The Hindu Business Line : India extends $640 million credit to Ethiopia

New Delhi, Oct 9 India has extended the largest-ever line of credit of $640 million to Ethiopia for greenfield investment in three sugar factories in that geographically strategic country in the African continent, besides putting in place a slew of measures to boost bilateral trade relations.

Talking to Business Line after returning from the fifth Ethio-India Joint Trade Committee meeting held in Addis Ababa on October 7, the Minister of State for Commerce and Power, Mr Jairam Ramesh, said India is the second-largest foreign investor as its outward investment commitment to Ethiopia is $3.5 billion. Of this $2 billion is in the agriculture and floriculture sectors. “Indian companies are very active in floriculture, leather and potash mining,” he said, adding that areas such as power and information technology have also been identified for heightened cooperation.

Historic ties

Stating that Ethiopia’s geography is strategic, Mr Ramesh said it is the second-most populous country in Africa with which India has had a long historic and political engagement. He said that during the JTC meeting, the Ethiopian Minister of State, Trade and Industry, Mr Ahmed Tusa, appreciated India’s recent initiative to extend duty-free tariff preference (DFTP) to bolster least developed countries (LDCs) in line with its multilateral commitments.

As the bilateral trade is tilted in favour of India, with India’s exports exceeding its imports from Ethiopia, Mr Ramesh hinted at the DFTP scheme providing preferential market access to diversified Ethiopian goods. Mr Ramesh told the Ethiopian side that the DFTP scheme for LDCs was formulated on the existing preferences (both zero duty and margin of preference) under the SAFTA arrangement, even as he assured them that the Indian Government was taking note of Ethiopia’s plea for inclusion of two items — sesame seeds and gum Arabic. These would be considered once the DFTP scheme is fully implemented among all the LDCs and becomes at par with SAFTA.

Diversified trade

He said both sides recognised there was ample scope for diversifying trade and strengthening cooperation in areas such as infrastructure projects, consultancy works, agriculture, textile, leather, IT, power and energy, and pharmaceuticals. In view of the growing Indian investment in Ethiopia, the Indian side sought the opening of a representative office of a public sector Indian bank to help lend confidence to the Indian investors. The Ethiopian side took note to review the request in the context of the extant legal framework, he added.

As the finalisation of a double taxation avoidance agreement (DTAA) would build confidence and enhance investment and trade between the two countries, both sides agreed to finalise the DTAA early next year.

Power projects

Mr Ramesh also told his counterpart that the $6-million project for the 230-kV Nefas-Mawecha-Gashena substations, funded by the World Bank, which was bagged by Bharat Heavy Electricals Ltd (BHEL), was nearing completion; a second order under execution for a 230-kV substation at a cost of $10 million was also won by BHEL.

Both sides agreed to explore more opportunities for cooperation in the setting up of hydropower stations and thermal/gas-based power plants in Ethiopia with the Indian side offering to provide technical assistance through IL&FS and BHEL for the development of the 38-MW Awash-IV hydropower project on public-private partnership, Mr Ramesh added.

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