SITA project to boost Indo African business and investment on selected sectors

The World Trade Organization and the United Nations mandated the International Trade Centre (ITC) to design and implement a five years projects called Supporting Indian Trade and Investment for Africa (SITA) to improve competitiveness of five east African countries through linkages with Indian companies.

The $20 million India-East Africa trade and investment improving projects, aims to boost business between the two sides on selected sectors.
The project targets growth in priority sectors such as cotton, textiles and apparel, coffee, beans and pulses, leather and business process outsourcing in Uganda, Kenya, Rwanda, Ethiopia, and Tanzania. Including companies and supporting institutions the projects involve around 150 participants.

The overall goal is to equip east African businesses to produce high-quality products for export that meet the demands of the Indian market and beyond. Increased exports and diversification of these goods and services will be fueled by the sharing of Indian knowledge, skills and technology, according to Mr. Ashish Shah, Director Division of Country Programmes, ITC.

The projects envisage helping the east African countries to better utilize the duty-free export privileges, which was enacted in 2008 by Indian government to help the least developing countries, according to ITC.

Funded by the United Kingdom’s Department for International Development (DFID), SITA’s projects also aim to help east African countries to take full advantage of India’s Duty Free Tariff Preference scheme, which eliminates most tariff barriers on imports into the Indian market from specific developing countries.

According to Ms. Tamar Bello, Head, Global Partnerships Team, DFID India, SITA has special focus on India’s Foreign Direct Investment (FDI) in Africa. Out of the 31 least developing countries that are beneficiary of India’s free of duty export scheme, 21 are in Africa.

Though India’s import from the 31 countries has grown from $3.3 billion during the first years of the scheme to $5.8 in recent year, most of the least developing countries are not utilizing it well, according to the statistics from the Indian government.

Out of the five east African countries that are beneficiary from SITA projects, Kenya is not beneficiary of India’s free duty export scheme because it doesn’t belong to the least developed countries category.

While Tanzania and Ethiopia are improving their performance while Rwanda and Uganda are not yet fully utilizing the duty free export opportunity of India.

According to the report presented by the Indian government at the launching of SITA, low level of utilization of the scheme, lack of awareness about the scheme by Indian private sector are mentioned as among the reasons for the least developed countries of Africa not to fully utilize the Indian duty free export scheme.

Among other, SITA is expected to result in new business and investment deals between the companies of India and the five east African nations. Started in 2014 ITC’s program has passed through several rounds of discussions between representatives of the business community, government and international organizations.

According to Prava Kumar, head International Trade Policy, government of India is fully committed to make this scheme successful. African LDCs must take good use of this scheme. To better utilize such duty free schemes, which African businesses are reluctant to effectively utilize, Indian government is now advising its companies to consider relocating their manufacturing in Africa.

Such measures will also help Indian businesses to access third country market like the European Union and the United States, such as Everything But Arms (EBA), Economic Partnership Agreements (EPA) and African Growth Opportunity Act (AGOA), which also provide duty free export opportunities for Africa.

In the global trade where every country competes to sell, duty free export scheme providers to least developing countries are often criticized for focusing on import of raw materials and commodities of least developed countries, which the importers later process and pack in their countries.

High standards, quality controls and certification requirements of duty free export scheme providers for least developed countries are also mentioned as a challenge of developing world such as African businesses to penetrate these market with value added products, which ultimately push them to export raw.

The project also includes assisting small and medium-sized enterprises in developing and transition economies to become more competitive in global markets. It also aims contributing to sustainable economic development within the frameworks of the Aid-for-Trade agenda and the Millennium Development Goals.

The Confederation of Indian Industry (CII) is the implementation partner for the project in India. India is well-positioned as a partner to improve the productive and export capacities of African partner countries. India’s expertise can be leveraged to build trade capacities in African partner countries through the sharing of knowledge, technology and lessons learnt.