India to Expand Cross-Sector Business Ties with Egypt

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Researched by Industrial Info Resources (Sugar Land, Texas)--Indian industrial conglomerates Aditya Birla Group (ABG) (Mumbai) and Bajaj Auto Limited (BSE:532977) (Pune, Maharashtra) are seeking to expand their presence in Egypt. While ABG is looking to augment its investments in the region, Bajaj Auto has plans to set up a manufacturing unit in the country.

ABG is planning to invest $150 million in a silica plant in Alexandria, Egypt, in addition to expanding its carbon black factory in the city. The group currently operates two joint venture companies in Egypt: Alexandria Fiber Company SAE (AFCO) (Alexandria) and Alexandria Carbon Black Company SAE (ACB) (Cairo, Egypt).

ACB is the only carbon black manufacturer in the Middle Eastern and North African regions, catering primarily to the tire industry. With the distinction of being the world's largest single-location black carbon plant, the facility has a production capacity of 285,000 tons per year from the largest black carbon production line in the world. The product range includes various grades of carbon black. About 95% of the output is exported to 30 countries across the globe, including the United States, United Kingdom and Europe, after addressing domestic demand.

AFCO started commercial operations in 2006. It produces 18,000 tons per year of white and colored acrylic yarn for use across a range of sectors such as apparel and furnishings, as well as other industrial applications. Capacity expansion under way at the AFCO facility is aimed at increasing acrylic fiber output to 58,000 tons by this calendar year.

Bajaj Auto is planning to set up a factory in Egypt in a bid to foray into the regional two-wheeler market that is growing at an annual rate of 45%. About 20% of the two-wheeler market and the entire three-wheeler market in the region have yet to be tapped, making them ideal ventures for Bajaj Auto, which is a leader in the three-wheel auto-rickshaw segment and the second-largest producer of motorcycles in India.

Bajaj Auto is the flagship company of the Bajaj Group, and has an annual turnover of $936 million. It ranks fourth in the global list of automobile manufacturers involved in the production of two- and three-wheelers. The Bajaj brand enjoys a presence in Southeast Asia, Latin America, the Middle East and Africa. Established in 1926, the Bajaj Group has been active in several industrial segments, including home appliances, iron and steel, finance, leisure, lighting and insurance, in addition to its core business of automobile manufacturing spanning both two- and three-wheeler production. The group figures among the top 10 business establishments in the country.

In recent times, trade ties between India and the Middle East have been expanding, with both involved in ventures on each other's territory. Following the signing of a memorandum of understanding last year, India and Egypt are in the process of creating a framework for mutual cooperation. Countries of the Middle East are now looking beyond the oil and gas sector into other possible areas of interest. India is also preparing to finalize a free trade agreement with the Gulf Cooperation Council states of Oman, Qatar, Saudi Arabia, United Arab Emirates, Bahrain and Kuwait.

Indian companies operating in the Arab region are invested in oil and gas projects apart from executing or establishing ventures in the energy, manufacturing, construction and mining segments. While India offers expertise in education, information technology, governance, health and biotechnology, the capital-rich nations of the Middle East contribute to the energy and food ventures of the subcontinent.

India and Egypt are looking to increase bilateral trade to the tune of $10 billion in the next few years from the current trade volume of $3 billion, with Indian investments in Egypt likely to increase by $2 billion in the next two years. While renewable energy has been identified as an area of mutual cooperation, nuclear technology and higher education are segments where India can provide expertise. On the other hand, India hopes to utilize Egyptian know-how in the areas of desert agriculture and infrastructure development.

Although diplomatic ties between India and Egypt have been active for over 2,500 years, the full potential of the trade route is yet to be harnessed.

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