India - Egypt Economic and Commercial Relations

Egypt has traditionally been one of India's most important trading partners in the African continent. India-Egypt Bilateral Trade Agreement has been in operation since March 1978 and is based on the Most Favoured Nation clause.

Bilateral Trade:

Bilateral trade registered an increase of 45% in 2002. The growth in Indian exports was 28.5% while Indian imports increased by 63%. For the first time since 1994 the trade balance shifted in favour of Egypt by US$ 46.25 mn during the year 2002. This was mostly due to 57% increase in our oil imports from Egypt. India has become the only major trading partner of Egypt with which this country enjoys a positive trade balance. Furthermore India has emerged as the second largest export destination for Egypt after Italy.

Jan-June 2003

• Indian exports in the first six months of the present calendar year have shown a downward trend. The total Indian exports is at USD 75 million (USD 163 million in 2002). Sesame seeds, refined cane sugar, tobacco and yarn were the main export items from India. Petroleum products continued to dominate the export basket of Egypt at USD 151.74 million of the total export of USD 229.07 million (last year USD 174 million).
• Major Indian Export items during the last few years: Iron/Steel casings; boneless bovine frozen meat; sesamum seeds; engineering goods including diesel engines, pumps & vehicles; cotton, jute yarn and other textile fibres; plastic & rubber; chemicals and pharmaceuticals (vaccines, blood & blood derivatives); tobacco; paper; and cereals (mainly wheat).
• Major Indian Import items during the last few years: Petroleum and products, Raw Cotton, Rock Phosphate, Coking Coal and Marble.

Agreements:

• A number of agreements covering various aspects of political, economic and cultural relations have been signed by the two countries. A Partnership Agreement between India and Egypt was initialled in Cairo in May 1999 during the first meeting of the India-Egypt Joint Business Group. It is an umbrella Agreement focusing on bilateral industrial cooperation for setting up of joint ventures with built-in exchange of expertise. The Agreement is yet to be signed.
• To give a further boost to bilateral economic relations a Preferential Trade Agreement (PTA) and a Double Taxation Avoidance Agreement (DTAA) are being negotiated by the two sides. The first round of discussions on PTA was held in New Delhi in January 2002 during the visit of Egyptian Minister of Foreign Trade to India and 2nd round in October 2002 in Cairo. The last round of talks was held in New Delhi from April 10-12, 2003. Mr. El Said Kassem, Head of Commercial Representation and Mr. M.V.P.C. Sastry, Joint Secretary, Department of Commerce, led the Egyptian and Indian delegations respectively. Successful talks on DTAA were held in Cairo on 15-16 September 03.
• Other important ongoing negotiations include Air Connectivity Talks and Merchant Shipping Agreement. The Tourism Cooperation Agreement has been ratified by both countries.

India-Egypt Joint Commission:

The India-Egypt Joint Commission was established in September 1983 to promote and expand bilateral cooperation in agriculture, economy, trade, industry, education, health, culture, consular affairs, tourism and science & technology. The meetings of the Commission are co-chaired by Indian External Affairs Minister and Egyptian Foreign Minister. Its first meeting was held in New Delhi in November 1985, second in Cairo in October 1988, third in New Delhi in April 1997 and the fourth in Cairo in February 2001.

During the fourth meeting of the Joint Commission held in Cairo in February 2001 the sub-committee on Trade and Economic Cooperation discussed bilateral trade, participation in Trade Fairs and Industrial/SME/Tourism sector cooperation. The sub-committee on Science & Technology Cooperation identified Information Technology, Biotechnology, Renewable Energy, Remote Sensing and Satellite Technology, and Nuclear medicine as possible areas for further cooperation.

Memoranda of Understanding (MOU):

• A number of MOUs have been signed between Indian and Egyptian companies and organizations. These include: an MOU between the Egyptian National Railways (ENR), Social Fund for Development (SFD) and the Rail India Technical & Economic Services (RITES); between the Steel Authority of India Limited (SAIL) and Metallurgical Industries Corporation (MICOR), Egypt; Cairo & Alexandria Stock Exchanges and National Stock Exchange of India Ltd.; Indian Automobile Component Manufactures Association (ACMA) and Egyptian Auto Feeders Union (EAFU); National Small Industries Corporation (NSIC) India and Social Fund for Development (SFD) Egypt; between Indian Institute of Foreign Trade (IIFT) and India and Foreign Trade Training Centre (FTTC), Egypt and an MoU between India Trade Promotion Organization (ITPO) and the General Organization for International Exhibitions and Fairs (GOIEF).

