestic and
international scenario.

The Department is also responsible for multilateral and bilateral commercial relations, special
economic zones (SEZs), state trading, export promotion and trade facilitation, and development
and regulation of certain export-oriented industries and commodities.

The current Foreign Trade Policy (2015-20) focusses on improving India’s market share in
existing markets and products as well as exploring new products and new markets. India’s
Foreign Trade Policy also envisages helping exporters leverage benefits of GST, closely
monitoring export performances, improving ease of trading across borders, increasing realization
from India’s agriculture-based exports and promoting exports from MSMEs and labour-intensive
sectors. The DoC has also sought to make states active partners in exports. As a consequence,
state governments are now actively developing export strategies based on the strengths of their
respective sectors.

While the external environment has a major role to play in the success of export policies, it is also
critical to address constraints within India including infrastructure bottlenecks, high transaction
costs, complex procedures, constraints in manufacturing and inadequate diversification in India’s
services exports. India is a signatory to the Trade Facilitation Agreement (TFA) at the WTO,
which will contribute to the simplification and lowering of transaction costs.

The government is looking to focus on promoting exports of high value-added products, where
India has a strong domestic manufacturing base, including engineering goods, electronics, drugs
and pharmaceuticals, textiles and agriculture. This is apart from the continued push to AYUSH
and the Indian services sector.

Around 70% of India’s exports constitute products that have just 30% share in global trade. The
government is looking at some more promising product groups like defence equipment, medical
devices, Agri-processing, technical textiles and chemicals.

In 2018, then Commerce & Industry Minister Shri Suresh Prabhu envisaged a strategy to double
India’s exports by 2025. The approach included devising a commodity-specific strategy for key
sectors like gems and jewellery, leather, textile & apparel, engineering sector, electronics,
chemicals and petrochemicals, pharma, Agri and allied products and marine products. Territory
specific strategy will cover North American Free Trade Agreement (NAFTA), Europe, North
East Asia, ASEAN, South Asia, Latin America, Africa and WANA, Australia, New Zealand, and
CIS.
FTP 2015-2020

The current trade policy – which focused on improving India’s performance in existing
markets/products and exploring new markets/products – has been praised as “progressive” for
the following reasons:  

 It consolidated a range of export incentives with different eligibility criteria into two
schemes – the Merchandise Exports from India Scheme (MEIS) and Services Exports
from India Scheme (SEIS).
 It offered export incentives under these two schemes in the form of duty credit scrips,
which can be used by exporters to pay import duties. The scrips are fully transferable,
which means that if an exporter has no need for them, they can pass it on to another.
 It reduced export obligation from 90% to 75% for capital goods sourced from local
manufacturers under the Export Promotion Capital Goods Scheme (EPCG).
 It allowed manufacturers who are “status holders” (entrepreneurs certified by the
DGFT as having helped India become a major export player) to self-certify their
manufactured goods as originating from India. This helps them qualify for preferential
treatment under various bilateral and regional trade agreements. 
 It identified 108 micro, small and medium enterprise (MSME) clusters for focused
interventions with a view to boost exports.
 It promoted paperless processing of various DGFT licences and applications.     

However, the policy has also had its fair share of criticism. Some of its provisions have been
challenged at the World Trade Organisation (WTO) by the United States. Some sticking
points:

 In 2019, a WTO dispute settlement panel, acting on Washington’s complaint, said

India’s export subsidy provisions violate WTO rules and must be withdrawn. These
included tax incentives under the popular MEIS and SEIS. As India’s per capita gross
national product is over $1,000 per annum, it can no longer offer subsidies based on
export performance, the panel ruled. This controversy reinforces the growing view in
India that the country needs to move away from subsidies and think of other ways to
help its exporters.       
  There is a strong belief in India (bolstered by its trade policy) that free trade
agreements (FTAs) haven’t worked for it. One indication of this came in November
2020 when India decided to not be a part of the Regional Comprehensive Economic
Partnership (RCEP), the world’s largest FTA. Experts and economists believe this
cost India a golden chance to be a major player in exports. 

