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Egypt unrest: Indian cos keeping fingers crossed

By Ajay Modi in New Delhi
January 31, 2011 09:54 IST
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Indian companies with exposure to Egypt are keeping their fingers crossed as the Arab Republic is faced with a massive unrest.

Egypt has been one of India's most important trading partners in the African continent and therefore the ongoing crisis in Egypt is a matter of concern to India.

"The situation is highly volatile and disturbing. As a corporate with investments in Egypt, we are in a wait and watch mode. We hope the situation improves," RS Sharma, ONGC chairman and managing director said.

OVL, ONGC's overseas arm OVL and its partner IPR Red Sea Inc has made two significant oil field discoveries in the North Ramadan Concession in the Gulf of Suez. Further work is on at both these sites.

India also imports high quality cotton from Egypt. The yarn made from this cotton is used by premium garment manufacturers. "There will be no immediate impact. However, if this persists for a long time, say more than a couple of weeks, Indian importers will have to find an alternative supplier," said Prashant Agarwal, joint managing director, Wazir Advisers, a consultancy with focus on textile trade.

Bilateral trade between the two nations has grown significantly in past five years. Since 2001-02 (with the exception of 2004-05), India has been among the top five importers of Egyptian products. This is mainly on account of import of oil and gas from Egypt. Interestingly, the trade balance has been in favour of Egypt since 2001-02 (except in the 2008-09).

The top five Indian exports during the period from July 2009 to May 2010 were light oil and preparations, boneless frozen meat, cotton yarn, other synthetic filament yarn and chemical vapour deposition apparatus for semi-conductor production, while the top five Indian imports were crude petroleum, coke and semi-coke, other cotton, LNG and natural calcium phosphates.

India has a total investment of approximately $2 billion in about 40 projects. Alexandria Carbon Black, the Alexandria Fibre Co, Dabur India's production facility for its cosmetics line, Niletex, Auto Tech Engineering, Marico's acquisition of two hair care brands and the Sanmar Group's acquisition of a unit of Trust Chemicals of Egypt are some of the main Indian investments in Egypt.

GAIL has equity and management stake in two gas distribution ventures in Fayoum and Cairo as well as in Natgas. In March 2008, Gujarat State Petroleum Corporation Ltd (GSPC) signed a Concession Agreement for two oil and gas exploration blocks in Egypt.

Satyam Computers and WIPRO have set up global delivery centres in Cairo. The Oberoi Group has been managing a hotel and Nile cruises; Kirloskar Brothers assemble diesel engines and irrigation pump sets in Egypt; Ranbaxy has an Egyptian subsidiary for manufacturing pharmaceutical formulations; Ashok Leyland, Tata Motors, Maruti Suzuki and Mahindra & Mahindra are marketing their vehicles in Egypt, and Bajaj Auto dominated the three-wheelers market.

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Ajay Modi in New Delhi
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