Indian Projects in Egypt :

• There is a substantial presence of Indian projects and Joint Ventures in Egypt. According to the Egyptian General Authority for Foreign Investment (GAFI), India is the 12th largest foreign investor in Egypt with a total investment of approximately $330 million in 43 projects.
  
  
• Alexandria Carbon Black (ACB) set up by Grasim India Limited with TRENCO and ATC as Egyptian partners has been the leading example of successful Joint Venture between Indian and Egyptian companies. Established in 1994 with a capacity of 20,000 tonnes, and having grown regularly its capacity is now poised to increase to 180,000 tonnes by 2004. It exports 93% of its product generating foreign exchange revenue or savings of LE375 million (US$61 million approx.) for Egypt annually. In September 03 an announcement to establish a new acrylic fibre plant adjacent to ACB was made. The project would be executed in two phases; the first phase is likely to be commissioned by December 2004 with a capacity of 18,000 tonnes per year. This would mean an increase of Indian FDI by about US$110 million within the next couple of years.
  
• Oberoi group has been operating hotels and Nile cruises successfully in Egypt. Other important Indian investments in Egypt include: International Chemical Company of the Thapar Group manufacturing Sodium Triphosphate; ESSEL of India which has set up a Joint Venture for manufacturing laminated tooth paste tubes for Proctor and Gamble in Egypt; Dabur India Ltd. which has established a 100% owned facility for the production of its cosmetics line; Niletex, which is also a 100% Indian company manufacturing PVC water-storage tanks; M/s. Auto Tech Engineering, another 100% Indian company manufacturing auto valves.
• Kirloskar Brothers are into assembly of diesel engines and irrigation pump sets in Egypt, while TELCO has tied up with a local private sector company, ETAMCO, for assembling pick-ups, trucks and mini buses. Unit Trust of India has established a joint venture company in the field of mutual funds. Ranbaxy has an Egyptian subsidiary for manufacturing pharmaceutical formulations. Ashok Leyland, in collaboration with Egyptian company, Engineering Automotive Manufacturing Company, are assembling and selling vehicles in Egypt.

Software and IT related Indian firms in Egypt

• NIIT started its operations in 1999 and in association with Virgitech has opened 5 Educational & Traning Centres in Cairo (4) and Alexandria (1). It offers IT solutions in Training, System integration and Software. NIIT/ Virgitech is working closely with Egyptian Ministry of Industry. A MOU between Productivity and Vocational Training Department of the Ministry and NIIT/ Virgitech was signed, for imparting IT vocational training, in the presence of Minister of IT Hon'ble Pramod Mahajan during his visit to Egypt in Jan 2003. NIIT/ Virgitech is also involved with USAID in its IT developmental projects.
  
  
• I-Flex Solutions Ltd., an IT solutions provider to the banking and financial services industry has also established its presence in Egypt and is implementing its core banking application - FLEXICUBE - to major banks (Banque Du Caire and Banque Misr). Recently FLEXICUBE has also been selected by the Egyptian American Bank (EAB) as its core banking platform.

Confederation of Indian Industry (CII) Partnership Summits :

• Egyptian Minister of Trade and Supply Dr. Ahmed Goweili led a high-level delegation including top businessmen for the CII Partnership Summit in Chennai in January 1998.
• A high-powered Egyptian delegation led by Minister of Trade, Youssef Boutros Ghali, participated in the CII Partnership Summit 2002 held in Bangalore on January 10-12, 2002. The delegation included the Minister of Industry and Technological Development, Dr. Aly Fahmy El-Saidi, and the Managing Director of the Social Fund for Development, Dr. Hussein El-Gamal, and was accompanied by a large business delegation. The delegation also visited New Delhi and held bilateral meetings with External Affairs Minister, Finance Minister, Disinvestment Minister, and Rural and Agro Industries Minister from January 13-16, 2002. It also called on the Prime Minister. A Business Interaction was held in New Delhi under the umbrella of Federation of Indian Chambers of Commerce and Industry. The delegation visited several high technology industrial units and training institutes. Youssef Boutros Ghali announced that 2002 would be observed as "Year of India" in Egypt.

