Economy Oct 28, 2011
Libya has entered a new political phase, with the regime of Col Gaddafi coming to a bloody end. So how will India be impacted?
Indo-Libyan trade relations have been on an uptrend over the years. A look at the past five years' data on merchandise trade between the two economies shows a five-fold increase from $ 221 million in 2006-07 to $ 1.1 billion in 2010-11, taking into account even the recessionary period.
Exports to Libya from India, expectedly, are much higher than imports - with the former accounting for around a third of total trade. The big question, however, is how much trade can grow now.
Libya is a very small economy of less than $100 billion, with a fair number of near-term problems to deal with like high unemployment and poverty. Some estimates put Libyan unemployment over 30 percent.
Nevertheless, Indian companies seem to have found a market in Libya, with some of the largest Indian names being present in the country. Companies like Indian Oil, Oil India and ONGC Videsh have a presence in the natural resource-rich country. Bhel, i-Flex Solutions, Punj Lloyd, Unitech, and Sun Pharma, among others, have executed projects in Libya as well.
How far will India's economic relations develop with Libya? Some of the latest analyses point to the possibility of Nato-backed economies benefiting from the initial infrastructure spending in Libya.
It needs to be noted that India, along with China, did not back the Nato move to end the Gaddafi regime. Now, of course, India has extended help to the Libyan National Transition Council through France.
How the relationship between India and Libya progresses in the future will be dependent crucially on how the political framework of Libya builds up and it might be years before a clear picture emerges.
For India, however, it might pay to remember that the economy might be small and its trade smaller, but India does not play a crucial role even there at present. There is room for building up economic relations with Libya.
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