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India’s 250 Million Dollars ‘Line of Credit’ to Kenya

  • Category
    International Relations
  • Published
    9th Dec, 2023

Context

India has declared a $250 million line of credit to Kenya for the modernization of its agricultural sector. Need to look at outline of India Kenya relationship.

About

Line of Credit and diverse multi-dimensional cooperation

  • A $250 million line of credit to Kenya for modernisation of its agricultural sector during the visit Kenyan President William SamoeiRuto in New Delhi.
  • Besides this there were talks on to strengthen bilateral ties in the field of defence, trade, energy, digital public infrastructure and healthcare.
  • Signing of five pacts providing for cooperation in a range of areas including sports, education and digital solution, and unveiled a joint vision document to scale up maritime engagement in the Indian Ocean region.
  • Kenyan side offered land for farming to Indian companies under a cooperative model besides showing interest in India’s payment system, UPI (Unified Payments Interface).
  • Both the nations are unanimous in their that terrorism is the most serious challenge facing humanity and both sides have decided to increase counter-terror cooperation.
  • Both sides also deliberated on defence cooperation and emphasised on military exercises, capacity building as well as linking the defence industries of both the countries.
  • There is also an opportunity for Indian companies to take advantage of the conducive and attractive environment to invest in Kenya, especially in agriculture, manufacturing, pharmaceutical, health, green energy and green mobility sectors.

The Analytical perspective on relations:

  • The commitment of a substantial line of credit for agricultural modernization underlines India's strategic intent to collaborate on critical sectors for Kenya's development.
  • The emphasis on defense, counter-terrorism, and maritime engagement positions the relationship as strategic, considering shared geopolitical concerns. India's role in sharing technological expertise, especially in digital infrastructure, reflects its commitment to capacity-building and South-South cooperation.
  • The invitation for Indian investments aligns with the broader economic diplomacy objectives of both nations, marking a holistic approach to bilateral relations.

India-Kenya Bilateral Relations

India and Kenya are maritime neighbours with robust and multi-faceted partnership, marked by regular high-level visits, increasing trade and investment and extensive people to people contacts.

India established the office of Commissioner for British East Africa resident in Nairobi in 1948. Following Kenyan independence in December 1963, a High Commission was established.

Trade

  • An India-Kenya Trade Agreement was signed in 1981, under which both countries accorded Most Favoured Nation status to each other.
  • Main Indian exports to Kenya include petroleum products, pharmaceuticals, steel products, machinery, yarn, vehicles and power transmission equipment. Main Kenyan exports to India include soda ash, vegetables, tea, leather and metal scrap.
  • According to the Kenya Investment Authority (KenInvest), India is the second largest investor in Kenya. Over 60 major Indian companies have invested in various sectors including manufacturing, real estate, pharmaceuticals, telecom, IT & ITES, banking and agro-based industries. Indian investments have resulted in creation of thousands of direct jobs to Kenyans. Indian pharmaceutical companies have a substantial presence in Kenya. A bilateral Double Taxation Avoidance Agreement (DTAA) was signed in 1989. Revised DTAA was signed in July 2016 and came into force on 30 August 2017.

Development

  • India offers development assistance to Kenya in the form of loans and credit. Recently India given LOC of $250 million.
  • Recently two sides signed five pacts providing for cooperation in a range of areas including sports, education and digital solution, and unveiled a joint vision document to scale up maritime engagement in the Indian Ocean region.
  • India is the third largest source (other than neighbours) of inbound tourists to Kenya.
  • Indian Community and Diaspora in Kenya
  • Indians were trading with the Swahili coast since early historical times as evidenced by ancient works. With the region coming under Omani rule particularly Mogadishu, Mombasa and Zanzibar, Indian presence remained part of Swahili kaleidoscope.
  • With the advent of Portuguese and finally British, Indian involvement became deeper. Prominent figures of the Kenyan Indian community in Kenya’s pre-independence period included the labour leader Makhan Singh. M. A. Desai and Pio Gama Pinto participated actively in Kenya’s independence struggle.
  • A vibrant community of persons of Indian origin presently numbered around 80,000 including an estimated 20,000 Indian citizens.

Geographical Location of Kenya:

  • Kenya is located in East Africa. Its terrain rises from a low coastal plain on the Indian Ocean to mountains and plateaus at its center. Most Kenyans live in the highlands, where Nairobi, the capital, sits at an altitude of 5,500 feet
  • West of Nairobi the land descends to the Great Rift Valley, a 4,000-mile (6,400-kilometer) tear in the Earth's crust. Within this valley in the deserts of northern Kenya are the jade-green waters of famous Lake Turkana.
  • Kenya is bordered by South Sudan to the northwest, Ethiopia to the north, Somalia to the east, Uganda to the west, Tanzania to the south, and the Indian Ocean to the southeast. Kenya's geography, climate and population vary widely, ranging from cold snow-capped mountaintops (Batian, Nelion and Point Lenana on Mount Kenya) with vast surrounding forests, wildlife and fertile agricultural regions to temperate climates in western and rift valley counties and further on to dry less fertile arid and semi-arid areas and absolute deserts (Chalbi Desert and Nyiri Desert).
  • Kenya's capital and largest city is Nairobi.

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