1. General: India and Ethiopia have long-standing economic and commercial relations, which are centuries old and can be traced back to the past 2000 years of recorded history. During the Axumite Kingdom, Indian traders flocked to the ancient port of Adulis in the eastern part of Ethiopia and traded silk and spices for gold and ivory. In recent years, with the opening up of the Ethiopian economy, business ties between the two countries have grown significantly, especially in the areas of infrastructure projects like roads, power, telecommunications and water resources. The economic part of the bilateral relationship has now become the most important.
2. Bilateral Trade: The bilateral economic relations are moving forward with the growing private sector investments from India, with 596 Indian companies having secured investment licenses in different areas with a total capital of US$ 4.7 billion during the period 1992- 2011.
In the past few years, Indian exports to Ethiopia faced unfavourable conditions like increase in the price of steel in the international market which is a major item imported from India and penetration of low-priced Chinese goods into Ethiopian market. Exports from India consist mainly of primary and semi-finished iron and steel products, drugs and pharmaceuticals, machinery and instruments, manufactures of metal, food items, plastic and linoleum products, paper and paper products, yarns and textiles, chemicals, transport equipment, etc.
India’s annual imports from Ethiopia had been averaging around US$ 1 million till 1999-2000. In 2010-11, these increased to US$ 32.74 million. During 2010-11, major imports by India from Ethiopia were: raw hides and skins, pulses, oil seeds, spices, leather and scrap metal.
3. Agreements: A Trade Agreement between the Government of India and Ethiopia was signed on March 6, 1997 at New Delhi during the visit of Prime Minister Meles Zenawi and it set up a Joint Trade Committee (JTC). Meeting of the first JTC was held in Addis Ababa on February 25-26, 1998, while the second JTC was hosted in New Delhi on March 21-22, 2001. The third JTC was held in Addis Ababa on July 1-3, 2002, whereas the fourth JTC was held in New Delhi on 5th June 2006. The 5th India-Ethiopia Joint Trade Committee Meeting was held in Addis Ababa on 7th October, 2008. The Indian delegation was led by H.E. Shri Jairam Ramesh, MOS (Commerce & Power).
A bilateral Investment Promotion and Protection Agreement (BIPPA) was signed on July 5, 2007 during the visit of H.E. Mr. Pranab Mukherjee, External Affairs Minister to Ethiopia to strengthen relations between the two countries in the economic and investment areas. India and Ethiopia have signed Double Taxation Avoidance Agreement (DTAA) on May 25, 2011 during the second India-Africa Forum Summit held in Addis Ababa from May 24-25, 2011.
During the India-Africa Forum Summit of April 2008, the Prime Minister Dr. Manmohan Singh had announced the Duty Free Tariff Preference Scheme (DFTP) for LDCs. Ethiopia was among the first countries that have acceded to the DFTP Scheme. As a follow up of JTC meeting, 41 experts of Leather Industries provided training to Ethiopian Leather Industries to enhance their capacities as part of a bench marking project which was funded by the Government of Ethiopia. CLRI and FDDI of India signed a twinning arrangement with LIDI of Ethiopia for a 3-year period. The project was launched on September 19, 2011.
4. Joint Business Council (JBC): A Joint Business Council was established through an agreement signed in Addis Ababa on 24.6.1997 between FICCI/ASSOCHAM on the Indian side, and the Ethiopian Chamber of Commerce on the Ethiopian side. Its first meeting was held in Addis Ababa in February 1998 along with the first JTC. The 2nd JBC Meeting was held in New Delhi in March 2001 along with the 2nd JTC.
5. Potential areas of cooperation: There is potential for increased trade and joint ventures in areas such as agriculture and agro-processing industries, floriculture, commercial farming of oilseeds, pulses and lentils, textile and garments, leather and leather products, IT sector, drugs and pharmaceuticals, packaging and woven sacks, etc. Other areas having potential are iron and steel, engineering goods and machinery, yarns, plastic and paper products, mining, sugar production, SMEs, etc. There are emerging opportunities in infrastructure projects in roads, power, telecommunications and water resources, gas exploration, wind-based energy, hydropower projects, sugar industry, machinery and engineering goods, and in general trade. Many public enterprises are on offer for disinvestment by the government.
6. Trade promotion activities: The Embassy has played a proactive role in catalyzing trade, investment and technology transfer processes in Ethiopia. SMEs have been a special focus and the Embassy is committed to support SME companies in creating partnerships in Ethiopia. A large number of SME industry members have been participating at the fairs and exhibitions, Buyer-Seller Meets, contact promotion programmes, product promotion programmes in India and further these efforts strengthen the dialogue of the Ethiopian delegations with the SMEs in India.
