CECPA : A lever for boosting trade and economic cooperation, with Africa in focus

Whether India is projected to be the world’s fastest-growing economy by 2023, or a usd 7 trillion economy by 2030, Mauritius is set to play a leading role, both as a major FDI source country and as a platform for financial intermediation, facilitation and business opportunities, with Africa. moreover, the CECPA offers a window of opportunity to strengthen mauritius’s economic relations with India, and this will involve trade in services.

SINCE more than two years now, the Comprehensive Economic Cooperation and Partnership Agreement (CECPA) opened up a window of new opportunities for Indian and Mauritius businesses, investors and professionals. Revitalizing the enduring 76 years of multifaceted bilateral relations between India and Mauritius, the agreement aims at enhancing balanced investment flows, trade exchanges, as well as economic partnership and technical assistance. For Indian investors wishing to channel their investments to Africa, or African entrepreneurs wishing to set up their headquarters in Mauritius to access the opportunities of the CECPA, the Mauritian’s business and financial ecosystem stands as the pivot of the India-Mauritius-Africa axis. A strategic position to cherish and consolidate as India looked forward to soon cross the 100 billion USD mark in bilateral ties with Africa.

Of 98 billion USD in 2022-2023, bilateral ties are meant to exceed the 100 billion USD threshold soon, and continue to thrive in the future, indicated Subrahmanyam Jaishankar, India’s External Affairs Minister during the 18th CII-EXIM Bank Conclave on India-Africa Growth Partnership. “India and Africa have longstanding trade and economic linkages, as indeed they do in people-to-people contacts. India staunchly supported African countries in their quest to attain independence and to fight against colonialism and apartheid. This is important to recall because our ties are not transactional but represent the solidarity of a shared struggle. Africa therefore occupies an important place in India’s foreign policy. During the last nine years, this has been consciously stepped up under the direction of Prime Minister Narendra Modi. Our engagement with the continent has since witnessed 36 high-level visits from India and more than 100 high-level visits from Africa to India. The same empathy also shapes how we approach each other. India believes in forging a development partnership with Africa that is based on the needs and the priorities of our partners. This was clearly articulated by Prime Minister Modi as the core of the Kampala Principles that he enunciated in 2018. We are there for the long term, with a focus on promoting capabilities and creating capacities. For India, and it is important that our African partners appreciate this, the rise of Africa is key to global rebalancing,” pointed out Subrahmanyam Jaishankar.

According to IMF’s April 2023 Regional Economic Outlook on sub-Saharan Africa, the region is today, on an overall level, “almost equally connected with traditionally dominant (US and EU)and newly emerging (China, India, among others)partners”. Through the CECPA, growth in the African-Indian economic ties could be scaled up with Mauritius serving as an investment, trading, and business platform. “CECPA could further open the door for new business initiatives for both Mauritius and India. India is a growing powerhouse. This in itself opens a large array of opportunities for businesses in Mauritius. With respect to the African continent, countries are focusing on the Critical Raw material value chains and this could interest Indian companies, in particular those investing in clean energy development. In addition, Mauritius provides a good base for financial intermediation. This means that companies in Mauritius could provide such services both in the banking and the non-banking financial services sector,” admits Manisha Dookhony, economist and investment advisor for Africa.

Some Indian Companies are also looking at collaboration with Mauritius owing to our French speaking capabilities, Manisha Dookhony adds. These can provide common synergies on project development.

Uniquely positioned to engage both african and indian markets

Mauritius, through the CECPA, is uniquely positioned to engage both African and Indian markets, agrees Dave Seebaluck, Partner at Dewberry Investment Management. “Mauritius is the most prominent and reliable financial centre in the African region. It has the right attributes because it has the right agreement with several African nations. Of the 44 treaties in place, more than 15 treaties are with African nations. Mauritius, through the CECPA, is uniquely positioned to engage both African and Indian markets. Indian investors can leverage on the myriad of bilateral and multilateral agreements of Mauritius with African countries to access and promote their products preferentially. In today’s fractured world economy, the CECPA can re-engineer stagnant and increasingly growth models, tapping two insatiable markets (Africa and India) which hold the potential of uninterrupted growth. The soft skills brought in by Indian entrepreneurs may scale up the economic management for both Mauritians and Africans, thus giving an edge to international and regional standards.”

