International Relations

India’s relations with Egypt have gained new traction

The decision to invite Egypt’s President Abdel Fattah al Sisi as the Chief Guest on Republic Day is a significant gesture that should help to revitalize India’s relations with the Arab world’s largest country.

What makes Egypt such an important player?

  • Egypt is a pivotal player in global affairs, with a population of nearly 110 million people, a location that straddles Africa and Asia, the largest standing army in the region, a capital that hosts the League of Arab States, and a diplomatic presence that punches above its weight in global affairs.

Why is Egypt important to India?

  • Close relationship immediately after independence: It is a country with which India had a particularly close relationship in the first few decades after independence.
  • NAM shared vision: Prime Minister Nehru and President Nasser’s personal relationship was legendary, and the two became stalwarts of the nonaligned movement during the 1960s Cold War.
  • Politically, the two countries were close enough for India to send clandestine arms shipments to Egypt during the Suez crisis in 1956 and to consider nuclear cooperation and a joint fighter project in the 1960s.
  • In Egypt, Mahatma Gandhi and Rabindranath Tagore were household names, and their works were translated into Arabic by leading figures in Arab literature.

A nearly 30-year swerve

  • The two countries began to drift apart. Especially from 1981 to 2011, during President Hosni Mubarak’s long tenure.
  • According to diplomatic legend, an apparently minor protocol blunder during the New Delhi NAM summit in 1983 was perceived as a personal affront, and it took 25 years for Mubarak to be persuaded to return to India in November 2008.

Growing ties and willingness to collaborate

  • Egypt demonstrated its intent to collaborate when President Sisi took office in 2014, first through his participation in the India-Africa Forum Summit in Delhi in 2015, and again through a state visit in 2016.
  • India’s back-to-back visits and emphasis on defense cooperation: High-level exchanges over the last two years resulted in Desert Warrior, the first-ever joint tactical exercise by the two countries’ air forces, with the IAF sending five Mirage 2000 fighters and a refueling aircraft to El Berigat Airbase in Egypt.
  • Egyptian interest in India’s Tejas and Dhruv fighter jets: The Egyptians have expressed an interest in India’s Tejas fighter jets and Dhruv light attack helicopters, though this is still at an early stage.
  • Cooperation to counter hostilities: Equally important is their behind-the-scenes assistance in countering hostile moves by Pakistan at forums such as the Organization of Islamic Cooperation (OIC), as well as their refusal to make any negative comments during the Nupur Sharma affair.
  • Mutual goodwill: Over the last two years, both countries have demonstrated mutual goodwill by assisting each other at critical times.
  • Egypt provides 300,000 doses of Remdesivir to India: When India was hit hard by the second wave of COVID-19, Egypt responded by sending three plane loads of medical supplies and 300,000 doses of Remdesivir in May 2021.
  • India reciprocated by supplying wheat a year later, when Egypt, the world’s largest importer of wheat, was facing a dire situation as a result of Ukraine’s abrupt halt in wheat shipments. The Indian response also cleared the way for Egypt to visit India’s wheat-growing regions and register India for regular wheat exports to Egypt.
  • Bilateral trade is far below its potential, but it is increasing: Backed by these tailwinds, bilateral trade increased by nearly 75% last year to reach US$ 7 billion, though this is far below the potential given the size of the two economies. However, Egypt’s emerging investment scenario presents a more intriguing opportunity.

Egypt’s current economic situation and India’s investment

  • Egypt’s economy is in trouble: Non-oil sector growth has been anaemic, foreign exchange reserves have dwindled, and the Egyptian pound has been in free fall, with the International Monetary Fund (IMF) administering a bitter pill to address some of the issues.
  • Economic and administrative reforms: After several failed attempts, and compelled by the gravity of the economic crisis, the Egyptian government appears to be taking economic and administrative reforms seriously.
  • India values ease of doing business: Indian firms have invested in Egypt and, for the most part, done well. Indian businesses are responding positively, with some openly stating that after years of apathy, they are finally being heard and action is being taken to make ease of doing business a reality.
  • The ambitious plans to transform the Suez Canal Economic Zone into a global manufacturing hub are reaching critical mass. ReNew Power, based in Gurgaon, appears to be the first Indian company to sign an agreement to establish a Green Hydrogen facility. It is clearly driven by attractive tax breaks, cheap and plentiful land, 365 days of sun to generate the solar energy needed for the electrolyzers, and a strategic location that allows easy access to European markets.

There is still time to strengthen the bonds

  • A deeper economic engagement with Egypt thus becomes a strategic imperative for India.
  • While Egypt clearly needs to do more to market itself as an investment destination in India, industry bodies such as the CII, FICCI, and ASSOCHAM must also be more proactive.
  • ReNew Power has paved the way, but it will take a collaborative government-industry effort to achieve the scale required to make an impact.

@the end

For the time being, there are clear indications that India under Prime Minister Modi and Egypt under President Sisi may finally be moving toward realising some of the potentials in bilateral ties that have lain dormant for the last four decades.

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