Trade Facilitation and Ease of Doing Business

Trade facilitation is a priority of the Government for cutting down the transaction cost and
time, thereby rendering Indian exports more competitive. The various provisions of FTP and
measures taken by the Government in the direction of trade facilitation are consolidated
under this chapter for the benefit of stakeholders of import and export trade.

Niryat Bandhu

Hand Holding Scheme for new export/ import entrepreneurs.

(a) DGFT is implementing the Niryat Bandhu Scheme for mentoring new and potential
exporter on the intricacies of foreign trade through counselling, training and outreach
programmes.

(b) Considering the strategic significance of small and medium scale enterprises in the
manufacturing sector and in employment generation, ‘MSME clusters’ have been identified,
based on the export potential of the product and the density of industries in the cluster, for
focused interventions to boost exports.

(c) Outreach activities shall be organized in a structured way with the help of Export
Promotion Councils as ‘industry partners’ and other willing ‘knowledge partners’ in
academia and research community to achieve the objective of Niryat Bandhu Scheme.
Further, in order to ensure optimum utilization of resources, efforts would be made to
associate all the stakeholders, including Customs, ECGC, Banks and concerned Ministries.
Electronic IEC

An Importer -Exporter Code (IEC) is a key business identification number which mandatory
for export from India or Import to India. No export or import shall be made by any person
without obtaining an IEC unless specifically exempted. For services exports however, IEC
shall be not be necessary except when the service provider is taking benefits under the
Foreign Trade Policy.

Consequent upon introduction of GST, IEC being issued is the same as the PAN of the firm.
However, the IEC will still be separately issued by DGFT based on an application. The
nature of the firm obtaining an IEC may be any of the follows- Proprietorship, Partnership,
LLP, Limited Company, Trust, HUF, Society.

DGFT issues Importer Exporter Code in electronic form (e-IEC). For issuance of e-IEC an
application can be made on DGFT.

(a) Applicant can upload the documents and pay the requisite fee through Net banking.
Applicant shall, however, submit the application duly signed digitally.

(b) Processing of such applications by Regional Authority (RAs) of DGFT would be done
online and a digitally signed e- IEC would normally be issued/ emailed to the applicant
within 2 working days.

(c) In case the application is incomplete or otherwise ineligible, the same shall be rejected
and a Rejection letter/email (with reasons for rejection) would be sent to the applicant.

E-BRC

One prominent initiative in recent times has been the e-BRC (Electronic Bank Realisation
Certificate) project and its successful implementation by DGFT. It has enabled DGFT to
capture details of realisation of export proceeds directly from the Banks through secured
electronic mode. This has facilitated the implementation of various export promotion
schemes without any physical interface with the stake holders. RBI has also developed a
comprehensive IT-based system called Export Data Processing and Monitoring System
(EDPMS) for monitoring of export of goods and software and facilitating AD banks to report
various returns through a single platform.
Exporter Importer Profile

An electronic procedure has been created to upload various documents in exporter importer
profile. Once uploaded, there will be no need to submit these documents/ copies of these
documents to Regional Authority repeatedly with each application. It intends to reduce the
transaction cost and time and is a step towards paperless processing of different applications
in DGFT.

Facility of online filling application

Thanks to digitalization, filing of applications has been made easier than ever before. The
DGFT has facilitated the online filing of application to obtain IEC and various authorization.
The entity has introduced a web interface for online filing of application. The application can
be filled online and the fees remitted through the banking facilities provided. The applications
are signed with a digital signature and submitted electronically to the concerned Regional
Authority of DGFT, which are then processed on computer by the Regional Authority and
Authorisations / scrip’s are issued.

Electronic Data Interchange

DGFT has put in place a robust EDI system for the purpose of export facilitation and good
governance. DGFT has set up a secured EDI message exchange system for various
documentation related activities including import and export Authorisations established with
other administrative departments, namely, Customs, Banks and EPCs. This has reduced the
physical interface of exporters and importers with the Government Departments and is a
significant measure in the direction of reduction of transaction cost. The Endeavour of DGFT
has been to enlarge the scope of EDI to achieve higher level of integration with partner
departments.

