Egypt is considering allocating land to Indian industries in Suez Canal Economic Zone. How will this impact Indian industries? Let’s find out.
What’s Happening?
We all must have heard of the famous Suez Canal. It is the busiest waterway through which around 12% of global trade passes daily. This amounts to over US $1 trillion worth of goods per annum. It is the fastest trade link to get to Asia from Europe.
If you still don’t remember the Suez Canal, then you would definitely remember the incident of 2021 when a colossal container ship was stuck in a small canal diagonally, which bought the world trade to a standstill for seven long days!
You may be wondering why we are suddenly discussing the Suez Canal.
Well, because Egypt, which owns the Suez Canal, is considering allocating land to Indian industries in Suez Canal Economic Zone. This was announced in a joint statement issued on 26th January 2023.
Why is Egypt Allocating Land to Indian Industries?
To start with, Suez Canal is a crucial pathway for international trade located in Egypt. Obviously, the country would want to attract investments and capitalise on this resource as much as possible.
Understand it this way, Saudi Arabia is a hub of crude oil; hence, it tries to capitalise on its resources by selling oil at higher prices. Similarly, Egypt is making efforts to attract investments by offering land parcels close to the Suez Canal. China has already established a 7.34 sq km industrial estate within the Suez Canal Economic Zone.
It is still unclear whether India will be buying the land parcel or Egypt will offer the land on lease.
Recap of India-Egypt Friendship
Today, Egypt is one of India’s important trading partners from the African continent. But, the roots of this friendship go back to 1956 when Israel, Britain and France invaded the Suez Canal to gain control over it. But, during those days, India supported Egypt.
Cut to 1961, when Goa was still under Portuguese rule for 450 years. The then Prime Minister Pandit Jawaharlal Nehru had undertaken ‘Operation Vijay’ for the freedom of Goa. To help the Portuguese, António de Oliveira Salazar – the then President of the Council of Ministers of Portugal, had sent reinforcements, but the ships had to turn back, as Nasser – the then President of Egypt, refused to allow them to pass through the Suez Canal.
Since then, India and Egypt have been in a bilateral trade agreement. In 2018-19, India and Egypt’s bilateral trade reached US $4.55 billion. Due to the pandemic, the trade saw a dip, but later, in 2021-22, the trade reached a whopping US $7.26 billion, registering a 75% increase compared to FY 2020-21.
How Will The Land Allocation Impact Indian Industries?
The Suez Canal is a shortcut to reaching Asia from Europe, saving time and fuel. If India sets up its industrial estate in the Suez Canal, it will gear up the Indian manufacturing sector and boost international trade. As the industrial estate might manufacture and ship products from the Suez Canal itself, it will lead to low shipping costs and lifetime profits for Indian manufacturers.
Moreover, according to Deccan Herald, the Indian industrial estate in Suez Canal will help Indian companies expand their investments in Egypt and use the Arab Republic as a hub to get into West Asia, North Africa and Europe markets.
This will undoubtedly boost India’s dream of becoming the next potential manufacturing hub.
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