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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.

History

Trade and people-to-people contacts have existed between India and Ethiopia  for  almost  two  millennia, Hoard of Kushan period coins have been excavated from Debre Damo, northern Ethiopia. Beginning at the   time of the Axumite Empire. Indians traded in silk, spices, gold and ivory with the Ethiopians in the 6th   century. Portuguese assistance to the King of Ethiopia in the 16th century saw the arrival of people from Goa in Ethiopia. British interventions in Ethiopia in 1868 to free European diplomats imprisoned  by  Emperor  Tewodros II under General Robert Napier and in 1941 that ended the Italian occupation both involved large contingents of Indian soldiers who fought as part of the British commanded forces.

Ethiopia has also been home to a sizable Indian diaspora consisting of traders and artisans who settled down there in the latter half of the nineteenth century. During Emperor Haile Selassie’s reign a large number of Indian teachers went to Ethiopia which has led to the development of significant goodwill towards India among the Ethiopians. The Siddi community on India’s western coast are thought to be of Ethiopian descent.

Economic Relations

BILATERAL TRADE AND INVESTMENT

Trade between the two countries amounted to $660 million in 2011-’12 and is expected to reach $1 billion by 2015. Indian exports to Ethiopia consists of drugs and pharmaceuticals, steel, machinery, food items, plastic and linoleum products, paper, textiles, chemicals, transport equipment and steel. India’s imports from Ethiopia include raw hides and skins, pulses, oil seeds, spices, leather and scrap metal.

India is Ethiopia’s second largest source of Foreign Direct Investments with investments amounting to $5  billion. Indian investments in Ethiopia are expected to be worth $10 billion by 2015 with India approving investments worth $4.78 billion in 2011.

ECONOMIC COOPERATION

India and Ethiopia signed a Bilateral Investment Promotion and Protection Agreement in 2007 and a Double Taxation Avoidance Agreement in 2011 to promote mutual trade and investments. At the Second India Africa Forum Summit, the then Indian Prime Minister Manmohan Singh announced a $300 million line of credit to help revive the Ethiopia-Djibouti rail route. This project however went to Chinese construction companies following delays on the Indian side in sanctioning the funds. The Duty Free Tariff Preference scheme that was announced at the summit allowing for imports from Least developed Countries into India has however had a positive impact on bilateral trade with the value of Ethiopian exports to India now reaching $120 million. The balance of trade however remains in India’s favour. India has also extended $710 million in lines of credit to help in rural electrification and the revival of the sugar industry in Ethiopia.

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