About Us Economical and Commercial

High Commission of India
Lilongwe
Commercial Brief:  India- Malawi


India-Malawi trade relations are historic and dates back to 18th century, coinciding with the arrival of Indian tradesmen, predominantly from the Indian State of Gujarat to Eastern Africa. 

India had established diplomatic relations with Malawi since it gained independence in 1964.  However, the High Commission’s resident mission, wound up in 1993 and re-opened in March 2012 after a gap of 19 years. Hence trade and business relations have not taken off in the manner, it has in the neighbouring countries to Malawi like Zambia, Tanzania and Mozambique, with whom Malawi shares its land borders.  

The then Vice President of India H.E. Mr. Hamid Ansari, visited Malawi in January 2010 and the late President of Malawi H.E. Mr. Bingu wa Mutharika visited India in November 2010, which that led to the re-opening of the Indian Mission in 2012. Malawian High Commission in Delhi was set up in 2007. They also have set up a Business office in the Surat Chamber of Commerce. 

The latest high-level visit has been that of the Vice President of India, Hon. Venkaiah Naidu during the period 4th-5th November 2018. During the visit, the following decisions and announcements were revealed:

  1. A line of credit of US$215.68 millions for water projects
  2. Gifting of one Radiotherapy Telecobalt Unit – Bhabhatron II for cancer
  3. Gifting of US$2 million of Medicines and Medical equipments
  4. Gifting of 10 ambulances for Emergency Response system.
  5. Gifting of 100,000 books on Mathematics, Science Physics and Chemistry for students
  6. The construction of the Mahatma Ghandhi International Convention Centre as a grant project
  7. Gifting of 500 artificial limbs prepared by Jaipur Foot Technology to beneficiaries identified by the Government of Malawi.

Prior to the VVIP visit to Malawi , the former Vice President of the Republic of Malawi Dr. Saulos Klaus Chilima visited India as the Guest of Honour at the 13th CII-Exim Bank conclave in New Delhi India. He was accompanied by two cabinet Ministers, the Minister of Trade, Industry and Tourism Mr. Henry Mussa M.P and Dr Emmanuel Fabiano M.P Minister of Foreign Affairs and International Cooperation. The Vice President delegation included a 60-member delegation of senior officials both from the private and public sector. 

Malawi as an LDC, is also a beneficiary under GoIs  DFQF Policy introduced in April 2008.

India-Malawi bilateral trade since 2010-18 (Amount in Million US $)


Year

India’s exports to Malawi

Malawi’s exports to India

Total trade

2010-11

98.03

19.89

117.92

2011-12

148.26

19.97

168.23

2012-13

153.30

43.11

196.41

2013-14

221.05

15.15

236.15

2014-15

214.02

36.78

250.80

2015-16

176.13

64.31

240.44

2016-17

178.42

41.33

219.75

2017-18

199.60

16.45

216.05

2018-19

201.55

22.80

224.35

Major Exports from Malawi To India
Malawi’s exports to India are very limited it is primarily agricultural products -Pigeon Peas (unprocessed Tur dal), Chickpeas and other related pulses. Pigeon peas, which used to be the major item of export from Malawi to India has been however affected, due to the change in the Trade Policy on import of Tur Dal since August 2017. The exports of Pigeon peas by Malawi to India had intially seen a drastic fall from US$39.32 million p.a. in 2016-17 to US$9.05 million in 2017-18, a drop of approx. 76.9%. This was followed up by a resurgence in the imports of pigeon peas to US$14.32 million in the 2018-19 financial year. In comparison to the higher imports of pigeon peas previously, the trade policy on importation of pigeon peas in India has adversely affected Malawi, both in foreign exchange earnings and a greater impact on the farmers, who traditionally have been growing Pigeon Peas for the Indian market.

Other prominent exports for Malawi globally include Tobacco, Tea, Coffee, and Sugar.

Malawi’s total exports to India in the 2018-19 financial year increased by 38.61% from $16.45 million in 2017-18 to 22.8 million in 2018-19.

Major Imports from India by Malawi

Major Malawi imports from India are: pharmaceutical products, industrial machinery commercial vehicles, Iron and steel pipes and sheets.

India Pharma products share approx,70.1% of the total pharmaceutical imports of Malawi hovering around $75.54 million in 2018. Malawi’s imports are many affected by the high cost of transportation because Malawi is a landlocked country. Most of the imports reach through the ports of Beira (Mozambique), Dar es Salaam (Tanzania) and Durban (South Africa).