With the CECPA “being the first agreement signed by India with any country for over 10 years, and the first one signed with any African country”, it unfolds as the right move in enhancing regional policy coordination, argues Dave Seebaluck. EDB Mauritius is also of the opinion that “this strategic agreement” is in line with Mauritius position as a regional hub in the Asia-Africa corridor. According to the agency’s Guide to Development of the India-Mauritius CECPA, the India – Mauritius CECPA is even considered as the logical next step in further strengthening and enhancing the Indian- Mauritian ties. Entered into force on the 1st of April 2021, the CECPA covers trade in goods and services, investment, technical assistance, and economic cooperation.

“It will lead to significant mutual benefits in avery balanced manner by giving impetus to goods & services trade through preferential access. India is emerging as a global economic superpower and an enabler of leading technologies; Mauritius could thus be the ideal platform for India to expand its economic horizons, especially on the African continent.The India-Mauritius CECPA thus gives us a unique opportunity to prepare a proper market penetration strategy for selected Mauritian products that meet the standards, specifications and production capacity in servicing the Indian market. In reciprocity, along with the multitude of bilateral and multilateral trade and investment promotion agreements for Mauritius, Indian operators will be encouraged to use Mauritius as a trade and investment platform for their venture on theAfrican continent,” says EDB Mauritius in its ‘Guide to Development of the India-Mauritius CECPA’, which was circulated last September to mark the 75 years of bilateral ties between Mauritius and India.

25 Areas Of Cooperation Under The CECPA

In terms of trade in services, the CECPA brings in an array of opportunities in Mauritius for Indian institutions, investors, operators and professionals wishing to venture in the financial, tourism and travel-related services; and other business services, educational, cultural, recreational and sports, as well as distribution, transport services, telecommunication, yoga, audiovisual services, computer-related services, R&D, construction, environmental, and other professional services. How far are these business prospects currently known and explored? Many of the business areas covered by the trade in services provisions of the CECPA are expanding and opportunities are being explored, confirms Manisha Dookhony. Trade in services is likely to be quite beneficial for India. As per the commitments, Indian service providers have access to around 115 sub-sectors from 11 broad service sectors, reminds our interviewee.

“Additionally, the agreement contains clauses for the negotiation of mutual recognition for degrees and credentials in the fields of engineering, medicine, dentistry, architecture, accounting and auditing, nursing, veterinary medicine, and corporate secretariat. Because Mauritius is bilingual and has a highly qualified labour population, there is a lot of room for Indian service companies to set up shop in Mauritius and use it as a base to target both Anglophone and Francophone nations. In this area, there are already Indian firms in the financial services sector that are looking at setting up a base in Mauritius, in particular, to cater for their French-speaking business in Africa. There is a likelihood that as Mauritian and Indian economy consolidate their services sector, the trade in services benefits may even outweigh trade-related components (limited in current form).”

India’s External Affairs Minister Subrahmanyam Jaishankar also shared during the 18th CII-EXIM Bank Conclave on India-Africa Growth Partnership that India is encouraging its homegrown pharma and vaccine manufacturers to explore joint manufacturing facilities in the African countries. “Mauritius can attract a range of Indian centres of excellence including those in the research areas. Clinical and Pre-clinical trials can be done jointly. India can be a good source of talent for the development of the sector,” confirms Manisha Dookhony. Some interesting prospects for Mauritius as it looks to kick-start its pharmaceutical and nutraceutical sector.

Under the CECPA, some 25 areas of cooperation have been agreed under the General Economic Cooperation Chapter including robotics, pharmaceutical industry, ICT, financial sector, health, education, amongst others. “Mauritius is dependent largely on imported pharmaceutical products for supply to both public and private healthcare institutions. It represents MUR 9.9 billion of imports as of 2021. There is a high degree of envy by the government through the Economic Development Board (EDB) to develop a robust pharmaceutical industry. A plethora of incentives have been put up by the EDB to lure foreign investors into this industry. India ranks 3rd worldwide for pharmaceutical production. It may also promote exchanges in the areas of training and scientific research, healthcare services, collaboration in diagnosis and treatment. The pharmaceutical industry may have a regional dimension providing a framework for Indian investors to establish special economic zones (SEZs) in Mauritius for production of vaccine and subsequent exports to the African market,” highlights Dave Seebaluck.

An array of untapped potential in various sectors still lies ahead under the CECPA, and India’s rapid growth and interest for ongoing development partnership with Africa will undoubtedly usher a new era of relations between India and Mauritius. In fact, IMF raised in its July update of World Economic Outlook India’s growth forecast to 6.1% for 2023, and maintaining its 2024 growth forecast for India to 6.3%, sustaining thus expectations that India will be the world’s fastest growing major economy for 2023.