“Hoping to leverage India’s pacts with its South East Asian
neighbours, Egypt is keen to maintain India as one of its top trading
partners. . ““India is viewed by Egyptian policy makers as a
target country for attracting foreign investment,” reckons A.
Gopinathan, Indian ambassador to Egypt who accompanied the delegation
to India. . “Indian investments, estimated to be USD 750 million
currently, could increase to about USD 2 billion by 2011, if Egypt
gives the green light to some of the projects under consideration. . “strong>Trade History.”/strong>Egypt’s
foreign policy with respect to India goes back to ancient times. A
Hindu text from 300 BC mentions Emperor Ashoka’s contact with Ptolemy
II Philadelphus of Egypt and the exchange of ambassadors. . “A
more definitive indication of the ties between the two nations is
evident in the letters exchanged between Mostafa El Nahas and
Jawaharlal Nehru in the late 1930s, both compatriots in the fight for
freedom. The warmth continued till Gamal Abdel Nasser’s time, after
which relations remained cordial but distant. . “strong>India’s sustained growth.”/strong>A
young and vibrant population, a potential 1 billion people to sell to,
the buying power of its rising middle class in addition to the
government’s reforms liberalizing the economy opened the market to
foreign companies. Even now, as the rest of the world is reeling from
the recession, India’s growth is expected to remain stable at 7% from
an average 8.5% it was maintaining for the last five years. What made
the growth sustainable was that India diversified its industries to
include manufacturing, pharmaceuticals, automobile manufacturing or
information technology (IT). . “There are challenges still
facing India, such as the overwhelming majority that live in poverty
and the infrastructure and labour market that need to keep pace with
the current growth. But the success at home brought about a new breed
of entrepreneurs daring to venture beyond India’s borders, braving
risks to acquire, invest or partner in joint ventures. . “Meanwhile,
Egypt’s government launched massive economic reforms in 2004 to promote
Egypt as an investor-friendly destination. It seems to have worked. In
the last five years or so Indian investments have climbed quite
dramatically, notes Ambassador Gopinathan. “By 2011 you will see a
billion dollars just by one Sanmar) group,” he adds. . “The
Birla Group’s Alexandria Carbon Black was one of India’s first
investments in Egypt that started operation in 1994. Today it exports
93% of its products, earning USD 100 million in foreign exchange for
Egypt. In 2006, the same group invested another USD 70 million for an
acrylic plant in Alexandria that employs 250 people in its factory. . “Another
sector that saw massive investment from India was the garment and
textile industry. Among the leading Indian companies that have set up
subsidiaries are Embee, Velocity and Cleopatra employing 500-1000
workers each in factories in Ismailia, Cairo and Alexandria. . “Egypt’s
investment laws provide a direct import benefit of 10-12% on goods
imported, says one Indian garment exporter. Garments exported to US and
Europe escape any duties because of the QIZ and EU trade pacts making
them very competitive in price. India is the largest importer of raw
cotton and cotton yarn from Egypt while the latter’s export of man-made
fibres has also grown 30% annually for four years, till 2006. . “strong>Across segments.”/strong>”span style=”>Several companies including Asian Paints and “span class=”Apple-style-span” style=”color: rgb(0, 0, 153);”>Marico India”/span> have made Egypt their success stories. ” “p style=”>”span class=”Apple-style-span” style=”color: rgb(0, 0, 153);”>“I call it the centre of the world,” says .span class=”Apple-style-span” style=”font-weight: bold;”>”span class=”Apple-style-span” style=”color: rgb(0, 0, 153);”>Brajesh Bajpai, Regional Head, Middle East and North Africa for Marico”span class=”Apple-style-span” style=”color: rgb(0, 0, 153);”>,
an Indian, fast-moving consumer goods (FMCG) producer. “In Africa, part
of Gulf and easy access to southern Europe, which country has such a
great advantage?” asks Bajpai. Marico’s hair care products control 60%
of the market share in Egypt today. “Egypt currently
exports USD 2.1 billion to India of which 95% is oil and gas, while
Egypt’s imports from India, a little over USD 1 billion, have
traditionally been cotton yarn, rice, meat and tea. When seen in the
context of India’s total exports (USD 200 billion), the trade basket
with Egypt may seem small. What is interesting is that there is a right
product mix in the bilateral trade. . “Last year Mahindra &
Mahindra flagged off its 4X4 vehicle, Scorpio in Egypt and is believed
to be popular among Egyptians for its price. The Egyptian Ministry of
Tourism has achieved tremendous success in promoting Egypt as a tourism
destination in India attracting 100,000 Indians last year. . “Under
the direction of Dr Tarek Kamel, Minister for Communications and IT,
Egypt, saw merit in attracting Indian software companies like Wipro and
Satyam to the country. Companies setting up operations in the Smart
Village were offered rental and training subsidies between 85-100%, as
well as optimum infrastructure and an inexhaustible pool of
Arabic-speaking computer graduates. Indian companies could help stage
Egypt in the international market as a popular destination for IT
outsourcing and develop the industry in the long term. . “But
for all the rhetoric, ground realities could be better. Following the
signing of COMESA, Egypt levied a 30% duty on Indian tea. Imports fell
dramatically until a recent agreement by Egypt was made to reduce the
import tariff to 5%. Similarly, it was only after persistent efforts by
the Indian consulate that Egypt restarted its import of beef. . “strong>Paying closer attention.”/strong>Obviously
it is important for companies to do their homework carefully. “I am
struck by the fact that Indian businessmen do not seem to be aware of
the requirements and potential of the Egypt business and industry;
similarly Egyptian industrialists do not seem to be aware of the
capabilities acquired by Indians over the past two decades,” notes
Ambassador Gopinathan. . “Clearly, one of the ways to understand
these ground realities would be for visiting delegations to carry out
real time research. The commercial wing of the Indian embassy can
assist by putting businessmen in touch with the Egyptian trade and
industry associations, as well as businessmen when requested. The good
news is that both countries have decided to move from politics to
economics. . “strong>Germans upbeat on India.”/strong>Back in
2004, when German chancellor Gerhard Schroeder set a target of EUR 10
billion for 2009 for Indo-German bilateral trade, little did he know it
would be achieved three years ahead of schedule. In 2006, not only did
German exports to India reach EUR 5.1 billion but the trade surplus of
EUR 2 billion has been in Germany’s favour. . “Textiles,
leather, pharmaceuticals and electro-technical products made up the
bulk of India’s exports to Germany while machinery made up one-third of
Indian imports from Germany. The Indo-German relations go beyond trade
and investment and to the transfer of technology. . “Almost 2,500
Indian firms are doing business in Germany, of which two-thirds is in
IT, while the rest are engaged in textiles, engineering,
pharmaceuticals and automobiles. India’s Tata Consultancy Services
entered into an agreement to jointly research and develop telecom
products at Nokia-Siemens in Dusseldorf. Biocon, a premier
biotechnology company in India acquired a 70% stake in German AxiCorp
which will enable it to sell pharmaceutical products in Germany as well
as Europe. . “In April, 2008, Volkswagen announced it was
increasing its investment in India by 40% to EUR 580 million. The
addition was to go for the Fabia hatchback model. India’s small-car
market is a fast growing sector and automakers hope to take advantage
of the opportunities by increasing their investing. . “Volkswagen’s
premium brand Audi is also assembling the A6 and A4 models in India.
Other German automakers invested in India are Daimler and BMW with the
latest buzz that Porsche plans to start assembly in India too..
Date:4/2/2009
Source:Brajesh Bajpai