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The International Centre for Trade and Sustainable Development

Africa’s trade relations in the context of India’s DFTP scheme: Evidence from Ethiopia, Tanzania and Uganda. Vinaye Ancharaz A presentation at the 10 th CII-Exim Bank Conclave on India-Africa Project Partnership, 9-11 March, 2014, Taj Palace Hotel, Delhi. The International Centre

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The International Centre for Trade and Sustainable Development

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  1. Africa’s trade relations in the context of India’s DFTP scheme: Evidence from Ethiopia, Tanzania and Uganda Vinaye Ancharaz A presentation at the 10th CII-Exim Bank Conclave on India-Africa Project Partnership, 9-11 March, 2014, Taj Palace Hotel, Delhi The International Centre for Trade and Sustainable Development

  2. Outline • Background (Ethiopia, Uganda, and Tanzania) • Trade with India • Gauging the impact of the DFTP scheme • Factors affecting the impact of the DFTP scheme • Conclusion and policy implications

  3. Economic Background

  4. Top 10 Global Exports (Share of Exports)

  5. Top 5 Export Destinations

  6. Top 5 Import Sources

  7. Trade with India

  8. Ethiopia • Ethiopia’s exports to India have increased steadily (from USD 8 million in 2000 to USD 35.1 million in 2012) • India is the 4th most important source of imports for Ethiopia, mainly manufactured goods • India is the second largest investor in Ethiopia, with approved investments of USD 4.79 billion (40% of which in commercial agriculture) • India has provided Ethiopia with technical assistance: • Central Leather Research Institute (CLRI) • Footwear design and development • Assistance to the Ethiopian Revenue and Customs Authority

  9. Uganda • Although Uganda’s trade with India increased over the last decade, by 2012, Uganda’s trade with India was minimal (1% of Uganda’s total exports) • Recent data suggests that India is one of the biggest investors in Uganda • Development assistance provided by India to Uganda in recent years includes: • The establishment of a tele-medical centre in Mulago Hospital • The creation of India-Africa Institute of Foreign Trade and the Food Processing Business Incubation Centre

  10. Tanzania • India’s importance as an export destination has grown significantly (9% of Tanzania’s total exports in 2012) • India’s FDI stocks in Tanzania increased from USD 49.2 million in 2009 to USD 63.3 million in 2010 • USD 497 million has been invested by Indian firms in various Export Processing Zones in Tanzania • Indian firms have been active in banking, agriculture, and telecommunications, minerals, natural gas, health, and infrastructure

  11. The DFTP Scheme

  12. Brief Description of the DFTP • India’s DFTP scheme, open to all LDCs, was launched in August 2008 • The DFTP scheme unilaterally grants tariff preferences on LDC exports • Currently, 29 LDCs benefit from this scheme (22 in Africa, 7 in the Asia-Pacific region) • Coverage: • Excluded: many fruits and vegetables, coffee, cereal, spices, tea, tobacco, and other metals • Included: cotton, cocoa, aluminum and copper ores, garments and fish fillets,

  13. Ethiopia’s Exports to India2001 - 2012

  14. Uganda’s Exports to India 2000 - 2012

  15. Tanzania’s Exports to India 2000 - 2012

  16. Ethiopia’s Top 10 Exports to India

  17. Uganda’s Top 10 Exports to India

  18. Tanzania’s Top 10 Exports to India

  19. Assessing the impact of the DFTP scheme

  20. Exports Pre- and Post-DFTP in Total and by Category to India

  21. Change in India’s share of exports to the world pre- and post-DFTP

  22. Limitations of the Scheme

  23. Ethiopia • Coffee represents 28% of Ethiopia’s world exports. Yet coffee is excluded in the DFTP scheme, and no coffee is exported to India. • 66% of Ethiopia’s global exports are on India’s exclusion list • Despite Ethiopia’s total exports being larger than Tanzania’s, Ethiopia exports to India amount to one-tenth of Tanzania’s exports.

  24. Uganda • Coffee is Uganda’s top export to India and the world, but it is on the Exclusion list • Many of Uganda’s global competitive exports are also on the Exclusion list • Tobacco, black tea, flat-rolled iron or steel, maize seeds, sesame seeds • There is limited complementarity between Uganda’s top global exports and India’s global import demand

  25. Tanzania • No certificate of origin has ever been issued for exports to India under the DFTP scheme • While Tanzania’s exports have diversified, it is still dependent on a few products • Products like tea, cashews (processed), sesasum seeds, copper waste and scrap are on the Exclusion list • India’s demand for Tanzanian exports is limited to gold, natural gas, and copper ores

  26. Factors affecting the impact of the scheme

  27. On the Receiving Country’s Side • Lack of awareness and promotion of the scheme • Limited production capacity • Role of India’s investment, technology transfer, and technical assistance

  28. On India’s Side • Design and coverage of scheme • Critical exclusions • 85% of exports are at preferential rates. But this figure is artificially inflated by oil, natural gas and minerals. • Implementation issues • Processing delays • Need for GoI to better promote the scheme • NTMs

  29. Thank you for your kind attention! Vinaye Dey Ancharaz Senior Development Economist vancharaz@ictsd.ch ICTSD 7-9 Chemin de Balexert 1219 Geneva, Switzerland, www.ictsd.org

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