As India’s demand for natural and manufactured resources increase, the country’s direct foreign investment into South Africa would increase in search of these resources.

Speaking at a forum hosted by research and strategy advisory firm Frontier Advisory on Thursday, the Consul General of India, Vikram Doraiswami said that India’s resources needs included coal, iron-ore for steel processing, oil and hydro power. “Name the product, and we need it.”

However, he noted that India’s investments in Africa might not be as obvious as those investments made by other countries, as India’s business model differed. “We don’t bring our labour and our banks. We use local labour and management talent, and at best we bring a couple of people over. So the Indian model is different and will never hit the radar screens quite as powerfully as other countries.”

Frontier Advisory division head Abdullah Varachia stated that despite the economic downturn, the Indian economy grew by between 6% and 8% this year, and was expected to do even better between 2010 and 2012.

Varachia noted, however, that investment into South Africa was unlikely to be limited to the resources sector, but would include investments into the automotive, pharmaceutical, industrial and construction sectors.

Doraiswami agreed, stating that Indian investment in Africa since the 1970s had shifted focus from oil and natural gases, to food preparation and packaging, extracting minerals and a significant participation in the retail sector.

“Taking that as an example, it clearly shows that there is capacity and ability within Indian businesses to apply themselves to the African market.”

He added that Indian products and services available to the local market was also suitable to it. “Another reason why Indian companies have gained a foothold in Africa is because they have not sought to introduce products that are inappropriate to the market. If your product works in India, it has a good chance to work in Africa.”

The investment was also not limited to global conglomerates, such as Tata, but Doraiswami noted that medium- and smaller-sized companies were now also looking to invest in Africa. “Most of the companies that contact the consulate seem to think that entering the South African market is the right first step to entering the African market as a whole.”

The business relationship between South Africa and India was driven by a number of factors, Varachia stated. Among these were a shared political history, as well as a large amount of Indian residents in South Africa.

“Countries like India and South Africa also play a very influential and close role in terms of advancing the agenda of the South. There have been a number of engagements in terms of south-south engagement, and one such instance can be seen in the expansion of the G8 into the G13, and we have even seen the emergence of the G20.”

Doraiswami estimated that India has made between $40-billion and $50-billion worth of investment into Africa between 1992 and 2007. However, it was difficult to corroborate the figure as the Indian government focused more on investment into India, rather than the investment that Indian companies made outside their own borders.

The investment into Africa, for the last decade, has been driven mainly by the Indian private sector, and Doraiswami noted that this was unlikely to change. However, he added that it was the role of the public sector to create an enabling environment for investment within other countries.

“To expect government to lead the charge in a coordinated strategy, in the sense that the government would provide the capital or backbone for it, I would be hesitant to think that it would go that far. And I don’t think that our private sector would want that.”

“What we can do as trade officials and government servants is to be part of the process by helping our flagship companies, to open doors for them where necessary. If our products are good, and I think they are, if our solutions are appropriate, and I think they are, we should be duty-bound to at least make that known.”