India and Kenya review developments in bilateral trade at Joint Trade Committee

Relationship between India and Kenya now evolved into a robust partnership, marked by regular high-level visits, increasing trade and investment as well as extensive people to people contacts.

The 9th Session of the India-Kenya Joint Trade Committee (JTC) was held on 19th – 20th August 2019 in New Delhi. The Indian delegation was led by Union Minister of Commerce & Industry and Railways, Piyush Goyal. The Kenyan delegation was led by Peter Munya, Minister of Industry, Trade and Cooperatives, Government of the Republic of Kenya.

Piyush Goyal highlighted that India and Kenya enjoy a close and cordial relation. He underscored the friendship and solidarity, strategic partnership and multifaceted- cooperation between the two countries. Relationship between India and Kenya now evolved into a robust partnership, marked by regular high-level visits, increasing trade and investment as well as extensive people to people contacts.

In his opening remarks, Peter Munya, Minister of Industry, Trade and Cooperatives, Government of the Republic of Kenya, thanked the Indian Government for a warm reception, hospitality and successful hosting of the 9th Session of the India-Kenya Joint Trade Committee. Peter Munya observed that India has been a long historical trading partner of Kenya and also wished to have a fair balance of trade between the two countries. In this regard, he emphasized the need to facilitate the movement of people, goods and services based on reciprocity.

Both sides acknowledged that the JTC is an ideal framework for trade and economic expansion between two countries and reaffirmed their commitments to deepen the trade and economic ties further.

Review of Bilateral Trade

Both sides reviewed the developments in their bilateral trade and noted the trends since the last session of the India-Kenya JTC held on August 2018.

In 2018-19 India’s top items of exports were petroleum products, drug formulations, biological and industrial machinery for dairy, paper, paper board, and products, plastic raw materials, two and three-wheelers, iron and steel, manmade yarn, fabrics made-ups, books, publications and printing, electric machinery and equipment. On the import side, it was inorganic chemicals, pulses, coffee, drug formulations, biologicals, copper and products made of copper, wood products, aluminum, products of aluminum, Tea and finished leather. Both sides stressed the need to enhance trade relations and also to diversify the trade basket.

Export Potentials

Both sides expressed their willingness to explore trade opportunities in sectors like manufacturing, agriculture, agro-processing, floriculture, aquaculture, Information, Communication and Technology (ICT) and in products such as base metals & articles thereof, textiles & textiles articles, vegetables and horticultural products, plastics & rubber, chemical products and machinery & mechanical appliances.

SPS Protocol

The Kenya side proposed a draft SPS protocol/agreement for India’s consideration. The Indian side took note of the same and assured to look into their proposal and respond at the earliest before the next JTC. The Kenyan side further requested to set up a Joint Working Group (JWG) on this issue. The Indian side responded that after going through the draft protocol submitted by the Kenyan side during the meeting, the appropriate response would be communicated to the Kenyan side.

Bilateral Investment

The Indian side informed that according to the Kenya Investment Authority (KenInvest), India is the second-largest investor in Kenya after the USA. Indian investments in Kenya are estimated to be over USD 3.5 billion, including some investment routed through other countries and by subsidiaries of Indian companies. Kenya ranks 70th (USD22.96 Million Foreign Direct Investments (FDI) from Kenya between April 2000 – March 2019) in the investor's list in India.

The Indian side informed that Invest India had signed MoU with other national Investment Promotion Agencies (IPAs) including that of Japan, South Korea, Canada, and Saudi Arabia. Based on the interest of the Government of Kenya, Invest India could sign an MoU with Kenya Investment Authority to promote the bilateral investment. The scope of such collaboration may encompass the following:

Exchange of information on investment opportunities, investment-related laws and regulations

Encourage the exchange of business missions

Assist existing and potential investors who seek opportunities for investment but face impediments to       

investment and to also provide further information on current laws and regulations to the potential investors.

