PASTPanel discussion on India’s Investment banking trends 2016 Influence in Littoral South Asia? Indian investments in Africa, from both public and private sector entities, have increased considerably in the last decade.
Yet despite the growing importance of Indian investments in Africa, only a few empirical studies have been carried out on the subject. This paper undertakes a disaggregated analysis of Indian foreign direct investment outflows to Africa from 2008 to 2016, and presents three main findings. Historically, the foundations of India’s relations with Africa were built upon movements against colonialism and racial discrimination. India also supported development initiatives in African countries under the banner of South-South Cooperation. Indian investments in Africa have increased remarkably in the last two decades.
The reason behind the growth of Indian investments in Africa can be traced to a number of developments in both sides. First, as a capital-scarce country with limited foreign exchange resources, India was highly restrictive in releasing the foreign exchange necessary for Indian firms to invest abroad. Significant changes took place within Africa as well. Africa entered a phase of high growth in the 2000s. According to the World Investment Report 2016, India was the eighth largest investor in Africa in 2014. Both Indian public and private sector companies have made significant inroads in Africa. The remarkable growth of Indian investments in Africa has caught widespread attention.