• 20 April, 2024
Geopolitics & National Security

India-Egypt Relations in the Context of Al Sisi Visit to India: An Economic View

Wed, 25 Jan 2023   |  Reading Time: 4 minutes

By Srikar Srivatsa Dahagam 

January 26, 2023 will be an important day for India in many aspects, on one hand it strengthens resolve of India’s commitment to its constitutional values of plurality, equality, liberty, freedom & enhancing its civilizational values over a period of time on the other hand it will mark a momentous occasion in the diplomatic history of India when the President of Egypt, Shri. Abdel-Fateh Al Sisi will be the chief guest for witnessing the grandeur of the Republic Day Parade on the now renamed Kartavya Path.

Diplomacy is seen as the presence of a structured communication system at a bilateral as well as at a multilateral level. A closer look at India’s chief guests for the last few years shows India’s commitment to properly use India’s incredible soft power to achieving diplomatic success either in the short run or long run. For example: In, 2018, the Narendra Modi government invited the heads of ASEAN countries namely Philippines, Laos, Cambodia, Myanmar, Indonesia, Malaysia, Thailand, Singapore, Vietnam & Brunei. Since 2018 the relations between India-ASEAN have improved significantly with the trade between both the countries in the months between the 2 powerful blocs increasing from US$ 81.3 billion to almost US$ 274.50 billion according to data from newspapers & the ministry of commerce-trade. India is also looking at the ASEAN nations to enhance its exports of defense equipment. India has signed an order for export of BrahMos missile to Philippines. Singapore, another nation with important strategic implication, has also become one of the top FDI investors in India in the last 4 years. Indonesia president Joko Widodo formally handed over G-20 presidency to India at recent Bali summit. One among the many examples are enough to show that such symbolism is very important when it comes to handling diplomatic affairs with countries that India considers to have a lot of strategic importance in the context of ever changing geopolitical realities of the world.

India-Egypt are the world’s 2 oldest surviving civilizations, while one is famous for its temples-cultural plurality, the other is known for its pyramids and rich heritage which act as important symbols for soft diplomacy in the world. Even during the ancient times, India-Egypt used to trade in abundance with multiple studies showing evidence of trade of commodities like lapis lazuli & food grains to name a few. After India’s independence India-Egypt relations continued to blossom on all fronts even in the face of extreme changes in the political changes in both the setups with India’s export to Egypt rising to 3,473.92 billion$ in 2021-22 from a figure of 2,392.34 billion$. India mainly exports iron & steel, light vehicles, cotton yarn & imports mineral oil, petroleum products, fertilizers to name a few. It means that the policies of textile ministry of India is of significant importance for international trade with Egypt & the policies related to fertilizers, energy demand is of significant importance for India’s imports from Egypt.

With the scheme of One Nation-One Fertilizer scheme coming into force in India from late 2021 along with India’s rising population, India’s rising PCI, India’s fertilizer demand is expected to rise as more farmers will be getting access to fertilizers at subsidized prices from the general market & applying simple demand-supply law, it will also create a lot of stress on India’s existing fertilizer PSUs like RCF, NFL who are also looking to improve their production capabilities in such a situation the market is open for international players to find a foothold in India’s fertilizer market as it can create a short term supply chain crunch for fertilizer industry. Fertilizer industry is also important for India’s agricultural growth. In such a situation, at least for the very short run, India would like to import more fertilizers from Egypt till the time India’s private players & PSUs ramp up the production capabilities. Also since, India is a market of more than 100 million farmers(source NSSO survey) it makes Egypt to seriously consider ramping up fertilizer exports to India as its too big a market to be ignored, when this will happen, India’s fertilizer industry will become more competitive & farmers will get fertilizers at a very cheap rate which is important for agricultural exports of India.

The second, important aspect is of, Egypt’s geographical location which is located near the Suez Canal from where a lot of international trade takes place, the route’s importance can be understood from the fact that 12% of the world trade happens through the Suez Canal which helps in boosting the Egyptian economy.  Egypt can levy taxes along with development of its ports sector which gives Egypt a strategic leverage among many African countries. Egypt will be expecting India to help in development of its ports along the Suez canal in exchange for India expanding its export bill from the canal to the per capita wise rich European, Middle eastern countries & the western economies in general. India’s export bill touched almost USD34.37 billion  in the month of October 2022. Hence Abdel Fateh Al Sisi’s visit to India becomes more important & given India’s rising economic stature and retaining its position of one of the fastest rising economies of the world, it’s an offer which will lead to mutual benefit for both the nations, the law of absolute & comparative advantage given by Daniel Ricardo holds true in this case.

The third aspect where the policymakers of both the nations will like to concentrate is improving the investment portfolios in both the countries. As of 2022, India invests US$  3.15 billion ranging from industries like garments, packaging firms, chemicals, F&O whereas Egypt invests  US$ 37 billion in India with investments in industries like coatings, electric meters to name a few. India- Egypt would like to boost this mutual investment portfolio & with India’s Oil & Gas Minister Shri. Hardip Singh Puri indicating that India will be seeing an upward trend in the investments in oil sector to 58 billion$. It is widely accepted that Egypt would also be investing for the development of oil & gas  industry in India which would reduce India’s dependence on other nations in the oil sector. India would also look forward to invest in Egypt’s renewable energy sector, textile, logistics & tourism sector as Egypt looks to diversify its economy to safeguard itself from geopolitical uncertainties of the world along with climate change factor.

The visit of Abdel-Fatah-al Sisi will induce sector wise economic growth in India & Egypt which makes this Republic day celebration parade interesting for watchers of diplomacy around the world as it can improve India’s outreach & winning the hearts of African countries.

Economists will also hope that this visit will improve the trade relations & induce sustainable development in both nations. To conclude, India-Africa relations can go to whole new level in the next few years.


The opinions expressed in this article are the author’s own and do not reflect the views of Chanakya Forum. All information provided in this article including timeliness, completeness, accuracy, suitability or validity of information referenced therein, is the sole responsibility of the author. www.chanakyaforum.com does not assume any responsibility for the same.

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