International cooperation for building capacities

Both sides agreed to explore such possibilities. Kenya welcomed the proposal on investment from India with the hope that it will provide a framework to guide investment flows from both sides. Further, Kenya informed India that there are investment opportunities in the Special Economic Zones (SEZs) of Kenya.

Recognition of Indian Pharmacopeia (IP)

Indian side informed that Indian export of pharmaceutical products to Africa constitutes about 20% of India’s total Pharma exports, and this has grown consistently. Indian Pharma sector is helping the African countries in promoting domestic manufacturing. Recognition of Indian Pharmacopoeia (IP) is an important step which will further facilitate both exports as well as domestic manufacturing in Africa. The Indian side proposed a special discussion on the subject between respective agencies of both countries through a JWG to consider recognition of Indian Pharmacopoeia so that both the countries could take benefit from the arrangement. The Indian side also shared the Concept note on Indian Pharmacopeia. The Kenyan side took note of the request from the Indian side for constituting a JWG for the said purpose.

The Kenyan side encouraged Indian companies to invest in the Kenyan pharmaceutical sector. The Kenyan side further proposed the Indian side to consider a Government to Government purchase of critical medications such as medicine for Haemophilia, Post-Transplant Medicine and Cancer, among others.

Rice (Geographical Indication)

The Indian side informed that Basmati is special long grain aromatic rice cultivated in a particular geographical region of the Indian subcontinent. Basmati rice has been granted registration as a Geographical Indication (GI) in India by the certificate of registration according to the GI Registry in Chennai, India on February 2016. The Agricultural & Processed Food Products Export Development of Authority (APEDA) of India is the registered proprietor of the GI of Basmati rice and authentication of the product reaching the consumers in India and abroad.

It was further said that Kenya is operating several irrigation schemes under which rice is being grown and cultivated under the Bunyala Irrigation Scheme, Ahero Irrigation Scheme, Mwea Irrigation Scheme and West Kano Irrigation Scheme. It may be seen from the website of National Irrigation Board (NIB) that a strain of rice is being cultivated in Kenya under the irrigation described above schemes and being erroneously named as Basmati.

The Indian side stated that the issue was also reflected in Agreed Minutes of 2nd meeting of JCM held in New Delhi on March 2019. In the same meeting, the Kenyan side had promised to provide a copy of Kenyan court ruling on the subject, which is still awaited. The Indian side reiterated its request for a certified copy of the ruling. The Kenyan side welcomed the request from the Indian side and assured that it would take it up with the relevant Ministry to provide a certified copy of the court ruling.

India’s Investment in Kenya

Referring to the case of an Indian company, M/s.TATA Chemicals Magadi Ltd. (TCML), Africa's largest soda ash manufacturer and one of Kenya's leading exporters, the Indian side informed that High Court of Kenya, in its decision on 3rd May 2019, had quashed the demand of Ksh 17 billion put forth by the Kajiado County government and asked Ministry of Mines to mediate and resolve the disputed subject within 6 months. It also questioned whether retrospective enhancement of the land rate could be done. If yes, then what should be the rate, as TCML is already paying a royalty to the Ministry of Mines. It was further informed that M/s TCML had written to the Ministry of Mines for the mediation but two months have passed, and the Ministry has not replied. The Indian side also flagged the issue wherein the County Government had arbitrarily recently raised the bill for the water usage by the TCML township, whereas only Water Resource Management Authority (WRMA) is the competent authority for the same. The Indian side requested the Kenyan side for immediate intervention for an amicable resolution. The Kenyan side informed the Indian side that the matter was brought to the attention of the Ministry of Mining and discussions are going on to get the long-lasting solutions.

Strengthening of Bilateral Trade

The Kenyan side requested the Indian side to consider supporting Kenya’s private sector to participate in the following trade fairs:

India International Leather Fair February 2020SME products for Home Deco, July 2020iii) India International Footwear Fair, August 2020

The Indian side took note of the request and promised to forward it to the relevant authorities.

