India-Africa Economic Ties Enter Reciprocal Phase, Could Strengthen Supply Chains: Report

The evolving relationship is increasingly moving beyond a traditional trade model, with Indian companies bringing engineering, technology and industrial capabilities to African markets while African economies offer access to natural resources, emerging consumer markets and investment opportunities.

One example highlighted in the report is a $450 million contract awarded by Indian state-owned Engineers India Ltd to oversee the construction of a planned $16 billion refinery and petrochemical complex in Lamu, Kenya, associated with businessman Aliko Dangote.

The proposed greenfield facility is expected to have a processing capacity of around 700,000 barrels of crude oil per day. The project illustrates how African investment and entrepreneurial capital can combine with India's engineering and technological capabilities for large-scale industrial development.

The deepening relationship could also help India diversify its supply chains. Africa possesses significant reserves of critical minerals, energy resources and agricultural commodities, while India's expanding economy is generating greater demand for many of these inputs.

For Indian businesses, establishing manufacturing and processing facilities in African countries could provide access to new markets while reducing logistics costs and allowing greater value to be added locally.

The report also pointed to Africa's growing urban populations and increasing demand for energy, healthcare, mobility and consumer products as potential areas for further cooperation.

Several African economies are seeking to expand industries including cement, fertilisers, petroleum refining, automobiles, pharmaceuticals, agricultural processing, renewable energy and logistics. These sectors require capital, technology, engineering capabilities and management expertise, areas where Indian companies have established experience.

Greater industrial cooperation could allow Indian companies to serve regional African markets while also contributing to employment, skills development and local manufacturing capacity.

“Greater African processing and value addition can create better economic returns for African economies while giving Indian industry more diversified and reliable sources of supply,” the report said.

Infrastructure is another potential area for closer collaboration. African countries require significant investment in roads, railways, ports, electricity generation and digital connectivity to improve links between producers, consumers and regional markets.

India's experience in developing relatively affordable infrastructure and technology in resource-constrained environments could provide opportunities for cooperation as African economies pursue industrialisation and regional integration.

The emerging model could therefore see both sides play a more active role in the economic relationship, with Africa gaining access to technology, capital and industrial expertise while Indian businesses gain new markets and more diversified sources of key resources.