Other items with export potential to Malawi, based on import demand include electronic equipment, Plastic and articles thereof, textiles, rubber, furniture, tanning, dyeing extracts, pigments, paper and paper boards, ceramic products, organic and miscellaneous chemical products, essential oils and cosmetics.

Top Ten Imports from India to Malawi (2018)


Rank

HS Code (2 Digit)

Description

Value in US$ millions

1

30

Pharmaceutical products

106.2

2

84

Machinery, mechanical appliances, nuclear reactors, boilers; parts thereof

26.8

3

87

Vehicles other than railway or tramway rolling stock, and parts and accessories thereof

16.4

4

73

Articles of iron or steel

14.6

5

85

Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television.

29.6

6

63

Other made-up textile articles; sets; worn clothing and worn textile articles; rags

4.6

7

39

Plastics and articles thereof

7.8

8

49

Printed books, newspapers, pictures and other products of the printing industry; manuscripts.

24.8

9

48

Paper and paperboard; articles of paper pulp, of paper or of paperboard

2,289

10

70

Glass and Glassware

1,928

Balance of Trade
In the year 2018 Indian exports to Malawi stood at US  million, while Malawian exports to India stood at USD 22.80million. The balance of trade during the period is as such in favour of India by USD 224.35 million.

The High Export Potential Commodities:
Pharmaceutical products (HS Code 30):  Indian pharma accounts for close to 70.1% percent of Malawi’s total import of pharmaceuticals and amounted to US$75.54 million in 2018. The scope to increase the market share for Indian pharmaceuticals is still high as health remains a priority sector for the government of Malawi.

Machinery and mechanical appliances etcetera (HS Code 84): Malawi’s imports of machinery amounted to US$ 17.2 million in 2018 and India’s share in this category was only 11.29%. 

Vehicles (HS Code 87): Malawi’s imports from India of these items in 2018 amounted to USD14.24Million. India share in this category was 13.17%.

Iron and Steel (HS Code 73): Malawi’s imports of these items from India amounted to US$11.54million in 2018. India share in this category was 26.38%.

Electronic Machinery (HS Code 85):  Malawi’s imports of these items from India amounted to US$9.94million in 2018.  India’s share in this category was 6.765%.

Lines of Credit
Malawi is a beneficiary of GoIs, Line of Credit (LOC) Scheme, and since 2008 of US$ 180 million has been provided to Malawi to cover areas such as irrigation, pigeon peas processing, cotton processing, fuel storage and sugar processing. 

A project now under construction viz, Blantyre Water Project is funded by LoC of US$23.5 million and is likely to be completed by 15 August 2019, which has increased LoC projects in Malawi to US$180 million from $156.56 million. With this, all commitments made in 2010-11 would be accomplished. In addition to the lines of credit that have been rendered to Malawi, the Vice President of India’s visit to Malawi in the year 2018 also unveiled plans for the extension of further lines of credit to Malawi  to the tune of  US$215.68 millions for water projects.

Indian Investments
While official figures of Indian Investments are not available, it is estimated that over US$500 million have been invested in Malawi. As per an official document of Ministry of Finance released in April 2018, Indian Private Capital has a share of 19% and is the largest single contributor in Malawi economy, with China being 12%, Africa as a whole contributing being 21% and the rest of the world being 48%.  Indian investment is also the largest contributor to the creation of private sector jobs in Malawi.

There are about 8000 persons of Indian origin and 2500 Indian nationals currently residing in Malawi. The Indian community is primarily engaged in trade. There are about 100 Malawian Indian origin owned companies registered in Malawi since its inception in 1993 with the Malawi Investment & Trade Centre (MITC).

As per MITC, out of the 56 companies registered to invest in Malawi at the last Malawi Investment Forum in 2016, 2 were of Indian origin representing a pledged total of US$ 73 million of total of US$ 932 million.  This represents about 10% of the total investment inflows in Malawi in 2017.  During the Malawi Investment Forum held in October 2016, a company from Gujarat, signed a US$ 1 million investment MoU with a Malawian company to set up an Organic Bio fertilizer plant in Lilongwe. M/s Innosoft Solutions signed an MoU with Ministry of Information, Communications and Technology for provision of e-government solutions to the Government of Malawi. However, these are all pledged and no actual investments have yet taken place.  2018 figures are not yet out by MITC.
The 3rd 2018 Malawi Investment Forum (MITC) was launched by President Dr. Arthur Peter Mutharika in early June, 2018. It attracted over 300 delegates from India, Netherlands, China, Ireland, United Kingdom, United States, South Africa, Nigeria looking at projects in sectors of the country’s economy such as; energy, manufacturing, tourism, transportation, infrastructure, agriculture and agro-processing.