Review of the Lines of Credit

The Indian side stated that it offers development assistance to Kenya in the form of loans and credit. It was further informed that Export-Import Bank (EXIM) of India, has on behalf of Government of India, extended 4 Lines of Credit [LoCs] aggregating USD 206.55 million to Kenya. Contracts with a total amount of USD 93.73 million for the projects in areas such as power transmission lines and substations, development of SMEs and textile sector have been included under the LoCs. Details of four lines of credit are given below:

i. LoC of USD 61.60 million for Power Transmission Lines and Substations

The LoC Agreement was signed on November 16, 2010. Kenya Electricity Transmission Company Ltd. [KETRACO] is the implementing agency of the project. Under the LoC, three contracts are included, and one contract was terminated. Kenyan side is requested to resolve the right of way (RoW) issue for the early completion and closure of this project.

ii. LoC of USD 100 million for Agri Mechanization

The LoC Agreement was signed on January 11, 2017. The Ministry of Agriculture, Kenya, forwarded a plan of utilization along with the list of tractors and agricultural implements, proposed to be procured under the LoC. On March 23, 2017, EXIM Bank requested for two separate lists of equipment and implements along with cost break-up to enable preparation of the Prequalification (PQ) documents. On May 18, 2018, Government of Kenya requested for revision of the packages. The Ministry of Agriculture, Fisheries and Livestock is reworking the list of goods, services, and projects to include drip irrigation system, storage rooms, granaries, cotton ginning machines, construction of livestock & meat processing units, to be procured under the LoC. The Ministry is also looking at incorporating skill development and training component. EXIM Bank awaits project details along with its estimated cost and technical specifications of the requirement to enable PQ exercise. The contract inclusion period expired on July 11, 2018. On June 11, 2019, Government of Kenya requested for extension of credit availability till June 30, 2020.

The Indian side informed that the Department of Economic Affairs is examining the proposal of the Government of Kenya and assured to expedite the decision on the same.

iii. LoC for development of SMEsIDB Capital USD 15 million

The LoC Agreement was signed on July 11, 2016. A loan agreement to extend lines of credit of USD 15 million (as the first tranche out of USD 30 million) to IDB Capital Limited, Kenya for development of various SMEs was signed in July 2016. So far, six contracts aggregating to USD 3.10 million have been included under the LoC. One new contract aggregating to USD 0.94 million is at an initial stage of inclusion.

b) Kenya Industrial Estates Limited

Kenya requested a line of credit from India (EXIM Bank) to the tune of USD 30 million on concessionary terms to Kenya Industrial Estates for purposes of on-lending to the SMEs.

The Kenyan side requested the Indian side to lower the percentage for local content from India – from 75% to 51% to enhance the uptake.

The Indian side took note of the request and assured to forward it to the authority concerned.

iv.     LoC of USD 29.95 million for up-gradation of Rift Valley Textile (RIVATEX East Africa) Ltd.

Both sides noted the inauguration of upgradation of RIVATEX factory successfully done by President Kenyatta on 21st June 2019.     

The Indian side informed that an amount of USD 3,583,938.10 due for payment on August 05, 2019, towards interest for the LoC of USD 61.60 million and USD 29.95 million had not been received from the Government of Kenya as on date. Kenyan side assured to expedite their response soon.

Cooperation in Micro Small and Medium Enterprises Sector (MSME)

Keeping in view the extent and role of Small and Medium-Size Enterprise (SME) sector in India, the Kenyan side expressed interest in knowledge sharing in the SME sector.

Responding to this, the Indian side offered the following:

(i) To share its experience and expertise with Kenya, National Small Industries Corporation (NSIC) can offer fee-based consultancy services and training in the following areas of Micro and Small Enterprises (MSE) development. Capacity BuildingPolicy & Institutional FrameworkEntrepreneurship DevelopmentBusiness Development Services(ii) Skill up-gradation programmes for Kenyan entrepreneurs in selected areas such as CNC machining, sheet-metal technologies, CAD & CAM designing, wool processing & weaving, leather and textile technology, plastic technology and woodwork in Kenya or in India through its training and technology development centres on mutually agreed terms.

