This article analyses the current India-Kenya economic relations with an aim to explore the prospects of enhancing and diversifying these relations in a framework of mutual benefit and partnership. The Indo-African summit meeting in New Delhi in April 2008, also participated by the Kenyan representatives, provides the context for such an analysis. The bilateral relations also bear special significance as country-specific relations are emphasized in the globalised world. Though trade between India and Kenya has grown steadily it is yet to reach its full potential. In the changed international scenario there is a vast opportunity for India and Kenya to strengthen their economic ties. India’s good reputation in Africa, the large Indian diaspora, democratic values, assurance of equal partnership etc. is some of the factors that can play an important role in bilateral relations and in boosting trade.

Historical Ties

India shares with Kenya, an East African country, bordering Somalia, Ethiopia, Sudan, Uganda and Tanzania and connected with India through Indian Ocean, ties that date back to centuries.¹ India supported Kenya’s struggle for freedom, wherein many people of Indian origin living in Kenya also played an active role. In the post-independence scenario, Kenya was one of the first countries in Africa where India established a diplomatic mission (in 1948) that was later raised to the status of High Commission, after Kenya gained independence. Kenya and India have also been cooperating with each other in the international forums like United Nations, Non-Aligned Movement, Commonwealth, G-77 and G-15 as well as Indian Ocean Rim Association for Regional Cooperation.

Kenyan students have been pursuing higher education in India since 1950s. Additionally, every year many Kenyans take training in India and avail various Indian government sponsored scholarships. Kenya’s defence personnel have also been attending defence-training programmes in India. The two countries have the cultural exchange programme to enhance cultural ties. Tourist exchange is also an important aspect of relations between the two countries. The presence of a sizeable number of people of Indian origin in Kenya, playing a vital role in the Kenya’s economy, adds an important dimension to India-Kenya relationship.

Although trade links between India and Kenya go back several centuries, recent migration of Indians to Kenya took place in the late 19th century and early 20th century as indentured labourers under the British to build the Mombassa-Kampala railway line. There are about 70,000 persons of Indian origin and Indian nationals in Kenya today. The majority are Gujaratis, although there are several other communities, especially Sikhs, Bohras, Ismailis and Goans. The India diaspora is very successful in Kenya and they are playing a vital role in the country’s commerce and industry. Their hold on the Kenyan economy is estimated to be 35 percent.²

Economic Relations

The vast potential of Kenya as a gateway to Africa particularly Central, Eastern and Southern Africa makes it important for India. Trade links between India and Kenya strengthened in the post independence era. Following the signing of Indo-Kenya Trade Agreement in March 1981, under which both countries agreed to accord each other the Most Favoured Nation status, significant increase in the volume of trade was experienced. Following the introduction of economic liberalization in both countries in early 1990s, the trade volume grew further. The sessions of India-Kenya Joint Trade Committee, the India-Kenya Joint Business Council and regular Buyer-Seller Meetings between the business communities have played a key role in boosting economic ties.

India’s principal exports to Kenya include home appliances, machinery, drugs and pharmaceuticals, synthetic products, transport equipment, dyed fabric, rice, chemicals, fabrics, etc. Kenyan exports to India include cashew, leather and leather products, scrap metal, inorganic chemicals, dyeing, tanning and colouring materials, pearls, precious and semi-precious stones, soda ash, fluorspar, diatomite, pulse wattle bark extract, sisal and African handicrafts. India-Kenya partnership in technology transfer is significant in the areas of technical assistance.

In 2002, India ranked number four in terms of exports to Kenya and was at number 10 among the major markets for Kenyan products. There has been increase in the bilateral trade in the last four to five years with the recent volume of trade is at US$650 million. Some of the successful India-Kenya joint venture projects include the Birla paper plant at Webuie in eastern central Kenya, the wines and distilleries unit of Mohan Meakins and the assembling unit of the Kirloskars.

The Way Forward

The ‘Focus Africa’ initiative launched by the Government of India in 2002 to focus on the sub-Saharan region with added emphasis on seven major trading partners of the region- Nigeria, South Africa, Mauritius, Kenya, Ethiopia, Tanzania and Ghana- is seen by all stake holders as a good opportunity to boost India-Africa trade and investments. During the launch of the programme Lazarus O. Amayo, then High Commissioner of Kenya sought fresh investments from India in sectors such as fertilizers and pesticides, pharmaceuticals, dairy products, hotels and cashew.³

Indo-Kenya economic ties can increase manifold based on the complementarities of the two economies. There is a need to forge closer ties in the economic field to utilize the vast potentials optimally in a mutually beneficial way. There is a need to expand the existing areas of trade and investment as also to explore new avenues for cooperation. The potential areas for promoting cooperation include production of machine tools, setting up of mini-cement plants, cotton-ginning and mini-sugar plants, harnessing the water resource for irrigation, telecommunications, human resources development, etc. India also has appropriate technologies for the development of small-scale industries and thus there is vast scope to share this experience. Tourism and medical tourism are other areas where mutual cooperation can be quite beneficial. Several leading Indian companies like Reliance and TATA are seeking investment opportunities in Kenya. Indian diaspora can also be a major booster of the economic ties.