According to an India Exim Bank report, a Preferential Trade Agreement (PTA) between India and the countries of the South African Customs Union will strengthen future partnerships as the region has emerged as an important partner for India, both as an export destination and an import source. The South African Customs Union (SACU) is a customs union that includes Botswana, Eswatini, Lesotho, Namibia, and South Africa. SACU is the world’s oldest customs union, having been founded in 1910. These countries, along with Angola, the Democratic Republic of the Congo, Malawi, Mozambique, Tanzania, Zambia, and Zimbabwe, are also members of the Southern African Development Community (SADC), as are the island nations of Mauritius, Seychelles, Comoros, and Madagascar.
According to the report, India has been trading with SADC for many decades, and its trade deficit with SADC will be USD 5.4 billion in 2021. However, if the India-SACU PTA is signed, this could change dramatically. “The ongoing negotiations for a Preferential Trade Agreement (PTA) between India and the SACU countries have laid the groundwork for India and SACU’s future partnership.” The PTA is aimed at cementing and expanding the burgeoning trade relations between India and the SACU member countries,” the report said.
According to the report, India has been trading with SADC for many decades, and its trade deficit with SADC will be USD 5.4 billion in 2021. However, if the India-SACU PTA is signed, this could change dramatically. “The ongoing negotiations for a Preferential Trade Agreement (PTA) between India and the SACU countries have laid the groundwork for India and SACU’s future partnership.” The PTA is aimed at cementing and expanding the burgeoning trade relations between India and the SACU member countries,” the report said. The first round of negotiations for the India-SACU PTA took place in Pretoria in 2007, and four more rounds took place in Namibia, New Delhi, and Pretoria until 2010. “India is an important trading partner for SACU, accounting for 8.9 percent of total SACU exports and supplying 5.9 percent of total SACU imports in 2021,” according to the report. “From USD 5.1 billion in 2012 to USD 6.4 billion in 2021, India’s exports to SACU increased.” Similarly, India’s SACU imports increased from USD 8.2 billion in 2012 to USD 12 billion in 2021, according to the report.
In 2021, India had a trade deficit with SACU of USD 5.6 billion, primarily in commodities such as pearls, precious stones, and metals; mineral fuels and oils; copper and articles; and ores, slag, and ash, among others. According to the report, India had a trade deficit with South Africa (USD 5.1 billion), Botswana (USD 332.7 million), and Eswatini (USD 260.3 million) in 2021 within SACU. South Africa accounts for 93.4 percent of India’s exports to SACU, while South Africa accounts for 92.2 percent of India’s imports from the region. According to the report, India’s exports to SACU are relatively diverse, with refined petroleum, motor vehicles, pharmaceuticals, light vessels, fire floats, floating cranes and other vessels, and unmounted diamonds accounting for the majority of the country’s exports in 2021. India imports raw primary or semi-processed commodities from SACU.
Natural or cultured pearls, precious or semi-precious stones, and metals account for half of the Indian imports from SACU, along with unwrought gold, unworked non-industrial diamonds, and platinum. Trade with the small island nation of Mauritius was punching above its weight, owing largely to the tax breaks it provided. “As Indian companies have become more globalised, many have chosen to use their locally incorporated subsidiaries abroad to invest, establish holding companies and/or special purpose vehicles, or other regional financial centres, such as Mauritius, which provide tax benefits for raising funds and investing in third countries,” as per the report.
