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Category: Global Economy Sub-category: Indian Economy
Document type: news
Indian economy will benefit by an average 1-2 percentage points of GDP growth if there is acceleration in India's export growth to the Middle East and Africa (MEA). Studies show that India's exports to MEA went up by seven times over the 2004 level to about $60 billion in 2010.
This is significantly faster than India's overall exports, which went up about five times to $250 billion at the same time. The share of this region in India's total exports has gone up from about 18% to almost 25% in recent times.
According to the experts, India still has barely scratched the surface of MEA's true potential. They are of the opinion that present years when retaining the 8% plus GDP growth is such a challenge, focusing on MEA exports makes a whole lot of sense.
Currently, the Indian exports to MEA are lopsided, with about half our exports going to a single country, the UAE.
This fact seems odd, considering that UAE is one of the smallest countries in MEA in terms of population, till we understand that the UAE plays a crucial role as a trade conduit to other countries in the region.
Moreover, it also shows the enormous potential that India has if it markets its products and services directly to these countries. Iran, which is one of the largest markets in the region, contributes a minor $2 billion, or 3%, to our exports to the region. Iran has exceptional potential and it is a culture Indian businesses can intuitively relate to and thrive in. It is important that the Indian industry and government make a concerted effort to export more to this country, regardless of political issues. There is no reason why Iran itself cannot import another $7-10 billion per year.
Iraq and Sudan deserve specific focus, i.e. they are recovering from years of strife, but have the potential for consuming high levels of products and services. Indian businesses need to enter quickly and boldly to service their market requirements.
In North Africa, besides obvious markets like Egypt, we have new emerging markets like Tunisia and Algeria, all with tremendous potential. Sub-Saharan Africa is also a high potential cluster of markets.
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