India–South Africa investment & trade reliance is optimistic - Srimal Fernando

Source : www.thediplomaticsociety.co.za

India–South Africa investment & trade reliance is optimistic

By Dr Srimal Fernando

South Asia Correspondent for Foreign Exchange

As India marks 65 years of independence on 15August 2011, the country has become one of the fastest growing major economies that aspires to be the major financial, educational and transportation center of the world. Since achieving independence India experienced numerous phases of developments and changes.
Following market based economic reforms in 1991. India has rapidly risen to become a global economic force to be reckoned with. As the world’s fourth largest economy with a population of over 1.2 billion people, and a middle class of more than 400 million people India is an increasingly big player on the world stage and has transformed itself from a Third world country into one of the World’s fastest growing economies.

The International Monetary Fund (IMF) projected that the Indian economy will expand by 8.2 percent in 2011. Driven by growth, India’s nominal GDP per capita has steadily increased from U$329 in 1991, when economic liberalization began to US$1,265 in 2010. India’s unique and vast geography, endowed with diverse topography, the country has made it one of the most attractive investment destinations in the world. India now boasts a private sector business that is continuing to attract the interest of the foreigners.
The economy of India has taken important steps towards boosting its agricultural output. Today it ranks number two in the global farm output. Agriculture and related sectors accounts for 16.6 percent of the Gross domestic product (GDP) (est 2007). India had a very large breed of indigenous cows and buffaloes. With an estimated 86.8 million tons of annual milk production from animals, managed by nearly 70 million farmers, India is the biggest milk producing country in the world. Manufacturing sector accounts for 27.6 percent of the GDP .The Government of India has introduced policies aimed at increasing domestic oil production and oil exploration activities. The ports are the main centers of trade. Maritime and air transport network has attracted several investments in the Indian air industry in the past few years. There are more than 335 (2008 est.) civilian airports in India.

Thus, India is one of the few markets in the world which offers high prospects for growth and earning potential, in practically all areas of business, particularly in agriculture, information technology (IT) and in tourism. India is viewed as the second most favorable outsourcing destination after United States. It has also made rapid progress in electronics and offers very attractive property investment opportunities. Several avenues have been opened to get the foreign investment flow in to the infrastructure sector. Infrastructure in India is gaining in importance and a number of public private partnerships (PPPs), targeted at US$150 billion are in the pipeline. Tourism in India is the largest service industry. More than five million foreign tourists visit India every year. The country’s  tourism industry is thriving due to an increase in foreign tourist arrivals. The remarkable growth in Indian Tourism market has benefited many support industries such as aviation, transport, hotel, medical and sports. Tourism in India is the largest service industry, with a contribution of 6.23 percent to the national GDP.

Railways provides an important mode of transport in India, transporting over 18 million passengers and more than 2 million tones of freight a day across the country. India has a network of 66,590 km of National highways connecting all the major cities and state capitals, forming the economic backbone of the country. The country has brought about revolutionary improvements in its communication system. There has also been remarkable improvement in the sphere of transport and communications during the last three decades. Industrialization process allowed growing industries such as steel, aluminum, and cement production to reduce the dependence of the economy on agriculture.

Since the 19th century, ethnic Indians have established communities in every continent including the African continent. India and South Africa have a 150 years old strong cultural relationship which is an added advantage towards strengthening the economic and trade relationship. Since 1994 the bilateral relations between India and South Africa have grown. The bilateral trade doubled from $3.18 billion in 2004-05 to $7.73 billion in 2009-10. Both nations have since developed close strategic, cultural and economic ties. Today there are close to 1.3 million Indians living in South Africa, most of them belong to fourth or fifth generation. With India as part of the India-Brazil-South Africa (IBSA) dialogue forum, the ties further solidified South Africa’s 2011 acceptance into the BRICS group. By joining the emerging economies BRICS group (Brazil, Russia, India, China and South Africa) India has been actively promoting trade with South Africa in recent years. The growth of India- South Africa trade has been explosive in the last decade. India shares an extensive energy partnership with South Africa. India’s largest import from South Africa is coal, which amounted to about $1.5-billion. On the other hand South Africa imported mostly information technology services and pharmaceutical goods from India. India has become the sixth largest trading partner to South Africa in the Asian region. South Africa is considered by the technocrats, where foreign capital realizes the best return on investment products from India. The two countries have decided to set a target of achieving $15 billion bilateral trade by 2015.

The Indian and South African economies continue to surprise with its very healthy growth rates  The growth rates, driven by consumer spending, investment, and exports, have surpassed most predictions

(Source : http://thediplomaticsociety.co.za/index.php?option=com_content&view=article&id=176)