No seizure of export related stock

No seizure shall be made by any agency so as to disrupt manufacturing activity and delivery
schedule of exports. In exceptional cases, concerned agency may seize the stock on the basis
of prima facie evidence of serious irregularity. However, such seizure should be lifted within
7 days unless the irregularities are substantiated.
24 X 7 Custom Clearance

CBEC introduced the facility of 24 X 7 customs clearance in the year 2012 for facilitated
Bills of Entry and factory stuffed container and goods exported under free Shipping Bills. At
present, this facility is available at 19 sea port and 17 air cargo complexes. The 24 X 7
Customs clearance facility has now been extended to all Bills of Entry (not only facilitated
Bills of Entry) at 19 sea port and 17 Air Cargo Complexes. Further, no MOT charges are
required to be collected in respect of the services provided by the Customs officers at 24 X 7
Customs Ports and Airports.

Authorized economic operator

In accordance with WCO’s Safe Framework of Standards (FOS), Indian customs have
developed an Authorized economic operator programme to benefit businesses engaged in
international trade. The following benefits are accorded:

a) Secure supply chain from point of export to import.

b) Potential to comply with the security standards when contracting to supply overseas
importer or exporters.
c) Enhanced privileges of border clearance in countries partnered by mutual Recognition
Agreement.
d) Minimal disruption to flow of cargo after a disruption related to security disruption.
e) Reduction in dwell time and related costs.

Facility of deferred payments

As a trade facilitation measure, CBEC has introduced facility of deferred payment of customs
duty. Further, Deferred Payment of Import Duty Rules, 2016 have been notified and the same
have come into effect from 16.11.2016. The importers certified under AEO Programme
(Tier-two) and (Tier-Three) have been notified for availing the benefit of these Rules.
 FOREIGN TRADE POLICY KENYA

International Trade Policy

International trade plays a

key role in Kenya’s
economy as illustrated by
the share of trade in goods
in total GDP, which
averages 43 percent.
Trade in services
increases the significance
of international trade even
further. This is evidenced
by the role that trade in
services plays in the global economy, which according to WTO (2010) accounts for two
thirds of Global GDP or USD 49.5 trillion by 2015. Kenya is already reaping from this
market through its diaspora community, which in 2015 remitted KES 145.4 billion1 (or USD
1.43 billion).

The global market size, as outlined above is an indicator to the greater role that trade in
services is likely to play in Kenya through increased exports of services to the global market
place, given that the services lead other sectors in contribution to GDP, where it accounts for
60 percent. Besides the macro level impact, international trade is playing a significant role in
the realization of the country’s productive sector goals of increased production to meet
international demand for various products. This is evidenced in sectors, such as floriculture
and horticulture, which have relied on international trade for sustained production.
International trade provides opportunity for agricultural and industrial development through
export opportunities for agricultural produce and industrial products. International trade has
offered a platform for enhancing the country’s competitiveness through opportunity for
importation of raw material, intermediate products and capital goods that are much needed by
the productive sectors but which are either in short supply or completely unavailable in the
country.
Kenya’s international trade policy, therefore seeks to exploit the potential in both the trade in
goods and trade in services through policy measures that contribute towards “transforming
Kenya into a competitive export led economy and a thriving domestic market”.

Current International Trade Arrangements

There currently exists three types on international trade arrangements as summarized here
below:

Multilateral Trade Arrangement:

Kenya, through her commitment under the WTO has subscribed to the multilateral trade
arrangements that are defined by various WTO Agreements. Specifically, the agreements
which are alluded to in the Design of the National Trade Policy include the following:
General Agreement on Trade and Tariffs (GATT), Technical Barriers to Trade (TBT)
Agreement, Anti-dumping Agreement, Subsidies and Countervailing Measures Agreement,
Customs Valuation Agreement, Rules of Origin Agreement, Safeguards, among others. To
ensure consistency with these agreements, the policy is therefore aligned to the country’s
commitment at the WTO.

