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Modi begins Africa tour to attract trade, investment, and to offset China

India's globe-trotting Prime Minister Narendra Modi kicked off a four-nation African tour on Thursday, in yet another charm offensive to promote his country's goods, services and investments, as well to as offset China's expanding influence on the resource-rich continent.

The man behind the 'Make in India' campaign arrived in Mozambique on Thursday, and is scheduled to stop in South Africa, Tanzania and Kenya later this week.

"This visit is about trade but it's also about investment and geopolitical connections," Anil Gupta, professor of strategy and globalization at the University of Maryland, said.

Leaders including Guinea-Bissau's President José Mário Vaz (2L) Guinea's President Alpha Condé (C) look on during the India-Africa Forum Summit in New Delhi on October 29, 2015.
PRAKASH SINGH | AFP | Getty Images
Leaders including Guinea-Bissau's President José Mário Vaz (2L) Guinea's President Alpha Condé (C) look on during the India-Africa Forum Summit in New Delhi on October 29, 2015.

India wants to be a maritime leader in the Indian Ocean and because these countries are strategically located on Africa's east coast, they are of great importance to New Delhi, Gupta explained.

India and Africa share deep historical ties dating back to colonial years and a two million-strong Indian diaspora on the continent places New Delhi in a significant soft-power position. But the world's number two economy, India's key economical rival in Asia, is now the dominant foreign power in Africa. Chinese investment and loans have flooded the continent, in sectors ranging from real estate to shipping, giving Beijing enormous diplomatic and military clout as well as a secure grip on the continent's commodity wealth, particularly energy.

As a result, India has been finding ways to counterbalance China's supremacy, particularly in the realm of development finance.

"India's development diplomacy for the continent has been through a strategic shift," Rajrishi Singhal, senior fellow of geoeconomics studies at Mumbai-based think tank Gateway House, said in a recent note.

The Indian Export-Import (Exim) Bank, a government-owned institution that finances and promotes foreign trade, exemplifies that transition, he explained.

The bank's credit disbursal strategy to Africa was long centered on infrastructure and industrial projects, which placed India in direct competition with China. But as Exim looks to ramp up its investments over the next three years, it's more likely to focus more on service exports instead, Singhal noted.

Service exports include healthcare, education, and information technology services, areas that are India's traditional strengths in Africa, that may give the former a unique advantage over Beijing. In May, Exim extended $10 billion in lines of credit for healthcare projects across the continent. About 40 percent of Exim's total loan exposure is to Africa, local media reports said in 2015.

"Exim is also looking to sharpen its focus on another area of Indian strengths in Africa: project exports," Singhal added, referring to the term used for overseas construction and engineering projects. "It has requested the Reserve Bank of India to ease regulatory and compliance guidelines regarding minimum equity capital, leverage and the maximum that the bank can lend to a single borrower."

Geopolitics aside, alternative energies will also feature prominently on Modi's agenda, as India aims to triple its use of renewable energy by 2030.

The four countries on his tour are part of the International Solar Energy Alliance, an initiative that New Delhi launched at the CoP21 Climate Conference in Paris last year, Gupta noted. Across his tour and especially in Tanzania, Modi is scheduled to meet with "solar mamas," local women trained by Indian non-government organization Barefoot College to become solar power engineers.

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