Rethinking Mauritius-India Economic Relations

While India’s technical assistance and aid have made a significant impact on socio-economic development in Mauritius, and are welcome, trade and investment between Mauritius and India are skewed in favour of the latter. Whether the CECPA could help achieve more balanced trade and investment relations between the two countries remains to be seen

By Vinaye Dey Ancharaz

The official visit of the Prime Minister of India, Shri Narendra Modi, to mark the 57th Independence Day celebrations of the Republic of Mauritius is good opportunity to take a critical look at the bonds between the two countries with a view to strengthening them. These ties are rooted deep in history and culture and span many sectors. This article focuses on the economic relations between Mauritius and India.

Cooperation between Mauritius and India in the economic domain has been formally implemented through a panoply of agreements, including Indo-Mauritian Joint Commissions and, most recently, the Comprehensive Economic Cooperation and Partnership Agreement (CECPA), which came into force on 1 April 2021.

“Cultural and educational exchanges have been a key aspect of such cooperation, with the setting up of the Mahatma Gandhi Institute back in 1976, the Indira Gandhi Centre for Indian Culture in 1987, and more recently, the Rajiv Gandhi Science Centre and the World Hindi Secretariat. India’s assistance in the health sector is also gratefully acknowledged. The Jawaharlal Nehru hospital, the Subramania Bharati Eye hospital and the new ENT hospital were all financed through generous grants from the Government of India…”

In theory, the CECPA represents a major opportunity for Mauritian exporters and investors to penetrate the large yet elusive Indian market. In practice, Mauritius’ exports to India are negligible, and survey findings suggest that exporters have a fear of venturing into large markets since they lack the capacity to meet demand on a sufficient scale. If this does not change, the CECPA would do little to redress the trade imbalance between the two countries.

On the other hand, one doubts if the accord was driven by purely economic imperatives. Political-economy considerations are likely to have trumped any economic rationale, especially for a small country like Mauritius, which coincidentally also signed a free trade agreement with China (MCFTA) that came into effect on 1 January 2021. These events can hardly be dismissed as mere coincidence. Mauritius, it seems, has become the unfortunate battlefield in which the war for economic supremacy between India and China is being fought.

India’s choice of Mauritius as the first African country with which to sign a trade pact is hardly surprising. Historical ties aside, India may be eyeing Mauritius as gateway into Africa, an idea that Mauritius has also tried to sell to the Chinese – without much success up till now, it seems, given that the much-touted Jin Fei project is left in ruins. Will the CECPA suffer a similar fate?

This article is in two parts. Part I presents a brief analysis of Indo-Mauritian economic relations, focusing on trade, investment and aid flows between the two countries. Part II critically assesses the potential of the CECPA to enhance such relations in favour of Mauritius, thereby leveraging their power to boost sustainable development on the island. 

India in Mauritius: a brief historical background and recent developments

India’s presence in Mauritius is ubiquitous – the result of sustained cooperation between the two countries ever since newly-independent India established diplomatic relations with Mauritius, still under British rule, in 1948. Cultural and educational exchanges have been a key aspect of such cooperation, with the setting up of the Mahatma Gandhi Institute back in 1976, the Indira Gandhi Centre for Indian Culture in 1987, and more recently, the Rajiv Gandhi Science Centre and the World Hindi Secretariat. India’s assistance in the health sector is also gratefully acknowledged. The Jawaharlal Nehru hospital, the Subramania Bharati Eye hospital and the new ENT hospital were all financed through generous grants from the Government of India.

Moreover, India has a significant commercial presence on the island in the banking industry (e.g. Bank of Baroda, State Bank of India), in financial services (LIC, New India Assurance), telecommunications (Mahanagar Telephone Ltd.), education (Amity), retail (Indian Oil) as well as in the agriculture and manufacturing sectors.

Technical assistance

Less visible are technical assistance and capacity-building initiatives. Mauritius is a major beneficiary of the Indian Technical and Economic Cooperation (ITEC) programme, which has provided training to thousands of public officers, including the police, coast guard and defence forces. Thousands of Mauritians have also studied in Indian universities under scholarships offered by the Government of India, or at their own cost. Notably, Indian-trained Mauritian doctors have made significant contributions in the health sector, and Indian doctors are now a common feature in both public and private health care institutions. More generally, Mauritius has benefited from Indian expertise in diverse areas, including maritime security, agriculture, fisheries management, science and technology, and education and health.

Aid

India’s foreign aid policy has been rather subtle. For instance, it was not until 2008 at the India-Africa Forum Summit that India pledged to scale up its aid and lending to Africa, and this, largely in response to China’s inroads into the continent, as signalled by the 2006 Beijing Declaration. However, Mauritius has been an outlier in India’s aid policy. Both because of the cultural affinity between India and Mauritius and their mutual economic interests, negotiations for loans and grants from India have taken place regularly (at 2- to 3-year intervals) and in a structured manner since the first Indo-Mauritian Joint Commission held in 1979.Read More… Become a Subscriber

Mauritius Times ePaper Friday 14 March 2025