Regional Trade Arrangements:

Regional trade arrangements that shape Kenya’s international trade policy include the East
African Community (EAC); the Common Market for Eastern and Southern Africa
(COMESA); the Intergovernmental Authority on Development (IGAD) and the Indian Ocean
Rim-Association of Regional Cooperation (IOR-ARC). Each of these are briefly outlined
here below.

a) The East African Community (EAC)

The EAC, whose membership comprises Kenya, Tanzania, Uganda, Rwanda and Burundi
brings the five countries together on issues of economic, social and political cooperation. The
EAC has created an expanded market for trade in goods and services, through the provisions
of the EAC Customs Union Protocol and the Common Market Protocol as well as other
regional integration instruments and sectoral strategies and policies. The EAC takes lead as
the destination market for Kenya’s exports, accounting for 25 percent in 2015. Trade
potential in EAC has been limited by factors that include measures that have tariff equivalent
effects (such as non-recognition of the EAC Certificate of Origin) and a host of Non-Tariff
Barriers (IFC - EAC Common Market Score card (2016). The slow pace in implementation
of EAC policies also contributes to limitations faced in efforts towards enhancing expansion
of exports.

b) The Common Market for Eastern and Southern Africa (COMESA)

COMESA is a Regional Economic Community of 19 countries, which include Kenya.

Through the Free Trade Area framework, COMESA affords Member States an opportunity
for expanding their trade with the region as a destination for exports or a source for imports
on duty free basis. In 2015, COMESA accounted for 16 percent of Kenya’s total exports,
whose trend over the period 2011 - 2015 is characterized by sluggish and near constant
growth rate. Over the same period, COMESA recorded tremendous growth in imports,
implying existence of trade potential that needs to be exploited in order to increase exports to
this regional bloc. COMESA regional integration also covers trade in service, a sector where
Kenya is a key player in the REC. COMESA member states have undertaken measures to
progressively liberalize trade in services in the region. Member states have identified four
initial sectors to start liberalization. These sectors are tourism, communication, financial
services and transport.

c) The Intergovernmental Authority on Development (IGAD)

IGAD comprises of the following countries in the horn of Africa - Djibouti, Somalia, Eritrea,
Sudan, Ethiopia, Uganda and Kenya. IGAD has been transformed into a Regional Economic
Community (REC) and its mandate expanded from drought and desertification to include an
economic and trade agenda. It therefore provides a regional integration framework through
which trade between the seven countries can be expanded using shared commitments in other
RECs (such as COMESA) to deepen trade integration.

d) African Growth and Opportunity Act (AGOA) 2000

Kenya, along with other beneficiary Sub-Saharan African countries, has benefited from a
preferential trade arrangement provided by the USA through the African Growth and
Opportunity Act (AGOA). The beneficiary countries have to meet the eligibility criteria set
out in the Act which includes establishment of a market-based economy and issues of good
governance. This trading program was initially expected to expire in 2015, was on 1st July
2015 extended by another 15 years. Kenya has benefited immensely from AGOA through
duty free exports of various products to the US. These products are however dominated by
apparel products. There exists opportunity to explore broadening of exports to cover other
AGOA eligible products.

Bilateral Trade Agreements:

Kenya has signed various bilateral trade and investment agreements with both developed and
developing countries that fulfil the following objectives:

a) Reciprocal participation in exhibitions and trade fairs as well as respective country week
promotional events.

b) Exchange of market intelligence, missions/surveys for market information.

c) Encouragement of institutional cooperation such as the Standards Institutions; Chambers

of Commerce and Industry, Customs Organizations, Research Institutions among others.

d) Prompt and focused follow up of issues raised during bilateral meetings.

e) Exchange of general and product specific trade and investment missions.

f) Promotion of Trade and Investment.

Top Exports of Kenya (2019)

In 2019, Kenya exported a total of $6.25B, making it the number 107 exporter in the world.
During the last five reported years the exports of Kenya have changed by $13.6M from
$6.24B in 2014 to $6.25B in 2019.

