Despite impressive progress, and although there are great opportunities still to be exploited, there remain a number of important issues that have to be resolved to allow bilateral South African and Indian trade and investment to achieve its full potential, Indian Commerce and Industry Minister Anand Sharma tells Engineering News Online.

"There are a number of issues," he says. "The question of connectivity remains an issue," referring to such matters as sea and air transport links, which remain inadequate.

Nor is there yet an agreement between the two countries to protect their respective investments in each other's jurisdictions. "We are looking at the bilateral Investment Protection Agreement," reports Sharma, which has not yet been concluded.

India and the Southern African Customs Union (Sacu), of which South Africa is a member, are also currently negotiating a preferential trade agreement (PTA). Sharma hopes for the "early conclusion of the India-Sacu PTA".

Regarding opportunities, he argues that these exist in "all sectors where the two countries have competitive advantages".

In a speech to Indian and South African CEOs on Monday, he cited the fact that, in purchasing power parity terms, India is the fourth-largest economy in the world. Referring to trade between all developing countries, he emphasised that "The countries of the South have trade in excess of $2-trillion. Today, 63% of the world's growth is from developing countries, 50% from Asia. This is bound to increase."

Sharma asserted that "both our countries have competitive advantages in many sectors" and identified those sectors in which India has such advantages as information technology, pharmaceuticals, the automotive industry and services. "India is a net exporter of services. But India is also a huge importer of services," he highlighted. "It almost evens out."

He pointed out that Indian investment in South Africa now totalled $2,5-billion. He also referred to South African companies investing in India, particularly in the financial sector, although he also cited SABMiller which has the second-largest market share in India. "But we should be doing more."

Bilateral trade, which had been effectively nonexistent before 1994, has now reached $7-billion. No less than $2-billion of this is accounted for by Indian imports of South African gold. He also remarked that "four out of every five diamonds pass through Indian hands".

He reported that the two governments had established a target of $12-billion in bilateral trade by next year. "Because of the recession, we might not reach it," admitted Sharma. (Speaking at a subsequent press conference, he assured that the $12-billion target will be achieved before 2012.)

He also highlighted the India, Brazil, South Africa trilateral trade target of $25-billion by 2015 (the three countries form the IBSA group) which, he told the CEOs, "is doable".