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  • Africa to be Money Spinners for Indian Firms

    Aug 13th, 2015

    KOCHI: If all goes well, countries in African continent will be money minters for Indian companies. With the push provided by India’s Duty Free Tariff Preference (DFTP) scheme, which provides preferential rates on 98% of tariff lines for 34 countries in Africa, the stage is now set for large scale business expansions of Indian firms.

    Major advantages which countries in Africa have now are availability of large fertile land and cheap labour. The DFTP scheme is to grant unilateral tariff preferences to products originating in these countries on imports to India. The focus countries as identified by International Trade Centre under the scheme are Ethiopia, Kenya, Rwanda, Uganda and Tanzania. At present L&T and Shapoorji Pallonji Group have actively involved in business in these countries. Making things interesting, cashew, spices and even rubber can be cultivated in African nations, where the land is ‘virgin’.

    “Sectors such as leather, IT-ITeS, cotton, textile and apparel, healthcare, potable water and renewable energy offer scope for Indian businessmen. Even rubber is being grown in countries like Kenya and Liberia. Land is available as low as $1 per hectare. In Africa the preferred operating model is lease hold as huge land is available for 30, 49 and 99 years lease. Spices, coffee and tea can also be grown in big numbers in the dark continent to make profit.

    Investors can either export products to India or can access the global market easily,” Govind Venuprasad, Coordinator, Support Indian Trade and Investment for Africa, International Trade Centre, Geneva told Express. He cautioned that the cost of transportation is a bit on the higher side but offlate it has reduced by 30%. According to Harikrishnan R Nair, Western India Cashew Company, low yield is one of the challenges in Africa.

    “Even though conditions are conducive, yield is low in these nations. For a hectare we will get only 250 kg whereas in India it is 500-700 kg. We are looking at ways to increase the output,” he said. “The soil and climate in many parts of Africa are favourable to grow spices. Now India firms are also engaged in contract farming in Africa to source spices,” said P J Kunjachan, MD, Arjuna Natural Extracts, a neutraceutical company which sources products from Africa