The most recent exports are led by Tea ($1.13B), Cut Flowers ($616M), Refined

Petroleum ($404M), Coffee ($224M), and Titanium Ore ($143M). The most common
destination for the exports of Kenya is Uganda ($619M), United
States ($546M), Netherlands ($487M), Pakistan ($440M), and United Kingdom ($387M).

Top Imports of Kenya(2019)

In 2019 Kenya imported $18.8B, making it the number 80 trade destination in the world.
During the last five reported years the imports of Kenya changed by -$1.17B from $19.9B in
2014 to $18.8B in 2019.The most recent imports of Kenya are led by Refined
Petroleum ($3.07B), Cars ($522M), Packaged Medicaments ($471M), Wheat ($439M),
and Hot-Rolled Iron ($413M). The most common import partners for Kenya
are China ($4.48B), United Arab Emirates ($1.83B), India ($1.82B), Saudi Arabia ($1.28B),
and Japan ($910M)
Origins (2019)
Top Exports of India
In 2019, India exported a total of $330B, making it the number 15 exporter in the world.
During the last five reported years the exports of India have changed by $9.73B from $320B
in 2014 to $330B in 2019. The most recent Exports are led by Refined Petroleum ($39.2B),
Diamond ($22.5B), Packaged Medicaments ($15.8B), Jewellery ($14.1B) and Cars ($7.15B)

The most common destination for the exports of India is United States ($55.3B), United Arab
Emirates ($28.6B), China ($17.4B), Hong Kong ($11.5B), and Singapore ($9.53B)

Top Imports of India

In 2019 India imported $474B, making it the number 11 trade destination in the world.
During the last five reported years the imports of India changed by $35.3B from $439B in
2014 to $474B in 2019.

The most recent imports of India are led by Crude Petroleum ($92.7B), Gold ($33.8B), Coal

Briquettes ($24.9B), Diamonds ($21.4B), and Petroleum Gas ($16.4B). The most common
import partners for India are China ($72.6B), United States ($33.7B), United Arab
Emirates ($26.8B), Saudi Arabia ($25.1B), and Iraq ($19.8B).
 KENYA ASSOCIATION BLOCK

Burundi, Kenya, Rwanda, the

United Republic of Tanzania,
and Uganda agreed on 13
December to make trade
between them and with other
countries cheaper, faster and
more straightforward in a
significant boost for economic
integration in East Africa and
continental trade facilitation.

Meeting in Nairobi, Kenya, representatives of the nations – who are members of the East
African Community (EAC) customs union and common market – said they would implement
trade facilitation reforms including reducing “non-tariff barriers” such as burdensome and
incompatible product regulations.

Chris Kiptoo, principal secretary at Kenya’s department for trade said: “Kenya recognizes
trade facilitation as an important tool to simplify trade regulations and procedures to reduce
the cost of doing business and improve the competitiveness of Kenya’s business
environment, promote exports and attract investments into Kenya.”

Frank Martsaert, chief executive officer of TradeMark East Africa (TMEA) which provided
support to the ministerial meeting, said that since 2010 “we have had a strong partnership
with the EAC Secretariat and partner states to increase trade and deepen the regional
integration agenda through investment in hard and soft trade infrastructure. Together with
UNCTAD, we look forward to continued partnership and support to the region’s trade
facilitation agenda as highlighted in the Ministerial Declaration”.
Building blocs

The EAC move comes after most African countries signed the African Continental Free
Trade Agreement (ACFTA) in March 2018. The ACFTA envisages establishing an Africa
free trade area by building on regional blocs such as the EAC where trading nations already
work together. The EAC declaration also aligns with the World Trade Organization’s Trade
Facilitation Agreement, which entered into force in February 2017.

In the declaration, EAC countries commit to supporting national trade facilitation committees
as the primary vehicle for coordinating the implementation of trade facilitation measures.

“Kenya is committed to the implementation of World Trade Organization Trade Facilitation

Agreement both at the national, regional and continental level,” Mr. Kiptoo said.

