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Zawya
25-03-2025
- Business
- Zawya
Bridging Border: Egypt and India Reshaping Economic Future
Egypt and India have cultivated robust economic ties for many years, yet significant opportunities remain to be explored. Forming new partnerships marks a strategic milestone in their evolving relationship, characterized by remarkable growth in trade and investment. As both nations navigate shifting economic landscapes, the potential for job creation and export expansion is considerable. Ongoing collaboration in information and communication technology (ICT) and renewable energy is poised to redefine the economic futures of Egypt and India, unlocking new avenues for mutual benefit and prosperity. Egypt-India Economic Boom In 2024, Egypt imported $3.259 billion worth of goods from India, while exports to India were valued at $517.445 million, according to the Central Agency for Public Mobilization and Statistics' (CAPMAS) Foreign Trade Data Bulletin for February 2025. To strengthen economic ties and attract investments, Egypt's Minister of Investment and Foreign Trade Hassan El-Khatib visited India in March 2025. During his visit, El-Khatib held high-level meetings with Indian officials, including Minister of Commerce and Industry Piyush Goyal, along with industry leaders. The meeting with Goyal addressed expanding trade between Egypt and India, with a target of $12 billion in five years, nearly tripling the $4.2 billion recorded in 2024. In this regard, Ahmed Ghaly, a trade economist, comments: 'This ambitious goal requires a combination of policy measures, strategic investments, and enhanced private-sector cooperation between both countries.' Ghaly explains, 'To boost trade exchange, Egypt and India are expected to focus on reducing trade barriers, improving logistics infrastructure, and facilitating smoother customs procedures. The expansion of direct shipping routes and trade financing mechanisms will play a crucial role in increasing efficiency and reducing costs for businesses on both sides.' Discussions also focused on renewable energy, chemicals, automotive manufacturing, pharmaceuticals, and ICT as priority investment sectors. The Egyptian-Indian Business Council aims to increase Indian investments in Egypt to $5 billion by 2027, reflecting a bold vision for mutual economic growth. One of the notable agreements signed during El-Khatib's visit is an $8 billion green hydrogen plant in the Suez Canal Economic Zone (SCZONE). Led by India's ReNew Power and Egypt's Elsewedy Electric, this project is set to produce 20,000 tons of green hydrogen annually by 2026, with plans to scale up production to 200,000 tons per year. This initiative positions Egypt as a regional leader in renewable energy and contributes to global decarbonization efforts. Moreover, the Egyptian-Indian Business Council has launched an ambitious investment initiative, targeting $5 billion by 2027. This includes projects in renewable energy, ICT, and industrial manufacturing zones. Indian companies are expected to invest heavily in Egypt's economy, further diversifying the bilateral relationship. Commenting on this initiative, Salma Chalabi, an economics specialist and a PhD student, tells Arab Finance: 'The initiative is set to significantly reshape bilateral trade and investment dynamics. This effort expands beyond traditional sectors like chemicals and tourism into high-growth areas such as renewable energy, green hydrogen, and IT.' Coupled with Egypt's efforts to streamline investment processes and address regulatory hurdles, Chalabi sees this diversification as a driver to bring bilateral trade closer to the $12 billion target by 2028. She also highlights that renewable energy and green hydrogen will be key focus areas. Economic Impact of Indian Investments in Egypt A key element fueling India's increasing investment in Egypt is the establishment of dedicated industrial zones. Ghaly notes, 'These zones offer an attractive business environment for Indian manufacturers by providing incentives such as tax breaks, reduced bureaucratic hurdles, and access to Egypt's strategic location as a gateway to Africa, Europe, and the Middle East.' 'By setting up manufacturing bases in these zones, Indian companies can not only tap into the Egyptian market but also leverage Egypt's free trade agreements with Africa and the European Union (EU) to access a wider consumer base,' Ghaly adds. Ghaly points out, 'As Egypt and India continue to expand their economic cooperation, one of the most direct benefits for Egypt will be job creation. Indian investments in manufacturing, IT, agriculture, and pharmaceuticals will generate employment opportunities for Egyptians at various skill levels.' Additionally, collaborations in ICT will drive Egypt's digital transformation agenda, improving connectivity and fostering innovation. Chalabi stresses, 'Recent partnerships in cybersecurity and IT are advancing Egypt's economic modernization, supporting the Digital Egypt strategy that focuses on expanding 5G networks and satellite projects to boost connectivity and attract technology investments in areas like e-government and fintech.' 'Egypt's cybersecurity sector is expected to grow by 12.39% annually, reaching $444 million by 2030. Collaborations with Indian companies like Trend Micro, which successfully blocked 73 million threats in Egypt in 2023, contribute to this growth. This achievement included the prevention of 18 million email threats, 2 million malicious URL attacks, and 8 million malware attacks. These efforts showcase the company's advanced threat detection and response capabilities in safeguarding Egypt's digital infrastructure, including energy grids and financial systems,' according to Chalabi. Moreover, the recent economic developments between the two countries are expected to have a positive impact on Egyptian exports. Chalabi highlights, 'Recent initiatives to deepen ties between Egypt and India are poised to significantly boost Egypt's export potential by expanding trade opportunities and harnessing Indian expertise.' 'Egypt's position as a regional energy hub, combined with India's demand for liquefied natural gas (LNG) and green hydrogen, creates new export opportunities. The $40 billion in green energy projects in the SCZONE reinforces this collaboration. Streamlined investment processes and regular bilateral trade forums are also driving Egypt's export growth and diversifying its trade landscape,' Chalabi emphasizes. With ambitious trade targets and substantial investments across various sectors, Egypt and India are poised to reap substantial benefits. Their shared commitment to increasing bilateral trade, alongside initiatives in renewable energy and ICT, underscores the strategic vision driving this partnership. © 2020-2023 Arab Finance For Information Technology. All Rights Reserved. Provided by SyndiGate Media Inc. (