(iii) NSIC can undertake skill-based training programs at its Technical Centres in New Delhi or other Centres under Indian Technical and Economic Corporation (ITEC) program.

(iv)Setting up of Training, Incubation Centres for development of MSEs / Vocational Training Centres in Kenya.

(v) Establishment of Turnkey Projects for setting up small enterprises in Kenya on commercial terms.

(vi) To facilitate enterprise-to-enterprise cooperation, increase awareness and enhance investment / technology-based collaborations, exchange of business delegations from India to Kenya and from Kenya to India can be organized. These delegations can be sector-specific or represent 2-3 sectors as per the requirement.

The Kenyan side identified Micro and Small Enterprises Authority (MSEA) as the nodal agency for coordination with NSIC.

 Cooperation in the Power Sector

The Indian side stated that:

I. NTPC Limited has expressed its willingness for setting up Utility-Scale Solar Photovoltaic (PV) power Project(s), developing a Liquefied Natural Gas (LNG) based power projects, possible Joint Venture/Joint Development of power projects with KANGEN. It also expressed its readiness to provide training & development to Kenya power sector professionals for capacity building.

II. Indian PSUs have expressed their willingness to assist Kenya in the planning and implementation of their transmission system.

III. POWERGRID, a PSU under Ministry of Power, is keen to execute new projects in Kenya.

The Kenyan side took note of the proposals and agreed to take up with the relevant Ministry.

 Cooperation in Renewable Energy

The Indian side requested the Kenyan side to ratify and sign the International Solar Alliance (ISA) Framework Agreement. The Indian side also invited the Kenyan side to participate in the upcoming Third Edition of Global Renewable Energy Investors' Meet & Expo (3rd RE-INVEST) scheduled to be held from 31st October to 2nd November 2019 in New Delhi-National Capital Region (NCR).

The Indian side proposed an MoU between the Ministry of New and Renewable Energy (MNRE) and its Kenyan counterpart on cooperation in the field of renewable energy.

iii The Indian side said that India had set a power generation target of 175 GW from renewable energy sources by 2022 (Solar 100 GW, Wind 60 GW, Bio 10 GW, Small Hydro Power [SHP] 5 GW). The Indian side encouraged Kenya to participate and develop the solar and wind energy markets.

iv. The Indian side offered a collaboration between Institutes under Ministry of New and Renewable Energy (MNRE) like National Institute of Solar Energy (NISE), National Institute of Wind Energy (NIWE), Solar Energy Corporation of India Limited (SECI) and National Institute of Bio-Energy (NIBE) with Kenyan institutions in the areas of R&D, consultancy, training and capacity building and resource assessment.

The Kenyan side accepted the invitation to participate in 3rd RE-Invest and took the note of the proposals by the Indian side and assured to respond soon.

 Cooperation in Housing & Urban Development

i. Both sides recalled the productive discussions held in the 2nd meeting of India-Kenya Joint Technical Committee (JTC) on Housing, held in Nairobi on 30th May 2019, on the sidelines of the 1stUN-HABITAT Assembly and agreed to expand cooperation in the field of housing through capacity building of Kenyan officials. It was also decided to share the policies and best practices in the area mutually and to organize a Conference on Housing in India and exploring partnership between Kenya Institute of Housing and Building Technology (KIHBT) and Building Materials and Technology Promotion Council (BMTPC), India.

ii. Both sides also agreed to expand the MoU signed between the Ministry of Housing and Urban Affairs, the Government of the Republic of Kenya on cooperation in the field of National Housing Policy Development and Management on 11th July 2016 to strengthen cooperation in the areas of sustainable urban development including smart cities, water, and waste management and urban mobility.