Intra-EAC trade, while low compared to regions outside Africa, is the highest among regional
economic communities in Africa at 19.35% of exports.

“UNCTAD has supported the institutional architecture of trade facilitation in the East Africa
region for many years,” Dr. Kituyi said. “For example, we have helped launch trade portals,
which simplify trade procedures and reduce the time and cost of trade transactions in Kenya,
Rwanda and Uganda – and soon in Tanzania.”

The Nairobi meeting is thought to be the first time a regional bloc in Africa has gathered at
this level to pledge to undertake trade facilitation reforms in light of the ACFTA and the
WTO’s Trade Facilitation Agreement.

UNCTAD and the EAC Secretariat organized the meeting with the support of TMEA and the
International Trade Centre.

Meanwhile, UNCTAD and TMEA, a non-profit organization established to support the

growth of regional and international trade in East Africa, also renewed their cooperation
agreement for 2019–2021.

They decided to continue to work on trade facilitation, trade portals, enquiry points, trade and
gender issues, and to explore working in other fields such as transport.
 INDUSTRY PROVIDING TRADE OPPORTUNITIES WITH
INDIA
The head of Kenya′s inward investment authority lays out the various investment
opportunities for Indian and foreign companies looking to invest in the African nation. Kenya
is the fifth largest economy in Sub-Saharan Africa. It is the dominant economy in the East
African Community (EAC), contributing more than 50 per cent of the region's GDP. Kenya's
annual GDP growth averaged 4.5 per cent between 2008 and 2012 and 5.2 per cent between
2013- 2017 and in 2018, the growth was 6 per cent. The increasing growth reflects
strong macroeconomic and structural reforms implemented during the last five years. The
annual GDP growth target in Kenya Vision 2030 is double digit. The Government of Kenya
recognises the critical role played by private investment and has put in place measures to
attract and retain foreign investment while encouraging the expansion of domestic
investment. The aim is to increase private investment to 24 per cent of GDP by 2030. The
Government has put in place strategies and policy initiatives to enhance the investment
environment. key among them being:

1. Vision 2030 - The country's blueprint towards making Kenya a newly industrialised
middle-income country.

2. Big 4 Agenda - A roadmap of the Government's priorities for the next five years. The
sectors of focus are food security and agricultural productivity, affordable housing,
manufacturing, and universal healthcare.

3. Kenya Industrial Transformation Program (KITP) guided by Vision 2030 - KITP

is key in creating an enabling environment to accelerate industrial development.

4. Buy Kenyan, Build Kenya Agenda - This entails promoting competitiveness and
consumption of domestic products and services in both the domestic and international
markets.

5. National Trade Policy -Transforming Kenya into a competitive export-led and

efficient domestic economy. Policy aims to strengthen the current supply chain by
addressing constraints impeding against development of wholesale, retail and
informal sectors.
 6. National Export Development & Promotion Strategy - A five-year sector
development plan aimed to induce synergies for higher production in specific export
sectors to enable a better export performance and enhance market access.

7. Kenya Investment Policy - This policy creates an institutional framework that fosters
coordination for efficient investment attraction, facilitation, and a favourable
investment climate aimed at attracting high-quality FDI into the country while
upscaling local investments and SME capacity.

8. EPZ scheme - Incentives provided under this scheme are meant to make the
manufacturing sector to have an export orientation rather than being inward looking.

9. SEZ policy - This policy stipulates those goods be produced in designated zones
closer to raw material sources. The SEZs will help boost industrial manufacturing by
allowing for lower tax levels and fewer regulatory hurdles, among other benefits.

General Incentives

1. Capital goods (plant, machinery and equipment) and raw materials are zero-rated;

2. Some of the plant, machinery and equipment are exempt from VAT;

3. Investment allowance for investment projects of at least USD 2 million:

-100% if the investment is location in Nairobi, Mombasa and Kisumu cities; and

-150% for those in other parts of the country (must have invested over KES 200 million)

4. Market access in COMESA & EAC markets with no taxes.

Indian Investments registered and facilitated

The authority has been able to register and facilitate 157 investment projects from India
worth Kshs.32.910 billion. The investments have the potential to create employment to
11,6588 Kenyans.

