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India – Ethiopia bilateral relations

India – Ethiopia bilateral relations

Introduction

Ethiopia–India relations have existed for almost two millennia. Modern diplomatic relations between India and Ethiopia were established at the level of legations in July 1948, after the independence of India. The relationship was raised to the ambassadorial level in 1952. India maintains an embassy in Addis Ababa and Ethiopia in New Delhi. The two countries have enjoyed close and friendly relations with India supporting Ethiopian developmental efforts while Ethiopia has supported Indian interests such as its claim to a permanent seat on the United Nations Security Council. India and Ethiopia share a common understanding on such issues as cross-border international terrorism, the need and direction for reform of the United Nations, and the importance of action on climate change.

Historical Significance

The historical connections between India and Ethiopia are deeply rooted, encompassing trade and people-to-people interactions dating back to the time of the Axumite Empire. Historical evidence reveals that Indians traded in valuable commodities like silk, spices, gold, and ivory with Ethiopians as early as the 6th century. The 16th century saw Portuguese support to the Ethiopian King, leading to the arrival of people from Goa in Ethiopia. Furthermore, India played a pivotal role in two significant events in Ethiopian history: the 1868 British-led mission to free European diplomats held by Emperor Tewodros II and the 1941 effort to end the Italian occupation. These interventions involved substantial Indian military contributions.

A notable aspect of this historical connection is the presence of a substantial Indian diaspora in Ethiopia, comprised of traders and artisans who settled in the country during the latter part of the 19th century. During Emperor Haile Selassie’s reign, many Indian educators migrated to Ethiopia, fostering goodwill and cultural exchange. Additionally, the Siddi community on India’s western coast is believed to have Ethiopian roots, further illustrating the enduring ties between the two nations.

Bilateral Trade and Investment

Economic relations between India and Ethiopia have seen substantial growth. Trade between the two nations reached $660 million in 2011-’12 and is anticipated to surpass $1 billion by 2015. India’s exports to Ethiopia encompass a range of products, including pharmaceuticals, steel, machinery, food items, plastics, textiles, and more. Conversely, India’s imports from Ethiopia comprise raw hides and skins, pulses, oil seeds, spices, leather, and scrap metal.

India has emerged as Ethiopia’s second-largest source of Foreign Direct Investment (FDI), with investments valued at $5 billion. This figure is expected to rise to $10 billion by 2015, given India’s approval of investments amounting to $4.78 billion in 2011.

Economic Cooperation Initiatives

Both nations have taken strategic measures to enhance economic cooperation. A Bilateral Investment Promotion and Protection Agreement was signed in 2007, promoting mutual trade and investments. In 2011, a Double Taxation Avoidance Agreement was also inked, creating a favorable environment for economic exchanges.

Moreover, India pledged a $300 million line of credit to revitalize the Ethiopia-Djibouti rail route during the Second India Africa Forum Summit. This project, however, saw Chinese construction companies stepping in due to delays in sanctioning funds from the Indian side. Nevertheless, the Duty-Free Tariff Preference scheme introduced at the summit, facilitating imports from Least Developed Countries into India, has positively impacted bilateral trade, with Ethiopian exports to India reaching $120 million. Despite these advancements, the trade balance currently favours India.

India has further extended lines of credit totalling $710 million to support rural electrification and the revival of the sugar industry in Ethiopia, strengthening their economic cooperation.

Conclusion

Ethiopia–India relations have stood the test of time and continue to evolve, driven by shared history, economic cooperation, and mutual support on the global stage. These diplomatic and economic ties offer promising prospects for future collaboration and growth, fostering a stronger relationship between the two nations.

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