The Indian ambassador to Morocco is confident that India and Morocco are set to strengthen economic ties despite the setbacks stemming from the global COVID-19 pandemic.
Rabat – India’s top business chamber organized an internet conference, “Economic Update: COVID and Beyond Focus North Africa,” on April 22. During the discussion, the ambassador of India to Morocco, Shambhu S. Kumaran, expressed hope for Morocco’s swift economic recovery and for a fruitful future of bilateral trade.
The webinar welcomed over 200 business representatives from India and Morocco, as well as several other North African countries, including Egypt and Tunisia. Morocco’s CGEM also actively supported the conference.
Addressing the webinar, the Indian ambassador said while the world is still facing the COVID-19 pandemic, it is necessary to look ahead at emerging business opportunities.
Morocco well-placed to overcome the crisis
The ambassador underlined India’s response to the pandemic and celebrated Morocco’s measures to stem the spread of the virus.
“The Moroccan economy will overcome this real and serious crisis, and the country has managed so far very well,” Kumaran said confidently.
Kumaran acknowledged that various Moroccan sectors such as aeronautics and textiles are facing difficulty due to the crisis but stressed the heavy investments in infrastructure over the past two decades under King Mohammed VI will enable Morocco to bounce back quickly.
Tourism is another affected sector and is likely to recover by the last quarter of this year, the ambassador said. Coupled with increased remittances from the Moroccan diaspora, Morocco could witness an economic revival in the third and fourth quarters of 2020 and in the coming year, he said.
The Indian ambassador also expressed confidence in Morocco’s macroeconomic stability. The current account deficit may rise due to declining exports, but low oil prices and compression in imports will offset this, he said.
Morocco’s overall forex position is reasonably stable with around five months of import cover and a special arrangement of $3 billion agreed with the IMF, he added.
“Inflation, including food prices, has been and is staying low,” Kumaran continued. “This has a very positive impact on economic stability and is also good from a social perspective.”
The ambassador predicted phosphatic fertilizers will continue to bring revenue to Morocco, despite a trend of lower prices, along with agriculture. As major economies continue to incentivize the agricultural sector, including India and Latin America, volumes and prices are set to recover over the medium term.
Morocco’s agricultural exports to EU, including fisheries, also have a very positive outlook, he continued, given that European agriculture mainstays such as Italy, Spain, and France have had a poor season and will take time to recover.
The banking sector, which has very limited exposure to foreign debt, remains strong, Kumaran underlined. New state incentives for local businesses such as the “Damane Oxygene” guarantee program to protect small and medium-sized businesses from defaults or bankruptcies will prove useful, the Indian ambassador continued.
The suspension of social security contributions and deferring tax payment deadlines for large companies will also contribute to overcoming short term disruptions in the business cycle, Kumaran added.
While there will be a phase of weakened demand and output, the ambassador said, Morocco will continue to be open for business and has “good prospects for a smooth landing.”
He celebrated the foresight of the King in setting up a special COVID-19 response fund, which already has $3.5 billion in commitments. Kumaran said the fund will be invaluable in ensuring Morocco’s economic recovery.
New momentum for India-Morocco trade
Kumaran expects trade between India and Morocco to remain on a growth trajectory, although the value may decline in 2020 compared to earlier trends.
India’s exports to Morocco are unlikely to see major declines. The key sectors for exports from India to Morocco are gas oils and fuel oils, synthetic and artificial fiber yarn for weaving, pharma products, electrical and engineering goods, and spices and food products.
Morocco’s exports to India are predominantly phosphoric acid and phosphates, amounting to up to $1 billion annually. India is the single largest market for Morocco’s phosphates. Because the Indian government strongly incentivizes agricultural production, the South Asian country’s high demand for Moroccan phosphates is unlikely to change.
Kumaran called upon business communities to work towards expanding and diversifying trade in both directions, reiterating India’s interest in early commencement of official discussions on a Preferential Trade Agreement.
Indian investment in Morocco could produce “some interesting scenarios,” the ambassador continued. He said one of the less-recognized trends over the past few years has been the rise of Indian direct investment in Morocco.
Indian investment in Morocco covers sectors such as auto components, food processing, mining, recycling, optical fiber manufacturing, pharmaceuticals, travel, and hotels.
While companies are likely to be hesitant about investing abroad amid the COVID-19 crisis and its aftermath, Indian companies are likely to remain positive towards the Moroccan market. There may also be some “interesting new valuations that could justify brownfield opportunities,” the ambassador added.
Health, digital, and agro-food sectors in focus
Kumaran highlighted three promising areas of India-Morocco trade: Health and pharmaceuticals, IT and the digital economy, and agriculture.
Noting that financial measures to support the health sector are highly likely in Morocco, the ambassador called for regular, sustained dialogue to establish good value propositions for Indian and Moroccan partners.
IT and the digital economy have emerged even stronger as a priority for all countries as a consequence of the COVID-19 crisis. Morocco and India can pursue opportunities for mutually beneficial partnerships in software services as well as IT education and training.
Agriculture and food will remain a strong source of trade between the two countries. Morocco has a continuing need for affordable agricultural equipment and machinery, where India has good competencies.
Food products, especially spices, will remain in good demand, while rice exports from India may increase. The Indian ambassador added that he hopes Moroccan tea importers will explore India as a serious alternative to their single current supplier.
The quality and affordability combination that Indian businesses can offer can be useful for Morocco, the ambassador stressed, calling on Indian companies to upgrade their efforts to tap the Moroccan market.
“The global COVID-19 crisis should encourage businesses in both our countries to actively explore new forms and partnerships opportunities across sectors,” the ambassador stated.