As India-South Africa friendship grows stronger, the steady decline in imports and exports between the two countries is a matter of concern.
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| Photo (Twitter) |
On January 26 this year, South African President Cyril Ramaphos was the chief guest at the Republic Day celebrations in India. His presence in the capital Delhi was special for both India and South Africa. India very recently celebrated and witnessed its 70th Republic Day 2019 since its independence. Also this year we are celebrating the 150th birth anniversary of Mahatma Gandhi, while South Africa is celebrating the 100th birth anniversary of Nelson Mandela. Against this background, Ramafos's visit to India is justified.
South African president Ramaphos is the second to be the chief guest at the India's Republic Day Festival and celebration. Twenty-four years ago, after the end of apartheid in South Africa, Nelson Mandela was the chief guest at the 1995 Republic Day celebrations. In 1997, the two countries signed the Strategic Partnership or Red Fort Declaration.
Nelson Mandela then said, "The Red Fort Declaration is a clear appeal to developing countries to support new goals for the economic growth and development of the South, as well as for the purpose of harmony and unity." Bilateral relations between the two countries were strengthened after the creation of the Red Fort Declaration and the two countries signed reconciliation agreements in almost all areas. During his visit, President Cyril Ramaphos also renewed the Red Fort Declaration, a three-year strategic partnership program (2019-2021) aimed at enhancing cooperation between the two countries.
Although Ramaphos's visit to India was symbolic and created an atmosphere of excitement in both the countries, it is important to know what the real meaning of the visit was. The purpose of the three-year cooperation plan was to give a major impetus to the growth of economic relations between India and South Africa. Bilateral trade between India and South Africa, which aims to reach 20 billion by 2018, is currently around рен 10.7 billion. India's exports to South Africa have declined since 2013 (see table). There was a slight increase in 2017, but the value of Indian exports is much lower than the 5.7 billion reached in 2013.
India's imports from South Africa have been declining since 2011. India's imports from South Africa had increased in 2017, but that figure is also much lower than the total potential imports. Therefore, both countries need to pay attention to the decline in trade.
One of the main reasons for the slow growth in trade between the two countries is the low number of direct flights connecting the two countries. He lamented that business travelers from both the countries have to travel long distances to reach South Africa. Businesses are demanding a more relaxed visa regime. Under the current visa regime, professionals, practitioners and senior officials are allowed to stay for a maximum of 4 years. India and South Africa urgently need to sign a bilateral agreement on visa arrangements, which will allow a company's chief executive officer (CEO) and chief financial officer (CFO) to live longer.
Some of the initiatives like 'India-South Africa Business Meeting', 'Invest in India Business Forum' as well as, Trade and investment are expected to increase through these initiatives but the governments of both the countries should make sincere efforts to address the problems of investors. The main concerns of Indian investors are inadequate infrastructure, poor internet facilities, uncertain power supply and delays in obtaining visas. President Ramaphos has promised to simplify the visa process, but other facilities-related issues must also be addressed quickly.
Although South Africa's investment in India is low, it is valuable, and its focus is on sectors such as banking, finance and healthcare. Just as Indian banks in South Africa get full licensing, so do South African banks in India, especially after the ease of doing business has improved and the Indian market is currently improving.
The talks between India and South Africa focused on closer defense and security ties in addition to trade and investment ties. As the two main regional powers in the Indian Ocean, the cooperative relationship between India and South Africa is indispensable for maintaining peace and security in the Indian Ocean. Increasing bilateral and tripartite naval cooperation through India-Brazil and South Africa naval initiatives and building cooperation in the Indian Ocean Naval Council (IONS) would be a step in the right direction. Also, the participation of the South African National Defense Forces in the first multinational Africa-India Battlefield Training Exercise - 2019 (AFINDEX-19) will help the armies of the two countries understand each other's strategies. India and South Africa are focusing on the development of defense weapons under the 'Make in India' initiative.
India's trade with South Africa from 2003 to 2017 (in US 1 billion)
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| Source : UN COMTRADE Database |
Nevertheless, the steady decline in imports and exports is a matter of concern. Visits by heads of state are very important, but bad economics can never be good politics. Therefore, the first and most important thing for both countries is to increase trade and solve the problems of investors. After the elections in both India and South Africa, the new governments are expected to focus on boosting economic ties between the two countries.
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