Kenyan side requested for technical assistance to support the implementation of Kenyan urban and affordable housing programs. Indian side responded that it is open to provide all kinds of technical support in the housing sector. Cooperation in Petroleum and Natural Gas

The Indian side stated that:

ONGC Videsh Limited (OVL) is also ready to offer its cutting-edge technologies and services of experienced geoscientists to carry out joint studies in areas of mutual interest spanning exploration, production, and development.

Indian PSUs have expressed their interest to work in specific areas of oil and gas business such as LPG marketing & distribution and Lube business, with Kenya.

Further, three Indian Public Sector Units (PSUs), OVL, Indian Oil Corporation (IOCL) and Bharat Petro Resources Limited (BPRL), (BPRL, a wholly-owned subsidiary of BPCL) have expressed their interest to participate in the opportunities for conventional producing / near producing assets based on techno-commercial considerations. They are also keen to participate in the next oil & gas bidding rounds in Kenya.

Indian PSU EIL (Engineers India Limited) has also expressed its interest in providing engineering consultancy services from concept to commissioning in the hydrocarbons sector covering offshore and onshore oil and gas, petroleum refineries, petrochemicals, pipelines, terminals, and storages facilities.

The Kenyan side took note of the request by the Indian side and will relay the information to the relevant Ministry.

Cooperation in Standards

The Indian side said that following the signing of the Memorandum of Understanding (MoU) between Bureau of Indian Standards (BIS) and Kenya Bureau of Standards (KEBS) on 11th July 2016 for cooperation in the fields of standardization, conformity assessment, and training, BIS has exchanged information on its activities. Similar information from the Kenyan side was sought for strengthening the cooperation in compliance with the provisions of the MoU. BIS has also shared information on the capacity building program being organized by BIS for consideration and utilization of KEBS.

It was further informed that BIS had proposed an Action Plan for the implementation of the provisions of the MoU signed on 27th Dec 2016 for consideration to the Kenyan side. Follow-ups were made on 15th June 2017, 14th August 2018, 13th November 2018 and in March 2019 during the visit of the Kenyan delegation to BIS. However, the response of the Kenyan side is awaited. The Kenyan side assured to expedite the response by the end of October 2019.Cooperation in Civil Aviation

i. The Indian side informed that Air India desires to operate to Mombassa on the code-sharing arrangement with Ethiopian Airlines. It is planning to operate on New Delhi–Addis Ababa-Mombasa route.

The Kenyan side informed that Kenya Airways is interested in operating flights in code-sharing arrangements to Cochin, Chennai, Bangalore, and Kolkata.

Both sides agreed to expedite their responses on the respective requests.

 Training and Scholarships

The Kenyan side requested India to consider providing more scholarships in technical courses in Kenya’s priority areas such as medicine, engineering, space science, and hydrocarbons, donate learning equipment to Kenyan Universities and create partnerships between Indian and Kenyan Universities.

The Indian side said that Kenya is covered under the Africa Scholarship scheme of the Council. The fixed slots offered to Kenya are 52. The Slots utilized for the academic years 2016-17, 2017-18 and 2018-19, are 41, 22 and 28 respectively. For this current AY 2019-2020, out of 52 slots for Kenya, 56 applications have been received by the Council, out of which 41 confirmations have been sent to the Indian Mission.

The Kenyan side expressed the gratitude for the scholarships offered so far. Further, the Kenyan side requested the Indian side to consider awarding the full allocation of 52 scholarships. The Indian side stated that the information regarding the availability of courses and eligibility criteria for the applicants is available on ICCR’s A2A web portal. The Kenyan side may screen all the applicants based on the information available in this portal.

The Indian side took note of the request for giving more time to the applicants to file their applications. 