Year of India in Egypt :

The Egyptian Ministry of Foreign Trade declared 2002 as Year of India in Egypt (YIE) with a view to further strengthen, develop and enhance Egypt-India relations. This initiative was taken consequent to the visit of Egyptian Minister of Foreign Trade to India in January 2002 for CII Partnership Summit. A high-powered Core Group was established to oversee and concretize a number of ideas and events to mark the occasion. It was led by the Minister of Foreign Trade from the Egyptian side and Minister of Commerce and Industry from the Indian side. Events organized during YIE included; exchange of key ministerial visits, cooperation between Indian and Egyptian entities in the field of Small and Medium Enterprises and Information Technology, business seminars etc.

Visit of CII-CEO Mission, May 2002 :

A high-powered CII delegation led by Mr. Rahul Bajaj visited Egypt from May 20-23, 2002 at the invitation of Minister of Foreign Trade Dr. Youssef Boutros Ghali. The delegation called on President Mubarak, Prime Minister Atef Ebeid, Minister of Foreign Trade, Minister of Industry and other dignitaries. President Mubarak assured the Mission of full support of his government. It was decided that a programme of cooperation between Indian Institute of Foreign Trade and Foreign Trade Training Centre would be evolved.

India Egypt Joint Business Group:

The India-Egypt Joint Business Group (IEJBG) set up in November 1997 aims at forming new joint ventures and investment projects between the two countries. It comprises nine top Indian businessmen and fifteen Egyptian businessmen. The first meeting of the IEJBG was held in Cairo in May 1999 and the second meeting in January 2002. Earlier this year the Egyptian Committee was reconstituted. It is now led by Gen. Ahmed Arafa, Chairman of Goldentex Group. The next meeting is likely to be held in India in the first quarter of next year.

Cooperation in the SMEs Sector

Minister of State for Small Scale Industries, Mrs. Vasundhara Raje visited Egypt from September 30 to October 4, 2002. She was accompanied by Secretary SSI, Chairman NSIC and a business delegation representing 9 Indian companies from the Small Scale Sector. During the visit, an MOU was signed between NSIC and SFD- Egypt to strengthen bilateral cooperation in this sector. MOS called on the Prime Minister of Egypt and Minister of Industry. Prime Minister showed a keen interest in the Indian experience in SSI. The businessmen held extensive interactions with their Egyptian counterparts at the seminars organized by Federation of Egyptian Industries, Alexandria Businessmen Association, Egyptian Businessmen association and Social Fund for Development (SFD).

Joint Action Plan between Ministry of SSI and SFD:

Dr. M. Hany Seif El Nasr, MD, SFD led a 4-member delegation to India from 28th October to 3rd November, 2002, at the invitation of Ministry of State for Small Scale Industries. A Joint Action Plan was finalized to deepen cooperation in various sectors including - Software/Hardware Clusters, Business Incubators; modernization & marketing of textiles, packaging, stationary & office equipment etc. During the preceding months, sustained efforts have been made by both sides to determine the scope of cooperation in these areas. To accelerate the process, a 4-member delegation led by Indian Vice Minister for SMEs (Secretary (SSI), Mr. S.K.Tuteja visited Cairo from October 8-10, 2003. All projects under JAP were reviewed. Decisions were taken about implementing them in stages. The next JWG meeting is scheduled to take place in India in the first quarter of next year.

Other areas of bilateral interest:

IIM

Egypt has evinced interest in collaborating with Indian Institute of Management, Ahmedabad. A three member delegation visited IIM in June 2003 to study its functioning and to examine the feasibility of replicating the model in Egypt.

Wheat

Trade in commodities especially wheat is another area where Egypt has shown interest. A six-member delegation led by H.E. Hassan Khedr, Minister of Supply and Internal Trade and H.E. Fayza Abou El-Naga, Minister of State for Foreign Affairs visited India from October 13-15, 2003 to explore the possibility of import of wheat within the framework of a buy back arrangement. During their stay the delegation, was received by Prime Minister of India and held extensive talks with Ministries of Food, Commerce, External Affairs and concerned agencies.

IT

Minister for Parliamentary Affairs and IT, Mr. Pramod Mahajan visited Egypt at the head of a 22-member parliamentary delegation in January 2003. The delegation was received by President Mubarak, Prime Minister Atef Ebeib and other dignitaries. Mr. Mahajan held discussions with Egyptian Minister of IT besides attending a ceremony for signing of a Protocol of cooperation between Productivity and Vocational Training Department, Ministry of Industry, Egypt and NIIT.