The sectors that have attracted the highest investment are Manufacturing, Energy,
Construction, Service and ICT. The data provided is, however, for companies which
registered with the Authority. The Investment Promotion Act, 2004 does not mandate all
investors to register with Authority, hence the figures provided do not represent all the Indian
investments in the country. The Agreement on Avoidance of Double Taxation signed
between Kenya and India was gazetted and entered into force on 30th August 2017. In
recognition of the strong trade ties, the two countries signed a Trade Agreement in 1985
culminating in the formation of the joint Kenya-India Joint Trade Committee in 2017 that
provides a platform for the engagement in trade related matters.
India and Kenya Bilateral Relationships

India and Kenya are maritime neighbours with robust and multi-faceted partnership, marked
by regular high-level visits, increasing trade and investment and extensive people to people
contacts.The State visit of PM Narendra Modi to Kenya on 10-11 July 2016 gave a new
impetus to bilateral partnership. PM Narendra Modi and President Uhuru Kenyatta discussed
a wide range of bilateral issues. Both leaders witnessed signing of seven (MoUs)/Agreements
in the fields of defence, trade and developmental assistance. PM handed over 30 field
ambulances for the use of the Kenya Defence Forces. PM and President Kenyatta addressed
an India-Kenya Business Forum. Five business to business MoUs were signed on the side-
lines of the business event. PM addressed a gathering of over 20,000 Indian community
members in Nairobi in which he was joined by President Kenyatta. India announced gifting
of a state-of-the-art made in India cancer therapy machine – Bhabhatron II – to Kenyatta
National Hospital, grant of US$ 1 million for the refurbishment of the Mahatma Gandhi
graduate library of the University of Nairobi.

President Uhuru Kenyatta, accompanied by several Ministers, senior officials and a high-
level business delegation, paid a State Visit to India from 10-12 January 2017 on an invitation
extended by PM Narendra Modi. During the visit, President Kenyatta held meetings with the
President and Vice President, attended the Vibrant Gujarat Summit and a business forum in
Delhi. Discussions were held on key elements of bilateral relationship including increasing
cooperation in defence and maritime security, enhancing trade and investment relationship
and counterterrorism. MoU on Cooperation in the agriculture sector and allied sector and
LoC for US$100 million for agricultural mechanization was signed during the visit. Earlier,
President Uhuru Kenyatta attended the 3rd India-Africa Forum Summit and held bilateral
meeting with PM Modi in October 2015.

The India-Kenya Joint Trade Committee (JTC) was set up at Ministerial level in 1983 as a
follow-up to the Agreement. The JTC has met seven times since, the last in February 2015 in
New Delhi. India was Kenya’s largest trading partner in 2014-15 with bilateral trade of US$
4.235 billion. However, for year 2015-16, bilateral trade was US$ 3.15 billion and for 2016-
17, bilateral trade was US$ 2.30 billion. Main Indian exports to Kenya include petroleum
products, pharmaceuticals, steel products, machinery, yarn, vehicles and power transmission
equipment. Main Kenyan exports to India include soda ash, vegetables, tea, leather and metal
scrap.
 EASE OF DOING BUSINESS
Given its robust methodology, wide acceptance and practical approach to addressing the
business climate issues facing small and medium businesses (SMEs), investors refer to this
report to guide investment decisions. In 2014, Kenya was lagging other East African and
African countries as an investment destination, primarily because of its difficult business
environment: Kenya was ranked 136th globally for ease of doing business, while foreign
direct investment (FDI) for some of our neighbouring countries was triple that of Kenya (US$
300 million). Investors complained of a lack of clear information on investment procedures,
even from key government agencies. To address the situation, the Government of Kenya
(GoK) set up a dedicated business reform unit in 2014 to coordinate the implementation of
business reforms. For the first time, a Cabinet Secretary reporting directly to H.E the
President was appointed to coordinate reforms with a dedicated budget line. Kenya has since
achieved several important milestones:

• It has been ranked the third most improved country globally for three consecutive years
(2015, 2016, 2017)

• It is the most improved country on the continent

• It ranks third in sub-Saharan Africa

• It rose 80 places in the ranking to no. 56 in October 2019.

