India opens Sh70bn gap over China in trade with Kenya

India has opened a Sh70 billion gap over its nearest competitor China in value of trade with Kenya, setting the emerging Asian economy on course to retaining its position as the leading source of Kenyan imports for a second year in a row.

Kenya’s imports from India in the 11 months to November 2013 stood at Sh224.03 billion, compared to purchases from China which stood at Sh165.7 billion.

In a comparative period in 2012, Indian exports stood at Sh174.6 billion, compared to China’s Sh154.7 billion, meaning India has grown its exports by 28 per cent compared to China’s seven per cent over the period.

“Industrial supplies (non-food) were the main import category in November 2013 with a share of 30.3 per cent, while the values of fuel and lubricants, machinery and other capital equipment and transport equipment registered shares of 21.87, 18.03 and 10.65 per cent respectively,” said the Kenya National Bureau of Standards (KNBS) in its latest economic report.

Kenya’s total import bill stood at Sh1.29 trillion in the 11 months to November, compared to Sh1.26 trillion over a similar period in 2012.

Indian exports to Kenya mainly include electrical machinery, steel products, hand and machine tools, vehicles, yarn, petroleum products, pharmaceuticals, and paper.

Indian firms have also made significant inroads supplying equipment to mining, healthcare and energy sectors in Kenya in recent years.

Kenya’s three biggest import goods categories are largely drawn from the Indian export portfolio, with India also enjoying the advantage of proximity to Kenya through its western seaboard ports.

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Kenya, on the other hand, exported soda ash, coffee, leather, vegetables, synthetic fibres, wool, cereals and scrap metal to India.

A weaker Indian rupee in the second half of 2013 boosted the country’s export volumes across the world, with Kenya in seeing a rise in value of imports from India in September and October.

This would have the effect of making Kenyan imports from India more costly, while at the same time reducing the amount that Kenyan exporters get for their products shipped to the Asian country.

The Indian rupee in the first week of September 2013 depreciated to its lowest level of about 66 units to the dollar, with the rate standing at 62 cents on Friday last week.

The Kenya shilling has also strengthened against the rupee in the past one year, from a rate of 1.58 units to the Indian currency in January 2013 to 1.38 units on Friday, according to official Central Bank of Kenya data. The shilling touched a high of 1.28 units to the Rupee at the beginning of September.

Imports from India in September and October stood at Sh31.02 billion and Sh34.1 billion respectively, the only months in the year when the cost exceeded Sh30 billion.

The balance of trade between the two countries stood at Sh187.7 billion in 2012 compared to Sh139.2 billion a year earlier.

Big-ticket contracts

India overtook China and the United Arab Emirates as the leading source of Kenyan imports in 2012.

This was attributed by the Indian High Commission in Nairobi to intensified search for opportunities in Nairobi by Indian investors, which yielded big-ticket contracts in healthcare and energy sectors.

“Kenya has become an important market for Indian firms and most have intensified their search for business opportunities with very positive results,” said former deputy High Commissioner at the Indian embassy Tanmaya Lal in an interview with the Business Daily last year.