Central Idea

• Prime Minister Narendra Modi’s upcoming visit to Egypt holds immense potential for revitalizing the historic ties between India and Egypt. While past interactions have been marked by goodwill, the bilateral relationship has yet to witness substantial progress. Egyptian President Abdel Fattah El-Sisi was also the chief guest at the seventy-fourth republic day celebrations on 26 January 2023.

Historical linkages between India and Egypt

• Ancient Maritime Trade: Historical evidence suggests that there were maritime trade links between ancient India and Egypt. In 2750 BCE, the Pharaoh Sahure sent ships to the Land of Punt, which is believed to be peninsular India. This indicates early trade and cultural connections between the two civilizations.
• Cultural Exchanges: There have been instances of cultural exchanges between India and Egypt throughout history. One notable example is the use of Indian indigo-dyed muslin to wrap Egyptian mummies during the middle of the second millennium BCE.
• Ancient Civilizational Connections:  The Indus Valley Civilization in India and the ancient Egyptian civilization are among the oldest and most advanced in the world. These civilizations have left behind a legacy of art, architecture, literature, and philosophy, showcasing shared human heritage.
• Influence of Ancient Egypt in India: Egyptian ideas and concepts, such as the idea of life after death, have influenced various ancient Indian philosophies and religious traditions. There are similarities in symbolic representations, rituals, and beliefs between ancient Egyptian and Indian cultures.

The current status of trade between India and Egypt

• Trade Volume: In the fiscal year 2022-23, the total trade between India and Egypt amounted to $6,061 million. However, this figure reflected a decline of 17% compared to the previous year, indicating a temporary setback in trade relations.
• Trade Composition: A significant portion of the trade between the two countries is petroleum-related, representing nearly one-third of the total trade volume. Apart from petroleum, other major commodities in the trade include refined petroleum, wheat (Egypt being the world’s largest wheat importer), cars, corn, and pharmaceutical products.
• Trade Rankings: India stands as Egypt’s sixth-largest trading partner, showcasing its importance in the Egyptian market. However, in terms of India’s overall trade relations, Egypt ranks 38th, indicating potential for further expansion and diversification.
• Investment Scenario: Indian investments in Egypt are spread across 50 projects with a total investment value of $3.15 billion. Notably, a significant portion of this investment comes from a single company. In contrast, Egypt’s investments in India amount to a modest $37 million.
• Indian Presence in Egypt: There are less than 5,000 Indians residing in Egypt, with approximately one-fifth of them being students. This indicates a relatively small Indian community presence in the country.

Reasons for the underperformance of bilateral ties between the two

• Lack of Substantial Progress: Despite decades of diplomatic engagements and various institutional mechanisms, the bilateral relationship has delivered little in terms of substantial outcomes. While there has been goodwill and verbal exchanges on topics like decolonization and non-alignment, tangible progress has been limited.
• Economic Factors: The decline in trade volume and limited investment flow between India and Egypt indicate economic challenges. The article highlights that trade between the two countries has declined by 17% in recent years, and India’s investments are primarily concentrated in a few projects. Economic crises, such as currency devaluation, high inflation, and financial constraints, have affected Egypt’s economy and impacted bilateral trade and investment.
• Limited People-to-People Contacts: The presence of a relatively small Indian community in Egypt, with less than 5,000 Indian residents, signifies limited people-to-people contacts. A stronger and more diverse network of individuals and professionals from both countries could contribute to enhanced bilateral relations.
• Bureaucratic Inefficiency: The existence of various institutional mechanisms, such as joint commissions, working groups, and consultations, indicates the bureaucratic framework in place. However, the article suggests that the efficacy and sense of purpose of these mechanisms may be lacking, leading to limited progress in concrete outcomes.
• Economic Challenges in Egypt: Egypt faces economic challenges such as a static economy, pandemic-induced slowdown, and global economic fluctuations. These factors have impacted the overall economic environment and posed challenges for trade and investment opportunities.

Way forward: Opportunities for collaboration

• Supply of Commodities: Egypt has a demand for various commodities, including refined petroleum, wheat (as the world’s largest importer), cars, corn, and pharmaceuticals. India has the potential to supply these commodities, presenting an opportunity for increased trade and collaboration.
• Infrastructure Development: Egypt has an ambitious infrastructure development agenda, including projects such as the construction of New Cairo ($58 billion), a nuclear power plant ($25 billion), and a high-speed rail network ($23 billion). India can actively participate in these projects, providing expertise, technology, and investments.
• Defense Collaboration: Egypt has been a significant importer of arms, making it an area for potential defense collaboration. India, being a defense manufacturing and technology hub, can explore opportunities for collaboration in defense equipment supply, joint ventures, technology transfer, and training.
• Economic Reforms and Investments: India can support Egypt’s economic reforms by exploring innovative financial instruments such as the EXIM line of credit, barter arrangements, and rupee trading. These mechanisms can facilitate trade and investment, especially during periods of financial challenges faced by Egypt.
• Strategic Partnerships: India can leverage strategic partnerships with other countries and organizations, including Gulf countries, the G-20, and multilateral financial institutions. These partnerships can provide additional funding, expertise, and resources for joint projects and initiatives.

Conclusion

• Prime Minister Narendra Modi’s visit to Egypt presents a crucial opportunity to strengthen the bilateral relationship and leverage historical ties. By focusing on key sectors of trade, investment, and infrastructure collaboration, India can enhance its presence in Egypt’s growing economy. By exploring innovative funding mechanisms and strategic partnerships, India can foster sustainable development and mutually beneficial cooperation with Egypt while setting a precedent for engagements with other nations in the region.

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