A Snapshot of Growth and Development
Kenya is the largest economy in East Africa, with a GDP of $109 billion in 2021, and has undergone significant economic growth in recent years. The Kenyan government has made substantial investments in infrastructure, agriculture, healthcare, housing, and manufacturing, with the goal of becoming a newly industrialized nation by 2030.
The country has a market-based economy with a few state-owned enterprises. Kenya is an emerging market and an industrialized nation, surpassing its East African neighbors in terms of economic development. Major industries in the country include agriculture, forestry, fishing, mining, manufacturing, energy, tourism and financial services. Kenya is also rich in natural resources, including minerals such as titanium, coal, and gold. The mining sector has been expanding in recent years, with the government investing in infrastructure to support exploration and extraction. The energy sector is also a significant contributor to the economy, with hydroelectric power and geothermal energy being the primary sources of electricity.
Manufacturing is an important sector in Kenya. Kenyan Manufacturers have recently unveiled a roadmap to increase the sector’s contribution to the GDP to 20% by 2030. The government has implemented policies aimed at promoting local industries, particularly in the textile, leather, and food processing sectors.
The Kenyan economy has undergone significant growth in recent years, driven by investments in infrastructure, agriculture, healthcare, housing, and manufacturing. The country's economic agenda is aligned with its long-term development plan, Kenya's Vision 2030, which aims to transform the country into a competitive and prosperous nation. Despite challenges such as inflation and corruption, Kenya's economy has demonstrated resilience and is expected to continue growing in the coming years.
A growing and multi-faceted Relationship
India and Kenya, as maritime neighbors, have developed a strong and multi-faceted partnership in recent years, characterized by high-level visits, growing trade and investment, and collaboration in international fora. The two nations have been members of organizations such as the United Nations, Non-Aligned Movement, Commonwealth of Nations, G-77 and G-15, and the Indian Ocean Rim Association for Regional Cooperation, among others.
The India-Kenya Trade Agreement, signed in 1981, has played a significant role in strengthening trade relations between the two nations. As per the agreement, both countries granted Most Favoured Nation (MFN) status to each other, and several Joint Trade Committees were established to promote trade and investment. India is now one of the largest trading partners of Kenya, and the trade volume between the two nations has been consistently increasing over the years.
In addition to trade and investment, India and Kenya have also signed a bilateral Double Taxation Avoidance Agreement (DTAA), which helps to prevent double taxation of income and reduce tax evasion. The agreement was first signed in 1989 and revised in July 2016, coming into effect on 30th August 2017.
Overall, the partnership between India and Kenya has become increasingly robust and multi-faceted over the years, with both countries collaborating closely in areas such as trade, investment, and diplomacy. The close relationship between the two nations is likely to continue to grow and evolve in the years to come.
India and Kenya share a significant bilateral trade relationship in the engineering sector. This trade accounts for over 34% of the total merchandise trade between the two countries.
India's engineering exports to Kenya experienced a growth of 36% during the fiscal year 2021-22. However, during April-Feb 2022-23, there was a negative growth of around 11% compared to the same period last year. In contrast, engineering imports from Kenya registered a growth of 67% in 2021-22 but experienced a negative growth of 48% during April-Feb 2022-23.
Major engineering products exported from India to Kenya include industrial machinery for dairy and agriculture, iron and steel products, two and three-wheelers, electrical machinery and equipment, auto components/parts, aluminum and its products, and other construction machinery.
On the other hand, major engineering products imported by India from Kenya include copper and its products, aluminum and its products, iron and steel products, zinc and its products, industrial machinery including boilers, electrical machinery and equipment, and others.