Zawya
17-02-2025
- Business
- Zawya
Egypt's Trade Future: Caught Between Trump's Tariff Storm and Opportunity
Egypt's external trade dynamics are currently shaped by a complex mix of exports and imports, influencing its economy. With major exports including agri-food products, cotton, and chemicals, while significant imports include wheat and energy, the trade balance reflects both opportunities and challenges. Yet, trade policies implemented during the Trump administration, particularly the imposition of tariffs, have reverberated through global markets. This raises the question of whether these policies would affect Egypt directly or indirectly. Exploring Egypt's strategic partnerships and adaptability to the changing global trade landscape can provide insight into its ability to navigate these emerging challenges. Egypt-US Trade Dynamics and Trump's Trade Policies Egypt's trade with the US is evolving. From January to November 2024, Egypt's imports from the US were valued at around $6.75 billion, 39.6% higher than about $4.8 billion in the same period of 2023, as mentioned in the Central Agency for Public Mobilization and Statistics' (CAPMAS) monthly bulletin of foreign trade, January 2025 issue. Key US imports included mineral oils, fuels, oilseeds, fruit oils, medicinal plants, animal feed, aircraft, spacecraft, vehicles, machines, and mechanical devices. Meanwhile, Egypt's exports to the US grew by 13.9% year on year (YoY) to $2 billion in the 11-month period of 2024 from $1.8 billion, according to CAPMAS. Recently, President Donald Trump has escalated his trade policies, imposing new tariffs to counter perceived trade imbalances. As of February 4th, a 25% tariff now applies to imports from Canada and Mexico, along with a 10% tariff on Canadian energy resources. Additionally, a 10% tariff on Chinese imports took effect on February 4th as well. On February 13th, Trump ordered the formulation of reciprocal tariffs to match those imposed by other countries on US goods. These recent tariffs have raised concerns about retaliatory measures from affected countries, as well as how these decisions might directly or indirectly impact Egypt. On February 13th, Trump warned that BRICS nations, among which Egypt is a member, could face 100% tariffs from the US if they 'play games with the dollar." His remarks came in response to discussions about the BRICS countries, namely Brazil, Russia, India, and China, establishing their own currency. Impact of Trump's Trade Policies and Sanctions The trade policies of the Trump administration, particularly tariffs, have reverberated through global markets, indirectly influencing Egypt's trade environment. Mohamed Riad, a senior economist, tells Arab Finance: 'US tariffs on other countries like China can create a ripple effect in global trade, impacting countries like Egypt in several ways.' 'Tariffs often make importing certain goods from high-tariff countries more expensive. China, for example, is a major supplier of goods, such as electronics, machinery, and consumer products,' Rias says. 'With higher tariffs, US businesses may seek alternative suppliers. Egypt can potentially benefit from this if it positions itself as a cost-effective substitute for some of the goods previously imported from China or other affected countries,' he explains. Meanwhile, Manal Mamdouh, an economic and international trade expert, elaborates to Arab Finance: 'It is too early to predict the full impact of Trump's trade policies on Egypt. However, these policies could negatively impact the entire world, triggering a cycle of protectionism and anti-protectionism that may set international trade back for a decade. This would affect Egypt and peers.' However, Riad warns that Egypt could face pressure if it engages in trade practices the US deems unfair or violating international agreements. 'Egypt's ongoing efforts to diversify its foreign relations, with China, the EU, and African nations, help buffer against potential isolation from any one economic partner,' he adds. On the other hand, rising US protectionism could present challenges for Egypt. To illustrate this point, Mamdouh says, 'Egypt is highly active in environment and climate change initiatives. It hosted COP27 in Sharm El-Sheikh from November 6th to 18th, 2022.' 'One of Egypt's top priorities is to transition to a green economy by adopting its practices and business models as well as new clean energy. This shift depends heavily on importing advanced technology. So, international trade tensions sparked by Trump's policies could disrupt Egypt's current and future green transition plans,' she clarifies. Mamdouh further emphasizes that geopolitics affect energy and gold markets. 'Securing Egypt's energy needs could face different challenges due to critical regional circumstances. What happens when other development plans requiring advanced technologies face similar difficulties? This is a simple question that needs to be addressed,' she points out. Adapting to Global Trade Dynamics Yet, Egypt can mitigate the risks of sanctions and tariffs by strengthening partnerships and diversifying its global economic relations. Riad suggests the need to look beyond the US, stating, 'Egypt should boost ties with the EU, Africa, and Asia, particularly China and India, to create alternative trade options.' 'Trade agreements like the Africa Continental Free Trade Area (AfCFTA) can give Egypt access to a larger market within the continent. Egypt can also solidify its role in regional organizations, such as the Arab League, the African Union, and the Middle East's economic forums,' as per Riad. 'By fostering intra-regional trade, Egypt can cushion itself against external sanctions or tariffs, ensuring that regional economic cooperation serves as a buffer,' Riad notes. The changing global trade dynamics, led by Trumps decisions, require Egypt to adapt. According to Mamdouh, 'The key is economic strength by learning from previous global economic crises, reinforcing domestic economic structure, and building institutions based on accountability and transparency.' Mamdouh adds. Despite the challenges posed by the US trade policies under President Trump, Egypt's trade dynamics are evolving. As Egypt's trade relationship with the US has seen growth in both imports and exports, tariffs and rising protectionism present challenges and opportunities for the future.
