India continues to shine as one of the largest containerised trade markets, registering significant growth of 11% in the first half of the year, with extensive opportunities for the South Africa–India trade going forward.
Increased use of the direct trade route between India and South Africa will facilitate better trade between the two nations, as products reach markets “faster and cheaper”, says Maersk Line Southern Africa trade manager Matthew Conroy.
“There are certain commodities, such as cement and scrap metal, where the transport time is less important,” he adds, explaining that perishable goods transported in refrigerated containers, such as food and pharmaceuticals, require a direct trade route to ensure efficient trade.
Conroy points out that India, one of the world’s fastest-growing economies, will be a lucrative trading partner for South Africa going forward, owing to its expanding automotive, telecommuni- cations and pharmaceuticals sectors. He adds that increased use of this route will open vast trade and commercial opportunities for both countries.
“Although Maersk has been transporting cargo to India for many years, we started calling directly to India only from February 2015, having previously transported goods through the Middle East. The direct route was established owing to increased demand and we have subsequently experienced an increase in the volumes of various commodities transported to India since early 2015.”
Conroy tells Engineering News that exports from South Africa to the Middle East have undergone an 8% decrease, while exports to India have remained flat. Imports from the Middle East have remained flat, but have increased between 5% and 7% from India.
According to trade statistics from the South African Revenue Service (Sars), exports to India from January to August amounted to about R30.65-billion, while imports totalled about R30.07-billion.
Conroy points out that the most common commodities currently being transported by Maersk to India are scrap metal, ore and timber.
“The direct trade route to India will not only improve this trade relationship but also stimulate various industries in South Africa. By exporting more manufactured commodities to India . . . to meet the country’s growing demands, the local manufacturing sector can be boosted significantly.”
He explains that India has a growing industrial sector, importing mostly raw scrap metal, timber and chrome from South Africa to manufacture final products such as vehicles. “[T]o stimulate South Africa’s economy, the amount of manufactured goods exported to India needs to increase. “This will, in turn, result in job creation and overall gross domestic product growth.”
Conroy says that increasing the trade levels of goods that can be sold in profitable quantities will also promote balanced and sustainable development of bilateral trade between the two countries.
“However, various restrictions, such as legislation, government regulations and high tariff duties on imported cargo, hinder trade between the two countries. Regulations on perishable goods are [more stringent] in India than in any other country in the region.”
Reducing the level of trade barriers and facilitating open trade between South Africa and India will result in more efficient trade operations and increased trade volumes, Conroy says.