Context:

• Ethiopia, with a population of about 109 million and one of Africa’s fastest-growing economies, is gaining strategic and economic importance for major partners, including India.
• Its strong manufacturing base, large domestic market, and strategic location in the Horn of Africa make it a pivotal regional state.
• Despite internal challenges, Ethiopia is seen as a stabilising force with an effective military, hosts the African Union, and holds major potential as a renewable-energy exporter, particularly in hydropower.
• Though landlocked and traditionally dependent on Djibouti for sea access, Ethiopia is seeking diversified routes via Somaliland and Eritrea to enhance trade autonomy.
• As it emerges from civil conflict and works toward national reconciliation, the country presents a timely opportunity to deepen India–Ethiopia cooperation across multiple sectors.
• With Ethiopia entering a new development phase and joining BRICS, conditions are favourable for elevating the bilateral partnership.

India–Ethiopia Educational Partnership: A Strong and Enduring Bond

• India and Ethiopia share deep educational ties spanning over a century, with Indian teachers and professors playing a foundational role in Ethiopia’s education system.
• Ethiopia has been a key partner in India-led initiatives such as the Pan-African e-Network and continues close collaboration with institutions like IIT Delhi in tele-education.
• It sends large numbers of students to India, including the highest number of African PhD scholars, and has effectively used Indian-trained graduates to build its academic institutions.
• Strengthening cooperation through digital education, vocational training, university partnerships, and expanded scholarships remains a highly promising pillar of India–Ethiopia relations.

Indian Investment as a Pillar of Bilateral Ties

• Indian investment in Ethiopia dates back to the 1950s but expanded significantly after India extended major lines of credit from 2006 onward, catalysing private investments exceeding $4 billion.
• Ethiopian leaders recognise the developmental role of Indian firms, especially as IMF conditionalities push the country to mobilise fresh capital.
• While earlier investments were concentrated in agriculture and faced taxation and operational hurdles, the partnership remains strong.
• Mining: A New Strategic Opportunity
  • The most promising avenue for future investment lies in mining, particularly gold, critical minerals, and rare earth elements, where Ethiopia has vast but underexplored reserves.
  • Recent surveys by the Indian Embassy highlight significant potential alongside regulatory and infrastructure constraints.
  • Joint commissioning and operation of mines could secure critical inputs for India’s renewable energy, battery, and semiconductor industries, making mining cooperation a core strategic priority.
• Defence Cooperation: A Historic and Growing Partnership
  • Defence ties between India and Ethiopia are long-standing.
  • India helped establish the Harar Military Academy in 1956 and has supported Ethiopian military training since 2009.
  • Following years of internal and regional deployments, Ethiopia now seeks modern training and equipment to replace outdated Soviet-era systems.
  • India’s cost-effective, battle-tested defence platforms position it as a strong partner.
• Institutional Framework for Future Defence Ties
  • A newly signed MoU on defence cooperation and the first meeting of the Joint Defence Cooperation Committee have created a formal structure for expanding training, capacity building, and defence exports.
  • Given Ethiopia’s strong repayment record under India’s Indian Development and Economic Assistance Scheme (IDEAS)programme, it could also be considered for new defence-related lines of credit within IMF norms.

Reforms to Unlock Private-Sector Engagement

• India can support deeper economic ties by updating key agreements such as the Double Taxation Avoidance Agreement (DTAA) and the Bilateral Investment Treaty.
• Ethiopia, in turn, needs to address persistent investor concerns over foreign exchange availability, taxation, regulatory approvals, and policy consistency—issues frequently highlighted by the Indian diaspora and the India Business Forum.
• Cooperation through BRICS, the G-20, and South–South frameworks enhances political and economic alignment.
• Under the African Continental Free Trade Area (AfCFTA), Ethiopian-based Indian firms can access broader regional markets, positioning Ethiopia as a strategic hub for Indian enterprises in Africa.

Trade Preferences and Export Opportunities

• Amid global trade uncertainty and tightening regulations in Western markets, India’s duty-free tariff preference scheme remains crucial for Ethiopian exports.
• By welcoming more Indian investors—especially in export-oriented manufacturing with buy-back arrangements—Ethiopia can maximise these trade benefits.

Outlook: A Dynamic India–Africa Partnership

• With renewed political momentum, targeted reforms, and strategic alignment, India–Ethiopia relations are poised to become one of the most dynamic partnerships between India and Africa.
• The recent meeting between Prime Minister Narendra Modi and Prime Minister Abiy Ahmed Ali at the G-20 summit in Johannesburg has provided fresh impetus to this evolving relationship.