Contacts between India and Djibouti have existed since ancient times when Djiboutian traders traded in hides and skins for Indian perfumes and spices. The port of Adulis was the hub of maritime trade where Indian seafarers traded in spices and silk for gold and ivory. More recently, bilateral commercial relations received a boost with the visit of the President of Djibouti to India in May 2003.
Economic Relation with India
Djibouti Government generally encourages and promotes Indian investment and business. Given the small size and population of Djibouti, so far there has been no direct Indian investment in Djibouti by Indian companies, except for Indian owned businessmen from Dubai increasingly investing in the logistics sector of Djibouti. Djibouti is keen to develop economic and development partnership with India especially in the areas of education, health, information technology, agriculture, small scale industries, portable electricity generation, fisheries and water resource development. In the area of rural electrification, IRCON had conducted feasibility study for rehabilitation works of rural electrification in Djibouti. M/s Kirloskar had supplied generator sets for power production. The Minister of Economy, Finance & Industry of Djibouti attended the India-Africa Trade Ministers’ Meeting in New Delhi in October 2015 on the margins of the 3rd India-Africa Forum Summit.
The bilateral trade stood at US$ 381.49 million in 2017-18, out of which India’s exports to Djibouti were US$ 376.46 million and imports were US$ 5.44 million. Exports from India consist mainly of iron & steel products, paper and plastic products, machinery, metals, yarns & fabrics, food items and drugs & pharmaceuticals etc. During 2017-18, major imports by India from Djibouti were hides and skins, metal scraps and leather. Bilateral trade is in India’s favor. Most of the trade with Djibouti actually serves the growing market in Ethiopia. The main items which have shown increase in Indian exports are: iron & steel products, paper and plastic products.
Bilateral Investment Promotion and Protection Agreement (BIPPA) signed at New Delhi on 19th May 2003 but not enforced yet, (ii) Civil Aviation Agreement signed at New Delhi on 19th May 2003, (iii) Pan-African e-Network Agreement signed between TCIL and Djibouti on 21st June, 2006.Â
Lines of Credit:
India actively collaborated with the Government of Djibouti in its developmental projects. Government of India has extended four Lines of Credit (LOC) aggregating nearly US $ 50 million to Djibouti for financing the Ali Sabieh Cement Project being constructed at Ali Sabieh, the second largest city of Djibouti, about 150 kms from Djibouti. The Djiboutian Minister of Economy and Finance visited India from 8-11 March 2015 for signing LoC Agreement with the EXIM Bank of India. Djibouti Government recently sought Government of India’s assistance for developing the SME sector in Djibouti, and in the health care sector for deputation/training of medical personnel and supplying specialized medical equipment.
Joint Trade Commission:
During the visit of President of Djibouti to India in 2003, an MoU was singed for setting up a JBC between FICCI and Djibouti Business Chambers. The two sides also pledged to study the proposal for establishment of a Joint Commission to coordinate bilateral relations in political, commercial, economic, cultural and other fields.Â
Trade and Investment Opportunities for Indian companies:
The small size and population of Djibouti limits the scope of trade and investments. Djibouti has good potential in the areas of IT, distribution and service centers, construction, roads, railways, rural electrification, small-scale industries, education and for joint ventures in pharmaceuticals and textiles etc. Due to Djibouti’s strategic location, the government has taken various initiatives which could contribute to more business opportunities. Djibouti qualifies for preferential access to the US market under the African Growth and Opportunities Act (AGOA). There are no specific trade-related issues or commercial disputes with Djibouti. They have always maintained a positive approach to Indian trade and economic activity there.
Bilateral trade between India and Djibouti
Source: Department of Commerce
India-Djibouti Bilateral Trade