More than 40 high-level officials from 17 African countries attended an investment meeting in India last month aimed at beefing up commercial relations between the two trade partners. India is trying to strengthen its ties with Africa in a bid to catch up with China, whose trade with the continent climbed 35% from 2020 to reach a record-high USD 254 billion last year—mainly due to an increase in Chinese exports.

India is among the many countries wary about Beijing’s growing influence on the continent. Beijing has pumped billions of dollars into Africa over the last decade, building roads, bridges, and power installations in return for access to markets and resources.

Indian Foreign Minister Subrahmanyam Jaishankar told the meeting that Indian–African trade reached USD 89.5 billion in the fiscal year that ended on March 31, 2021, up almost 60% from the previous year. However, data from the Ministry of Commerce & Industry show that bilateral trade between India and the 48 countries of sub-Saharan Africa amounted to USD 46.8 billion in 2020-2021, down from USD 55.7 billion the year before. India has a negative trade balance with sub-Saharan Africa, ministry figures show.

Ministers and other officials from Burkina Faso, Cameroon, Eswatini, Nigeria, South Sudan, and Zambia were among those attending the 2-day meeting in New Delhi. The CII-EXIM Bank Conclave on India-Africa Growth Partnership was launched in 2005 with the support of India’s Ministry of External Affairs and Ministry of Commerce & Industry to encourage the development of private investment from India in African countries. Over the years, the meeting has “emerged as one of the largest congregations of senior ministers, policymakers, and business leaders from Africa and India, cutting across sectors” and is playing a “pivotal role in encouraging Indian companies to establish and grow their footprint in Africa,” according to the conclave website.

India’s main exports to Africa are refined petroleum products and pharmaceuticals. Africa primarily exports crude oil, gold, coal, and other minerals to India. India is now one of the top five investors in Africa, with about USD 74 billion of investments. Most Indian investments in Africa go to Mauritius, Mozambique, Sudan, Egypt, and South Africa. Indian firms are also increasingly active in countries rich in natural resources, such as Ghana and Nigeria. Several Indian multinationals have major interests on the continent, with strategic sectors including agribusiness, pharmaceuticals, information and communications technology, and energy.

Indian Commerce and Industry Minister Piyush Goyal told participants at the meeting that his government is keen to clinch a trade agreement with Africa. Such an accord “is going to be promising for both India and Africa, because this is where the markets and opportunities are present,” he was cited as saying at the meeting.

September 13, 2022, New Delhi—Three of India’s biggest central state-owned enterprises—Coal India Limited (CIL), NTPC, and Indian Railways—can help the country reach its climate goals while seizing a share of the clean energy market and mitigating an estimated 22%–28% cash flow gap by 2050 as India gears itself towards net-zero, according to a new report by the International Institute for Sustainable Development (IISD).
 
The study, India's State-Owned Enterprises in Energy from 2020-2050: Identifying Evidence-Based Diversification Strategies, uses public sector undertakings (PSUs) in the coal sector to show how energy businesses can identify their future uncertainties while also identifying opportunities in the changing energy system.
 
“State-owned companies can be part of India’s clean energy future while continuing to bring revenues to the government, creating jobs, and supporting local communities,” says co-author of the report Balasubramanian Viswanathan, Policy Advisor at IISD. “Our evidence-based approach shows pathways for how this can be achieved.”
 
The study finds that between 2020 and 2050, under the net-zero-aligned pathway, CIL and Indian Railways could face a INR 415 billion (28%) and a INR 2,112 billion (22%) reduction in cash flow, respectively, while NTPC’s cash flow could drop by INR 404 billion (22%) compared with a business-as-usual scenario.
 
But taking a few concrete measures in the next few years to diversify their businesses can allow these firms—and other similar PSUs in India—to alleviate future uncertainty and avoid revenue gaps, argue the authors of the report.

Early Diversification

For instance, the study finds that it is critical for PSUs to create net-zero roadmaps with interim targets for the firm—which can become a guide for future decisions—and develop in-house estimates on the financial impact of the changing energy landscape.
 
They can also use their ability to raise capital at favourable rates to identify diversification strategies and become early adopters of clean energy technologies. To do so, firms should set clean energy targets in proportion to the potential scale and speed of the financial implications, and periodically increase the ambition of these targets, the experts recommend.
 
Furthermore, building strategic partnerships among PSUs to exchange expertise and investing in research and development can help PSUs build internal capacity in new and emerging clean energy technologies. Finally, making their ambitions toward achieving a clean energy transition public can send positive market signals that can further strengthen previously mentioned measures.
 
“As major employers in the conventional energy sector, PSUs are key actors in reaching India’s climate and energy targets, and they should involve other relevant stakeholders in the decision-making process,” says Viswanathan.
 
The authors of the report encourage all state-owned energy enterprises to adopt this approach to produce their own detailed internal assessments and an evidence-based strategy for transition into a clean energy business.

Media Contacts

Balasubramanian Viswanathan, Policy Advisor, IISD: bviswanathan@iisd.org

Aia Helena Brnic, Communications Officer, IISD: abrnic@iisd.org