India’s involvement in Africa has been run-of-the-mill for the past few years. Although the Africa Continental Free Trade Agreement was established in 2018 and began trading in January 2021, there has been little response from India towards exploring any prospective opportunities therein. At the same time, the India-Africa Forum Summit, last held in 2015, has remained dormant, with no significant attempts to revive it. Nonetheless, the recent inclusion of the African Union (AU) in the G20 is notional towards addressing their critical issues.
That being said, it is important to separately capitalise on the ongoing business and trade prospects currently available.
Africa’s potential exploration?
India’s exports of US$437 billion as of FY 2024 were mainly to the United States (US) and the European Union (EU). These markets, which collectively constitute 40 percent of the country’s export markets, are becoming increasingly volatile. While Trump’s assumption of power lends an air of uncertainty in the US, the EU market is creating headwinds for India with the introduction of the Carbon Border Adjustment Mechanism (CBAM).
Given the same, Indian firms need to look at other markets, especially Africa. The 55 African economies are at various stages of growth and development, with their Gross Domestic Product (GDP) growth projected to be around 3.7 percent in 2024 and 4.3 percent in 2025.
Further, Africa will soon benefit from a potential demographic dividend while that of the rest of the world falls. It would present the region with an occasion to not only offer its large labour force as a replacement for the declining labour supply worldwide but also exhibit increased consumption patterns, with the fastest growth expected in the East African region.
Given the changing geo-economic situation, India could more actively explore the African market and double-digit share.
Trade data shows that Africa’s share in imports from India, which had grown from 2.8 percent in 2005 to 4.5 percent in 2015, has touched 5.9 percent in 2023. Given the changing geo-economic situation, India could more actively explore the African market and double-digit share. During the same period, Africa’s share in imports from China increased from 8 percent to 16 percent.
In this context, Indian companies must examine this market in greater detail and take gradual steps towards catering to Africa’s import demand.
Catering to Africa’s key imports
Greater inroads into the market over a sustained time period would enhance the visibility and acceptance of Indian products in the continent, creating an investment market for Indian companies for select products.
Granular analysis shows that the top 20 African imported items constitute US$224 billion, and India’s exports of the same to Africa stand at US$24 billion. Essentially, India caters to around 10 percent of Africa’s top key import demand.
Granular analysis shows that the top 20 African imported items constitute US$224 billion, and India’s exports of the same to Africa stand at US$24 billion.
Additionally, India’s exports of the same products to the world total US$132 billion, highlighting India’s potential to diversify and increase its presence in the African market.
Focus on products, to begin with
As discussed above, while there is always potential to export multiple products to Africa, focusing on three product categories (see Table 1) could help India increase its exports to the continent. As of 2023, India’s total exports to Africa were US$46.5 billion. In contrast, India’s exports to the world of the three potential product categories that could be targeted for export to Africa stand at US$55.7 billion, showing room for growth.
Table 1: Top Three Items for India to Focus on in Africa (numbers as of 2023, in US$ billion)
| Products | Africa’s Imports from the World | India Exports to World | India’s Exports to Africa |
| Total (in billion) | 714.9 | 431.4 | 46.5 |
| Three potential items | 77.4 | 55.7 | 6.3 |
| Petroleum products | 62.9 | 25.4 | 3.7 |
| Pharmaceuticals | 10.1 | 16.0 | 2.4 |
| Smartphones for wireless networks | 4.4 | 14.3 | 0.2 |
Source: UNCTAD; Author’s calculation
Petroleum products (constituting light oils and preparations from petroleum) are one area where India can deepen its exports in Africa. India presently contributes only around 6 percent to Africa’s petroleum imports, which is also the highest imported item. Africa’s share in total imports stands at around 9 percent.
India should look at capturing this African market with cost-effective supplies, especially in South Africa, Morocco, and Mali, where the imports are higher.
Another product with the potential to help India balance its exports is pharmaceuticals (therapeutic or prophylactic medicaments). Africa’s imports of pharmaceuticals have seen a 28 percent increase in Compound Annual Growth Rate in the past 10 years. More specifically, the import demand for therapeutic or prophylactic medicaments remained the maximum in Africa. India should diversify away from North America and the EU28, which have long been focused markets for India, towards Africa, where demand would continue without any policy hiccups as elsewhere.
The most interesting and promising category is smartphones. While India has seen a significant increase in its exports to US$14.3 billion, Africa imported US$4.4 billion in 2023. However, India’s share in Africa’s imports of smartphones is just 4.5 percent. Going ahead, there is an assured upsurge in its demand as it creates jobs, boosts productivity, and stimulates the overall economy. India should look at capturing this African market with cost-effective supplies, especially in South Africa, Morocco, and Mali, where the imports are higher.
The products that have been identified for possible markets in Africa are those with regular demand and which provide opportunities for Indian companies to diversify.