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THE CATALYST GROUP I Most Trusted Study Group in India
India-Egypt summit
Context: Prime Minister Narendra Modi’s visit to Egypt (June 24-25, 2023).
Introduction:
India and Egypt, two ancient civilizations, have a longstanding history of cultural and
economic ties that date back centuries.
With shared values of democracy, diversity, and strategic regional importance, the
bilateral relationship between the two nations has been growing steadily over the years.
Despite historical goodwill and cultural exchanges, tangible outcomes have been limited.
Therefore, historical inspiration must be invoked to enhance bilateral relevance and
substance, building upon the rich past of India-Egypt relations.
Performance of bilateral ties:
In the fiscal year 2022-23, India’s trade with Egypt amounted to $6,061 million, with a
significant portion being petroleum-related.
However, this figure represented a 17% decline from the previous year. Egypt ranked as
India’s sixth largest trading partner, while India stood at the 38th position for Egypt.
Indian investments in Egypt totaled $3.15 billion across 50 projects, with a substantial
portion contributed by a single company. On the other hand, Egypt’s investments in India
were only $37 million.
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THE CATALYST GROUP I Most Trusted Study Group in India
The current underperformance of bilateral ties cannot be attributed to a lack of bilateral
institutional mechanisms, as numerous mechanisms exist.
These include a Joint Commission, Foreign Office Consultations, and various joint working
groups.
Furthermore, both countries have witnessed visits from their Defense and External Affairs
Ministers, and a bilateral summit was held less than five months ago when the Egyptian
President, Abdel Fattah El-Sisi, visited India.
Opportunities and challenges:
The upcoming Cairo Summit must seize the opportunities available while navigating
potential challenges.
With a large population of 105 million and a significant economy worth $378 billion, Egypt
offers considerable potential for collaboration.
The country’s major imports, including refined petroleum, wheat, cars, corn, and
pharmaceuticals, present opportunities for India to supply.
Egypt’s ambitious infrastructure development agenda, encompassing 49 mega projects
such as New Cairo ($58 billion), a nuclear power plant ($25 billion), and a high-speed rail
network ($23 billion), further opens avenues for cooperation with India.
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THE CATALYST GROUP I Most Trusted Study Group in India
Additionally, Egypt’s position as the world’s third-largest arms importer during 2015-19
provides potential opportunities for defense trade.
However, these opportunities are countered by substantial challenges.
Egypt’s economy is currently facing a severe crisis, with significant financial commitments
coinciding with a stagnant economy, global slowdown, pandemic, and the Ukraine conflict.
These factors have led to a decline in tourism and increased costs for essential imports
like cereals.
Annual inflation has surpassed 30%, and the currency has depreciated by more than half
since February 2022. Foreign exchange scarcity has forced the deferral of payments for
crucial items like wheat.
While a $3 billion bailout package was secured from the International Monetary Fund six
months ago, it is conditional upon implementing challenging economic reforms. However,
progress in these reforms has been hindered by entrenched interests and crony capitalism,
resulting in a slowdown.
Egypt’s foreign debt stands at over $163 billion, equivalent to 43% of its GDP, and the
country’s net foreign assets are in negative territory at minus $24.1 billion.