About 24 business deals valued at over US$3 billion (about MK2.2 trillion) were signed at the just ended 2018 Malawi Investment Forum (MIF). The forum is rated highly when compared to seven companies which signed Memoranda of Understanding (MoUs) by end of the 2016 MIF, while the one held in 2015 yielded deals and MoUs worth US$1 billion about MK734 billion.

One of the notable deals was secured by CDH Investment Bank, which was reported to have signed three MoUs to raise about US$267 million. The bank signed a mandate to raise $100 million for a manufacturing and bottling plant. It also partnered an investor to finance a solar energy project worth US$150 million and partnered another investor to invest in infrastructure projects worth US$17 million.

Green Belt Initiative also partnered an international financier to develop irrigation infrastructure on 1,000 hectares of land.
The Lilongwe City Council also signed an MoU with Prominent Waste Management company whose value would be established after a feasibility study is conducted.

MITC signed an US$8.5 million worth MoU with Chinese investor, Pacific Electric Company, for production and installation of Electrical Support Facilities, production and construction of urban lighting projects, wind power and photo voltaic generation.
There were export orders of over US$16 million. A structural plan by MITC projects shows that the country’s investment opportunities are set to rise to $15 billion with increased export earnings set to rise to US$4.9 billion by 2019 as well as the creation of 650 000 direct and indirect jobs.

MIF 2018 targeted over 1000 participants from both Malawi and beyond. According to Trade and Industry authorities, 24 bankable projects were discussed under the Public-Private Partnership arrangement and 18 private sector projects were marketed during the two-day forum. Further, 70 local Small and Medium Enterprises (SMEs) were given an opportunity to exhibit their products at the event in a quest to help them find international markets for their products.

Most Indian businesses are engaged in Agro processing, Alcoholic beverages, Construction, Energy sector, Financial service & Insurance, Food processing, Health Sector in Diagnostic services, Information Technology & Software development, Logistics, Mining, Transport, Textile, Cosmetics & Pharmaceuticals, Fertilizers, manufacturing like Cement, Packaging, Plastics, Hotel & hospitality etc. The commercial and manufacturing activity is mainly concentrated in Blantyre in the southern region of Malawi.

Indian Companies Tata, Ashok Leyland, Bharti Airtel, Bajaj Auto, TVS, Atul Auto, Eicher, Mahindra are prominent through their authorised dealers. Kirloskar generators, Escorts, Godrej and SuKam are other Indian company products with a presence in Malawi.
SAI Consulting Engineers Pvt Limited of India and Malawi Roads Authority signed a contract agreement on 16 February 2016 for Consultancy Services for Feasibility Study, Preparation of Detailed Design, Preparation of Tender Documents and Construction Supervision of One Stop Border Post Infrastructure (OSBP) at Dedza, Mwanza and Muloza.

The construction of the one step boarder pass is a part of the Southern Africa Trade and Transport Facilitation Program. The program is financed by the World Bank and contents four components namely; Improving road infrastructure, improving social infrastructure, improving trade facilitation as well as institutional strengthening and implantation assistance. The construction of the One Step Boarder post falls within the improving trade facilitation component which was allocated a total of $26.8 million.

Two Indian companies Larsen & Toubro and Kalpataru handled the  transmission line erection project of approx. US$60 mn out of the US$ 350 million project, to upgrade the electrical infrastructure in Malawi under the Millennium Challenge Account (MCA) funded by the USA.

Minimum capital requirement for setting up business
According to the Malawi Business Licensing Act of 2012, foreigners are allowed to operate only in the main cities and have to apply for permits with a deposit of US$ 250,000 as initial capital. The bank rate as of July 2019 stands at 13.5%. The private sector continues to keep interest rates high. The Malawi Kwacha is currently trading at appx. MK 780 to a US$ and Rs. 1= MK 11.13

Chamber of Commerce in Malawi
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) is a partnership of enterprises and associations representing all sectors of the economy of Malawi. The Chamber of Commerce has been in the forefront of Malawi’s private sector development efforts for over 100 years. Established in 1892, the first Chamber organization operated as a Chamber of Agriculture and Commerce to reflect the predominant focus of the economy on agriculture production and trade.

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Updated July 2019