The eleven indicators measured in Ease of Doing Business include: starting a business,
dealing with construction/ building permits, getting electricity, registering/ transferring
property, access to credit, protecting minority investors, paying taxes, trading across borders,
enforcing contracts, resolving insolvency, and contracting with government (procurement).
The initial focus area for these reforms has been city of Nairobi, with plans to begin rolling
out the same to all other counties in the country. President assigned the Ministry of East
Africa Community and Regional Development to execute the mandate to improve Kenya’s
business environment. The Ministry’s top leadership has been steering the mandate since
2014 with great success. Its efforts have lifted Kenya’s global Ease of Doing Business
(EODB) ranking from 136 (2014) to 56 (2019) and grown FDI tenfold from US$ 350 million
(2014) to US$ 3.5 billion (2019).
 OPPORTUNITY FOR BUSINESS IN KENYA

Manufacturing Plants

Kenya on 24th July, 2019 encouraged Indian investors to set up manufacturing plants locally
that will help to boost the country's exports in order to reduce the bilateral trade deficit.

Betty Maina, Principal Secretary in the Ministry of Industry, Trade and Cooperatives told
journalists in Nairobi that India is one of Kenya's biggest sources of imports. "We are seeking
additional Indian investments that will enable Kenya to produce more goods that can be sold
competitively to India," Maina said while hosting a high-level business delegation from
India, Xinhua news agency reported.

The Indian trade mission was in Kenya to explore investment opportunities and was
facilitated by the UN's International Trade Centre (ITC). It represented companies in tanning,
footwear and leather goods manufacturing.

Under ITC's Supporting Indian Trade and Investments in Africa (SITA), East African nations
including Ethiopia, Kenya, Uganda, Rwanda and Tanzania will receive support to boost their
exports to India.

Maina said that Kenya is keen to have Indian companies form joint ventures with their
Kenyan counterparts so that the East African nation can benefit from advanced expertise and
technology.

Government data indicates that Kenya imported goods worth approximately 160 billion
shillings (USD 1.6 billion) from India in 2018 and exported merchandise valued at about
USD 60 million in the same year.

According to the Ministry of Industry, India is a key bilateral partner of Kenya because it is
the third leading source of foreign direct investments into the country.
 KENYA TRADE WITH INDIA
India is one of the largest trading partners of Kenya and India-Kenya trade relations
encompasses various sectors of economy. The current trade volume is to the tune of USD
2.2158 billion (2019-20), out of which Indian exports to Kenya was USD 2.126 billion and
import from Kenya was USD 89.62 million. Main Indian exports to Kenya include petroleum
products, pharmaceuticals, steel products, machinery, yarn, vehicles and power transmission
equipment. Main Kenyan exports to India include soda ash, vegetables, tea, leather and metal
scrap.

India offers development assistance to Kenya in the form of loans and credit. This includes a
loan of Rs. 50 million to Government of Kenya in 1982 and Lines of Credit by EXIM Bank
to Industrial Development Bank Capital Ltd. An Agreement on extension of a Line of Credit
of US$ 61.6 million by EXIM Bank of India to Kenya for utilization in the power
transmission sector was signed during the visit of PM Raila Odinga to India in November
2010. A loan agreement to extend lines of credit of US$ 15 million (as first tranche out of
US$ 30 million) to IDB Capital Limited for development of SMEs was signed in July 2016.
A Line of Credit agreement of US$ 29.95 million for upgradation of Rift Valley Textiles
Factory (RIVATEX East Africa Limited) was signed in July 2016. The upgraded facility was
inaugurated by President Uhuru Kenyatta on 21 June, 2019. An LOC agreement of US$ 100
million for Agricultural Mechanization Project was signed in January 2017.