7. The Largest Indian Trade Exposition in Ethiopia: Since 2006 India has been participateing quite significantly in the Addis Ababa Chamber International Trade Fair (AACITF) which is an annual feature. 34 Indian companies participated in the 16th Addis Ababa International Trade Fair in February 2012. ITPO had organized the event by making logistical arrangements. Shri U. Venkateswarlu, Joint Secretary, Ministry of Food Processing Industries, also participated in the Fair The delegation also held meetings at the Addis Ababa and Ethiopian Chambers of Commerce and Sectoral Associations to tell the members of both the Associations about the potential that existed in strengthening cooperation between the two. They also met the Secretaries General of both Associations.
8. Indian investment in Ethiopia: Indian private companies are increasingly looking towards Ethiopia for investments and joint ventures. The momentum has picked up in the past few years. The Government has identified India as one of the focus countries for investments in Ethiopia and for investment promotional activities. During the period 1992 till December 2010, 596 Indian private companies have obtained project approvals from the Ethiopian Investment Agency, with a total approved capital of US$ 4.72 billion. Indian companies have invested in various sectors like agriculture and floriculture, engineering, plastics, manufacturing, cotton and textiles, water management, consultancy and ICT, education, pharmaceuticals and healthcare. Indian companies greatly prefer Oromia region for agriculture/floriculture, while Addis Ababa region is the preferred choice for manufacturing, engineering, plastics, consultancy and ICT services, water management and education sectors.
9. EXIM Bank Line of Credit: India had given an EXIM Bank Line of Credit worth US$65 million to Ethiopia for a power transmission and distribution project under the rural electrification programme in 2006. Government of India also extended LOC of US$640 million for the development of sugar projects and after the completion of these projects namely, Tendaho, Wonji/Shoa and Finchaa Ehiopia will emerge as a major exporter of sugar and these projects will create huge employment opportunities and backward integration of the Ethiopian economy.
10. Infrastructure Projects: During the last few years, Indian companies have won various government contracts in Ethiopia against tough international competition. Indian companies from public and private sectors have secured several contracts in the infrastructure sector, including consultancy works, in roads, power, telecommunications, water resources, and cement production. IRCON and M/s SMS Infrastructure have secured contracts in road construction; RITES, International Consultants and Technocrats (ICT), Consulting Engg. Services, Span Consultants, LEA Associates in road studies and consultancy; KEC International, BHEL, Jyoti Structures, IRCON, Kalpataru Power Transmissions and Gammom India in power transmission, distribution and sub-stations; TCIL in telecommunications; WAPCOS and ICT in feasibility studies for micro dams and irrigation projects; ACC and HOLTEC in consultancy for expansion of cement production.
11. Pilot Project on Tele-medicine and Tele-education: India is providing tele-medicine and tele-education to all countries of Africa under the Pan African e-Network Project. Ethiopia was the first beneficiary under a Pilot Project which was completed in September 2009. Addis Ababa University and the Black Lion Hospital are the respective nodal centers for tele-education and tele-medicine, with remote centers located at Haromaya University and Nekempt Hospital respectively. The entire cost of US$ 2.13 million was borne by the Government of India as a grant. TCIL is the implementing agency of the project in all countries of Africa, including Ethiopia.
12. Textile/Garments: For developing an Integrated Textile Cluster, IL&FS prepared a report. This report encourages the flow of private sector investment in Ethiopia in the textile sector. Government of India designated IL&FS to undertake the task of preparing the detailed project report. The total cost of DPR was Rs. 1.5 crores and was funded by Ministry of Commerce of Government of India.
13. Solar energy rural electrification: In 2005, Presidents of the regional states of Afar, Benshangul Gumuz, Gambella, and Somali visited the Barefoot College in Rajasthan and saw the solar energy rural electrification and rooftop rainwater harvesting projects. 34 villagers from remote villages of these states ('barefoot soldiers') were selected and sent for six-month training. On return they have applied their knowledge to provide electricity by using solar energy in 17 remote villages. Under the Second Africa India Forum Summit, a Barefoot Training College will be established in Ethiopia.
14. India Business Forum: The India Business Forum (IBF) was launched on October 30, 2005 has been meeting quite frequently to chalk out strategies to engage in productive and mutually beneficial business activities. The Embassy organized various meetings with the Presidents of the Regional states, General Managers of banks, DG, Ethiopian Customs Revenues Authority, Ethiopian Employers Federation, Minister of Trade, Industry and H.E. Mr. Meles Zenawi, Prime Minister of Ethiopia with the Indian investors under the aegis of the Indian Business Forum (IBF). These meetings have provided a new dimension to bilateral co-operation and added vigour to the strong relations that exist between the two countries.
Annexures I-III give details about bilateral trade between the two countries, total imports/exports of Ethiopia and bilateral agreements signed between the two countries.