Dal, NSG, China: Big 'cats' that Modi must bell in Africa

 

 

June and July 2016 should officially be declared Africa month in India. In the first week of the month, vice president Hamid Ansari visited Tunisia and Morocco. In the second week, president Pranab Mukherjee embarked on a tour of western and southern Africa, covering Ghana, Cote d’Ivoire, and Namibia. And now in July, Prime Minister Narendra Modi is scheduled to visit Kenya, Mozambique, Tanzania, and South Africa for over five days starting July 7.

 

 

In Namibia, the president negotiated the issue of uranium supply and discussed ways to further enhance cooperation in the mining and exploration of zinc and marble. In Cote D'Ivoire security and terrorism were on the top of his agenda  where he was also conferred the Cote D Ivoire’s National Grand Croix award. 

Addressing a business forum in Abidjan, Cote d’Ivoire, Mukherjee said,  "This visit to Africa is part of our grand strategy towards Africa, last year India announced concessional credit of $10 billion to African countries over a five-year period - along with grant assistance of $600 million."

At the event, a memorandum of understanding (MOU) was signed between Tata from India and Sutra from Cote d’Ivoire to reinforce its existing transport fleet by the import of 500 buses manufactured by Tata.

 

 

At the India-Ghana Business Forum, Mukherjee said, “…the Indian Government would be ready to work with you in key sectors and areas of common interest and encourage Indian private as well as public entrepreneurs to bring more investments into Ghana. India’s cumulative investments in Ghana are over $1 billion and two-way trade during 2015-16 amounted to $3 billion."

 

Ansari's visits to Morocco and Tunisia were also critical as India imports phosphate—a  critical raw material for fertiliser production—from these countries. Ansari also inaugurated an India-Morocco Chamber of Commerce during his trip to Rabat.

 

While in Morocco, Ansari signed two MoUs for improving bilateral relations in different areas including cultural exchange, water and information technology. An extradition treaty between India and Morocco was also discussed especially as recently Morocco had extradited a wanted criminal of Karnataka back to India.  Ansari also condemned the killing of a Congolese man by a group in New Delhi calling it “despicable” and condemnable.

 

 

So clearly this extraordinary diplomatic emphasis on Africa is unabashedly about business and politics. Asianet Newsable tells you exactly what's at stake.

 

Dal

 

The humble dal will be high on Modi's agenda as now dal prices in India are kissing Rs200/kg and the government is desperately exploring a strategic route to control these spiralling prices.

 

So it has turned to Mozambique and has now offered to buy tur dal from the country for the next five years at the support price plus additional transportation cost.

 

Pulse prices in the Indian domestic markets are retailing as high as Rs 198 per kg due to the shortfall in the local output in the wake of two consecutive droughts. According to a PTI report, India has asked the Mozambique government if it can supply tur dal for the next five years on a government-to-government basis.
 

 

A draft proposal has been submitted to the African nation, which is yet to respond. The MSP of tur dal has been fixed at Rs 5,050 per quintal, which includes a bonus of Rs 200 for 2016-17 crop year (July-June).

An Indian team headed by consumer affairs secretary Hem Pande, recently visited the African nation to negotiate the long-term arrangement for tur dal supply. Mozambique grows around 70,000 tonnes pulses, mainly tur dal and some urad. The entire quantity is exported to India and for meeting NRI demand in other parts of world. Its rabi tur crop is expected to arrive by September-October.

 

India is also keen to explore possibilities of leasing out agricultural land in Mozambique to grow pulses via contract farming.

 

 

Gas

 

India's investment in one of the world's most prized gas asset in the Rovuma basin in Mozambique should also figure high on Modi's agenda. Especially as now there is a big question mark on the viability of the project courtesy the sharp fall in global gas prices courtesy the epic demise of oil prices.

 

The project is slated to have an ultimate capacity to produce 20 million tonnes of liquefied natural gas (LNG) annually and will be the world's largest LNG export site after ExxonMobil-­run Ras Laffan in Qatar.

 

ONGC Videsh Ltd, the overseas arm of Oil and Natural Gas Corp (ONGC), Oil India Ltd (OIL) and a unit of Bharat Petroleum Corp Ltd (BPCL) together hold 30% interest in Rovuma Area-1, which is estimated to hold recoverable gas reserves of up to 75 trillion cubic feet. “We have invested more than $6 billion so far (in the Mozambique field) and another $6 billion will be invested by 2019 to develop Rovuma Area-1 field,” said the oil minister.

The project is currently facing a double whammy of sorts as customers are not prepared to sign on the dotted line and sign gas purchase agreements given the volatility in gas prices which have now halved to $8 per mmbtu. Consequently, investors are unwilling to put up the $24 billion required to get the project going.      

 

 

 

China

 

A spate of these diplomatic visits also assumes significance as India's usual economic nemesis China has been beating India hollow and increasing its economic influence in Africa. China has undertaken large infrastructure projects in Africa that include ports, roads, and soccer stadia. China has also pumped in big monies in Africa's commodity and energy sectors. Apart from China, South Korea and Japan, US and other European nations are also aggressively wooing African nations. India supported decolonisation movements across the African continent in the 1950s and 1960s, but as of recently its influence in the continent has diminished considerably in the wake of stiff competition from other nations keen to target the enormous business opportunity the continent represents.

 

India-Africa trade was almost $70 billion in 2014-15 and investments into Africa in the past decade amounted to $30-$35 billion. The figures are almost laughable when compared to the continent’s trade and investment ties with China which has invested more than $180 billion in Sub-Saharan Africa in areas ranging from energy to transportation during 2005-2015, according to a study by the Washington-based American Enterprise Institute think tank. China-Africa trade in 2014-15 alone was worth $200 billion.

 

 

Nuclear Suppliers Group

Hectic parleying is expected in South Africa as it was one of the few countries that had reservations on India’s application to the Nuclear Suppliers Group (NSG) at the just-concluded plenary session in Seoul. According to the institute for defence studies and analyses, "The opposition of most of these countries is because India is yet to sign the Nuclear Non-Proliferation Treaty. South Africa’s position on this issue has, however, come as a surprise. Especially because, Minister for International Relations and Cooperation, Maite Nkoana-Mashabane, had, during the 9th India South Africa Joint Commission meeting in May 2015, assured external affairs minister Sushma Swaraj that South Africa would support India’s bid for membership in the NSG." 

Commercial relations between India and South Africa have flourished with bilateral trade now standing at $15 billion; and India’s investments in the country was pegged at $6 billion in 2014.2 A number of Indian companies such as Tata, Mahindra, Cipla, Ranbaxy, UB group, Infosys, Wipro and Essar have a presence in South Africa.

 

The change in the South African position may have something to do with the growing Chinese influence in the country. China’s relations with South Africa have deepened in recent years. Trade between the two countries is booming; the latest reports suggest that the value of two-way trade is around $20 billion making China South Africa’s largest trading partner. The 2015 ANC foreign policy discussion document applauds, “The exemplary role of the collective leadership of the Communist Party of China” and hails China as, “A guiding lodestar of our own struggle.”

Images courtesy: Guruprasath R