Discussions
South Africa-India Investment and Trade Initiative
Willemien Viljoen, tralac Researcher, discusses the South Africa-India Investment and Trade Initiative
Ms Elizabeth Thabethe, the South African Deputy Minister of Trade and Industry is accompanying a delegation of approximately 45 South African business people on an Investment and Trade Initiative (ITI) to India from 19-23 March 2012. The objectives of this initiative are to facilitate market penetration for South African value added products and services in the Indian market, promote South Africa as a trade and investment destination and give emerging exporters the opportunity to learn about the export process and gain insight into the Indian Market. It is expected that the trade and investment seminars, business-to-business meetings and site visits in Chennai and Mumbai will afford businesses the opportunity to identify trade and investment potential in specific sectors, while also facilitating the flow of foreign direct investment into South Africa.
This ITI forms part of the export and investment promotion strategy of the South African Department of Trade and Industry (Dti) which includes India as one of the priority countries in Asia for increased export and investment opportunities for South African businesses. Other countries identified as priority trade and investment countries include China, Russia, Brazil, Egypt and Angola. These countries were chosen based on various criteria, including the extent of competition; the long-term market potential of the considered countries; whether a country is an important source of investment and technology and the interest of the South African private sector in a specific market. The sectors identified as being crucial to growth and investment potential are agro-processing; automotive and components industry; chemical and plastics; electronics, information technology and communications; metal-based industries; marine, aerospace and rail transport; textiles, clothing and footwear and tourism.
The focus sectors for the South Africa-India ITI are pharmaceuticals; ICT; energy, manufacturing and infrastructure; agro-processing; beneficiated metals and mining technology and automotive components. South Africa and India have already agreed on increased cooperation in energy, technology, trade and investment which is a step forward for long-term sustainable economic growth in South Africa.
The Southern African Customs Union (SACU) which includes South Africa, Botswana, Lesotho, Namibia and Swaziland, and India are in the process of negotiating a Preferential Trade Arrangement (PTA). It has been more than five years since the trade negotiations started, but it is expected that the PTA will increase trade flows between the countries, extend the range of goods traded and deepen mutual beneficial trade and investment ties between SACU countries and India.
The current trading relationship between South Africa and India is exemplified by the following:
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In 2011 India was South Africa seventh major export destination accounting for approximately 3.4 percent of South Africa’s total exports for the year.
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From 2000 to 2011 exports from South Africa to India increased by 21 percent, from approximately US$ 428 million to approximately US$ 3.4 billion during the time period.
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The product categories mainly exported by South Africa to India in 2011 were mineral products (61%); base metals (15%); chemical products (11%); machinery (5%) and paper products (2%). These products accounted for 94 percent of South Africa’s total exports to India for the year.
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The top five products South Africa exported to India in 2011 were bituminous coal (HS 270112)(53%); phosphoric and poly-phosphoric acid (HS 280920)(7%); other ferrous cast iron and alloy steel waste and scrap (HS 720429)(7%); manganese ores and concentrate (HS 260200)(4%) and unwrought aluminium (HS 760110)(2%).
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From 2000 to 2011 South Africa’s imports from India increased by 28 percent, from US$ 254 million in 2000 to approximately US$ 3.9 billion in 2011.
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South Africa’s imports from India accounted for 4 percent of South Africa’s global imports in 2011.
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In 2011 South Africa mainly imported the following product categories from India: mineral products (34%); transport equipment (17%); chemical products (12%); machinery (10%) and base metals (7%). These products accounted for 80 percent of South Africa’s total Indian imports for the year.
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The top five products imported from India by South Africa for the year was petroleum light oils and preparations (HS 271011)(33%); passenger vehicles with a cylinder capacity not exceeding 1500 cm3 (HS 870322)(9%); other types of medicaments (HS 300490)(6%); cellular telephones (HS 851712)(3.4%) and passenger vehicles with a cylinder capacity not exceeding 3000 cm3 (HS 870323)(2%).
Sources:
South African Department of Trade and Industry (Dti) (http://www.thedti.gov.za/trade_investment/trade_investment.jsp);
IOL business report (www.iol.co.za);
The Hindu business line (www.thehindubusinessline.com);
World Trade Atlas 2012 (www.gtis.com/gta)