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What's the article about?
- It talks about the present status of India-Egypt relations.
Relevance:
- GS2: Bilateral, Regional and Global Groupings and Agreements involving India and/or affecting India’s interests;
- Prelims
Context:
- India's Prime Minister is set to visit Egypt for the bilateral Cairo Summit.
- In this backdrop the writer analyses the status of India-Egypt relations
Historical background:
- Historically, India-Egypt ties are perhaps the oldest civilisational link.
- In 2750 BCE, the Pharaoh Sahure sent ships to the “Land of Punt”, which historians identify with peninsular India.
- By the middle of the second millennium BCE, Egyptian mummies were wrapped in muslin dyed with indigo, both from India.
Significance of Egypt for India:
- Egypt is a large country (population 105 million) and economy ($378 billion).
- It is politically stable and its socio-economic conditions are quite similar to India.
- Egypt’s largest imports are refined petroleum, wheat (world’s largest importer), cars, corn and pharmaceuticals — all of which India has the potential to supply.
- Moreover, the Egyptian government has an ambitious infrastructure development agenda, with 49 mega projects including the construction of a New Cairo ($58 billion), a $25 billion nuclear power plant and a $23 billion high-speed rail network.
- During 2015-19, Egypt was the world’s third-largest arms importer.
Underperformance of bilateral ties:
- India’s trade with the most populous Arab country stood at $6,061 million in 2022-23, having declined by 17% over the previous year.
- Nearly a third of it was petroleum-related. India was Egypt’s sixth largest trading partner, while Egypt was India’s 38th.
- Indian investments in Egypt were spread over 50 projects totalling $3.15 billion, half of the sum contributed by a single company.
- Egypt has invested only $37 million in India.
- There are less than 5,000 Indians in Egypt, nearly a fifth of them being students.
- Reason for this underperformance: The underperformance of bilateral ties is not due to a lack of bilateral institutional mechanisms, but their efficacy and sense of purpose.
Challenges to reach full potential in the bilateral ties:
- Egyptian economy is in a serious crisis.
- The huge financial commitments have coincided with a static economy, pandemic, global slowdown and the Ukraine conflict.
- Consequently, tourism has dropped and imports such as cereals have become costly.
- Annual inflation is above 30% and the currency has lost more than half its value since February 2022.
- Foreign exchange scarcity has forced the deferral of payments for such essentials as wheat.
Way Forward:
- India can foster strong ties with Egypt by helping (through various innovations such as the EXIM line of credit, barter, and rupee trading) it to bail out from the ongoing economic crisis.