 Cooperation in Agricultural Research

The Indian side informed that the development of Work-Plan for the Agriculture Research and Education under the MoU signed on 11/01/2017 between Ministry of Agriculture & Farmers Welfare of Government of India and Ministry of Agriculture, Government of Kenya. The Indian side was of the view that cooperation between the Ministry of Livestock and Fisheries of the Government of Kenya with Department of Agricultural Research and Education (DARE)/ Indian Council of Agricultural Research (ICAR) in the agriculture and the allied sector could be taken forward.

The Kenyan side sought the financial and technical support to rehabilitate and modernize training facilities in bee-keeping, boost bee population and produce high-quality honey by enhancing Hive Products Quality Assurance Function through purchase and installation of honey analysis equipment and Revamping of the Bee Colony Multiplication Hub at the National Bee-keeping Institute. The Indian side took note of the same and assured to look into their proposal. 

Both the sides agreed to form a JWG to take the MoU forward.

 Cooperation in Anti-Counterfeit

The Kenyan side informed that it seeks collaboration in training anti-counterfeiting enforcement officers and other personnel on specific programs and events to better understand IP regimes. The cooperation includes:

Training on Intellectual Property Rights (IPRs), specifically on enforcement of IPRs and their link to international trade;Training on market intelligence gathering concerning counterfeiting;Training on the effectiveness of public outreach and training as a means to reduce the demand for counterfeit goods;Emerging technologies that improve efficiency in the management, protection, enforcement & identification of counterfeit goods; andExchange Programs on matters of counterfeiting.

The two countries agreed to work together in the fight against counterfeiting and other forms of illicit trade.

Cooperation in Immigration

The Kenyan side informed JTC that it has been issuing visas on arrival to Indian nationals and work permits expeditiously. For instance, in 2018 Kenya issued 6,263 work permits to Indian nationals.

The Kenyan side requested the Indian side for reciprocal treatment in regards to visa issuance at the Port of Entry and processing of work permits for Kenyans.

The Indian side noted the request and assured to forward the same to the relevant authorities.

The JTC was preceded by the Senior Officers Meeting on 19th August, 2019 which was co-chaired by Dr. Chris Kiptoo, Principal Secretary, State Department for Trade, Ministry of Industry, Trade and Cooperatives, Government of Republic of Kenya and Keshav Chandra, Joint Secretary (Africa), Department of Commerce, Government of India.

The discussions were conducted in a warm and cordial atmosphere reflecting the close and friendly relations between the two countries.

Both sides agreed to hold the next session of the Joint Trade Committee meeting in Nairobi to be decided mutually through diplomatic channels within the next two years.

In the recent past, there have been high-level visits from both sides affirming deep ties between both the countries. Suresh Prabhu, Minister of Commerce & Industry and Civil Aviation paid a State Visit to Kenya during 22nd – 25th August 2018 to co-chair the 8th Meeting of India-Kenya Joint Trade Committee, while Ambassador Monica Juma, Cabinet Secretary for Foreign Affairs, led Kenyan delegation to New Delhi during the Joint Commission Meeting (JCM) in March 2019. President Uhuru Kenyatta paid a State Visit to India from 10th to 12th January 2017 on an invitation extended by Prime Minister, Narendra Modi. The two leaders held official talks on 11th January in New Delhi. President Kenyatta attended the Vibrant Gujarat Summit 2017 on 10th January 2017. Dr. Harsh Vardhan, Minister of Environment, Forest and Climate Change, visited Kenya from 4th to 7th December 2017 to attend the 3rd Session of United Nations Environment Assembly. M. J. Akbar, Minister of State for External Affairs, visited Kenya from 27th to 28th November 2017 to attend the swearing-in ceremony of President Kenyatta.

Important Memorandum of Understanding (MoUs) /bilateral Agreements like the revised Double Taxation Avoidance Agreement (DTAA), bilateral agreement on exemption of visa for holders of Diplomatic passports, MoU on defence cooperation, MoU on Cooperation in the field of standardization and knowledge sharing between Bureau of Indian Standards and Bureau of Kenya Standards have been signed during the visits of dignitaries from Kenya and India.

(With Inputs from PIB)