Meat

Chairman, Agricultural and Processed Food Products Export Development Authority (APEDA) visited Cairo in the last week of May, 2003. Various issues pertaining to resumption of supply of frozen buffalo meat from India to Egypt was discussed with the Egyptian authorities. Consequently at the invitation of APEDA, an Inter-ministerial Egyptian delegation visited India to make a first hand assessment in August 2003. They inspected abattoirs in three Indian states. They also held detailed discussions with Indian authorities in Ministry of Health and Agriculture as well as APEDA. A report was submitted on return to Prime Minister in which the delegation expressed a high degree of satisfaction at the hygiene and quality standards being followed by the Indian abattoirs which are ISO 9002 certified and have the state of the art plants. It has been decided to conclude an MOU between Ministries of Agriculture (Veterinary authorities) of governments of Egypt and India, to put in place a mechanism to prescribe and safeguard quality standards.

Visit of Bombay Industries Association (BIA) delegation :

A 24-member delegation led by President of BIA visited Alexandria and Cairo from 15 to 22 March, 2003 at the invitation of the Mission. It called on Minister of Industry. Intensive business interactions were organized at Alexandria Chamber of Commerce, Federation of Egyptian Industries (under the aegis of India-Egypt Joint Business Group) and Egyptian Businessmen Association. The delegates undertook a number of plant visits and held one-to-one meetings.

Indian Technical & Economic Cooperation (ITEC) :

The Indian Technical and Economic Cooperation (ITEC) programme was instituted by the Government of India in 1964. The programme is an expression of India's earnest desire to share the fruits of its socio-economic development with other developing countries. The number of ITEC beneficiaries from Egypt who have gone to India for training under ITEC Programme from 1986 to Aug 2003 is 129.

Trade Fairs

The Mission along with Indian Trade Promotion Organization (ITPO) organized the first-ever exclusive Indian Exhibition in Cairo in April 1998. There were 36 participants from India in the Exhibition. During 2000, Indian companies participated in the Cairo International Trade Fair in March under the auspices of ITPO and in the G-15 Trade Fair held in Cairo on the sidelines of the G-15 Summit in June. An exclusive Indian Exhibition IndiaTech 2000 was organized in September 2000 in Cairo. About 120 Engineering, Electronic and Software companies participated in the exhibition. It received more than 5000 visitors and was expected to generate business of more than $350 million.

Recent visits :

From Egypt: April 1997 - Foreign Minister Amre Moussa for the 3rd Session of the Joint Commission; January 1998 - Minister of Trade & Supply Dr. Ahmed Goweili with a business delegation for the CII Partnership Summit in Chennai; 1999 - Minister of Trade & Supply Dr. Ahmed Goweili to attend a G-15 Ministerial Meeting in connection with the WTO; 1999 - Under secretary, Ministry of Finance, Mr. Hosny Ibrahim Gad for negotiations on DTAA; January 2002 - Egyptian Ministerial delegation led by Dr. Youssef Boutros Ghali and Dr. Ali Fahmy El Saidi for the CII Partnership Summit in Bangalore, and official visit to Delhi; October 2002-Mr Hani Seif Al Nasr, Managing Director, Social Fund for Development April 2003 - Mr. El Said Kassem, Head of Commercial Representation. May 2003 - Two senior officials from the Egyptian Ministry of Foreign Trade visited New Delhi on May 18-20 to participate in the International Conference on Trade, Investment and Development; Aug 2003-Three member delegation to observe meat processing facilities in India; October 2003 - Six member delegation led by Mr.Hassan Khedr, Minister of Supply and Internal Trade.

From India: August 1998 - Minister of Textiles for inauguration of an Indian Jewellery Exhibition; September 2000 - MOS, Commerce and Industry to inaugurate Indiatech Exhibition; February 2001 - EAM, for 4th Joint Commission; October 2002 - Minister of State for Small Scale Industries; January 2003 - Minister for Parliamentary Affairs and Communications, June 2003- Minister of Commerce and Industry; Sept 2003 - 2-member delegation led by JS (FT & TR-I) from Department of Revenue (Ministry of Finance) to negotiate DTAA; Oct 2003 - 4-member delegation led by Secretary (SSI) to participate in the meeting with SFD.

Source: Indian High Commission, Egypt