Context

• The decision to invite President Abdel Fattah al Sisi of Egypt as the Chief Guest on Republic Day is an important gesture and should go a long way in imparting fresh momentum to India’s ties with the largest country in the Arab world.

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What makes Egypt a pivotal player?

• With a population of almost 110 million, a location that straddles Africa and Asia, a standing army that is the largest in the region, a capital that hosts the League of Arab States and a diplomatic presence that punches above its weight in global affairs, Egypt is a pivotal player.

Why Egypt matters to India?

• Close relationship immediately after Independence: It is a country with which India enjoyed an exceptionally close relationship in the first couple of decades after our independence.
• Shared vision of NAM: The personal equation between Prime Minister Nehru and President Nasser was legendary and the two also became the stalwarts of the nonaligned movement during the Cold War of the 1960s.
• Joint fighter project: At the political level, the two countries were close enough for India to send clandestine arms shipments to Egypt during the Suez crisis in 1956 and contemplate nuclear cooperation and a joint fighter project in the 1960s.
• Indian literature in Egypt: It was a time when Mahatma Gandhi and Rabindranath Tagore were household names and their works were translated into Arabic by leading figures of Arab literature.

A drift for almost 30 years

• The two countries drifted apart Particularly during President Hosni Mubarak’s long innings from 1981 to 2011.
• According to diplomatic folklore, an apparently minor protocol gaffe over seating arrangements during the New Delhi NAM summit in 1983 was seen as a personal affront and it took all of 25 years before Mubarak could be persuaded to return to India in November 2008.

Growing ties and willingness to work together 

• Egypt showed its intent to work together: President Sisi came into power in 2014 and Egypt again showed its intent, first through his participation in the India-Africa Forum Summit in Delhi in 2015 and again through a state visit in 2016.
• Back-to-back visits by India and emphasis on defence cooperation: Defence cooperation is clearly one of the themes and high-level exchanges over the last two years led to Desert Warrior, the first-ever joint tactical exercise by the air force of the two countries, with IAF sending five Mirage 2000 fighters and a refuelling aircraft to El Berigat Airbase in Egypt.
• Egyptian interest in India’s Tejas and Dhruv: The Egyptians have also shown some interest in India’s Tejas fighter jets and Dhruv light attack helicopters, although this is still at a fairly preliminary stage.
• Cooperation to counter hostilities: Equally important is the behind-the-scenes support provided by them in countering hostile moves by Pakistan at forums like the Organisation of Islamic Cooperation (OIC) and by refraining from making any adverse comment during the Nupur Sharma affair.
• Mutual goodwill: Both countries also demonstrated mutual goodwill by helping each other at crucial times over the last two years.
• Remdesivir supplied by Egypt to India: When India was hit hard by the second wave of COVID-19, Egypt responded by dispatching three plane loads of medical supplies and providing 300,000 doses of Remdesivir in May 2021.
• India reciprocated by supplying wheat: India reciprocated a year later when Egypt, the world’s largest importer of wheat, was facing a dire situation following the abrupt halt in wheat shipments from Ukraine. The Indian response also paved the way for Egypt to visit India’s wheat growing areas and register India for regular wheat exports to the country.
• Bilateral trade is well below the potential but it is growing: Bolstered by these tailwinds, bilateral trade has grown by almost 75 percent last year to touch US$ 7 billion, although this is well below the potential, given the size of the two economies. But it is Egypt’s emerging investment scenario that offers a more interesting opportunity.

Current status of Egypt’s economy and India’s investment

• Egypt’s economy is struggling: Growth in the non-oil sector has been anaemic, foreign exchange reserves have dwindled and the Egyptian pound has been in free fall, with the International Monetary Fund (IMF) administering a bitter dose of medicine to fix some of the problems.
• Economic and administrative reforms: After several abortive starts and forced by the gravity of the economic crisis, the Egyptian government finally seems to be getting serious about implementing both economic and administrative reforms
• Ease of doing business is welcomed by India: Indian companies have invested in Egypt and by and large, they have done well. Indian companies are positive in their feedback, with some saying quite candidly that after years of apathy, they are finally being heard and action is being taken to make ease of doing business a reality.
• Plan to develop Suez Canal Economic zone into global manufacturing hub: The ambitious plans to develop the Suez Canal Economic Zone into a global manufacturing hub are now gathering critical mass. Gurgaon-based ReNew Power seems to be the first off the blocks from India and has signed an agreement to set up a Green Hydrogen facility. It is clearly driven by attractive tax incentives, cheap and abundant land, 365 days of sun to produce the solar energy needed for the electrolysers, and the strategic location that makes it easy to access the European markets.

Way ahead to further improve the ties

• For India, a deeper economic engagement with Egypt therefore acquires an additional strategic imperative.
• While Egypt clearly needs to do more to market itself as an investment destination in India, it is also important for industry bodies like CII, FICCI and ASSOCHAM to take a more pro-active approach.
• ReNew Power has shown the way but it will need a joint government-industry initiative to acquire the scale needed to make an impact.

Conclusion

• For now, there are clear indications that India under Prime Minister Modi and Egypt under President Sisi may finally be moving towards achieving some of the potential in bilateral ties that has remained unfulfilled for the last four decades.

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