India & Lebanon should target US$ 500 million trade in few years
HE Dr. Suhel Ajaz Khan, Ambassador of India to Lebanon, asserts that India and Lebanon have significant goodwill and synergy to enhance their trade from the current modest levels. He proposes a five-point strategy as well as focus sectors where India can increase exports. At the same time, he encourages Lebanese importers to consider India as an alternative to countries in the west, as the latter provides world class products at highly competitive prices.
India and Lebanon have excellent bilateral relations that are over 65 years old. We have always have been together in good and bad times. In the last one year itself, India provided a lot of support to our friends in Lebanon. After the August 4 blast, India sent immediate relief supplies of more than 58 metric tonnes. We also provided relief supplies to the Ministry of Public Health here in the fight against the Coronavirus and have also done a number of projects.
One of the important pillars of our presence in Lebanon is the UNIFIL. The Indian battalion has been there for the last 20 years and they are in the most sensitive and most crucial area of the operation of UNIFIL. They have been working there with full professionalism, and have developed excellent rapport with the local communities.
In this overall bilateral relationship, trade is also a very important aspect and this is something that we are now focusing on today. The bilateral trade between India and Lebanon has been very modest and there is a huge potential to increase it manifolds. Bilateral trade was about US$ 360 million in 2019, which came down to US$ 145 million in 2020, especially because of the economic difficulties Lebanon is undergoing. Lebanon’s overall trade has dipped by almost 45% over the last year, and Indian trade has mirrored this trend.
Lebanon traditionally imports almost 80-85% of its requirements from abroad, which should be food for thought for traders in India. I feel that we should easily target at least US$ 500 million in bilateral trade in the next few years.
India’s exports are currently highly diversified, with food items, chemicals, textiles, machinery, precious and semi-precious stones being the leading product groups in the basket. I have been discussing with our friends in Lebanon that considering the current economic difficulties, it’s an opportunity for your importers to look at India as an alternative source.
The trade pattern of Lebanon is heavily in favour of the West. But if Lebanese traders look at India as a source of imports, they can significantly reduce their import bill. Indian products, besides being world class, are extremely cost competitive, especially compared to countries in the west.
Another issue we have noticed in the last one year is the payment problem. When an exporter is exporting his goods from India or from anywhere else in the world he would definitely expect his payments well in time. We have noticed that sometimes even the importers are ready to pay. They deposit money in the bank and then open an LC.
Based on this LC, the Indian exporter sends goods, but banks don’t honour the LC. This is a problem that merits urgent resolution, for which we are also requesting Lebanese business chambers to try and ensure that whatever banks their traders are dealing with, are ready to honour LCs and release payments as soon as goods are received.
Apart from that I don’t see any major trade barriers between India and Lebanon. The only barrier, possibly is lack of initiative, for which we need to work in close collaboration. In this regard, I propose a five point strategy that industry from both sides must consider:
- There should be an enhanced interaction between the trade bodies of India and Lebanon. Recently, Trade Promotion Council of India signed an MoU with the Association of Bekaa Industrialists, but we need many more such associations. I urge Lebanese and Indian trade and investment bodies to engage with each other in accordance with their area of expertise and the objectives they would like to achieve. The embassy will be happy to help. Ideally every chamber in Lebanon should have at least one partner chamber or trade body in India they can work with for various exchange of information and facilitation of trade.
- Secondly, we are asking chambers in Lebanon to share databases of their importers in Lebanon. Once this database is available, we can share it with relevant trade bodies and organisations. In India, we have a lot of specialised trade bodies in various sectors like food, pharma, engineering, textiles, chemicals, etc. This will help in enabling focussed B2B interactions.
- Next, we need to undertake a careful identification of the commodities, which have potential between the two countries. For this, we need to see the commodities, which are imported by Lebanon in big volumes and if those commodities are also being exported by India, and the same goes for commodities that Lebanon can export to India. As far as Indian exports are concerned, I think food is a major prospect. It is very big volume import in Lebanon and India has strengths in a lot of sub-sectors, particularly rice, spices, frozen foods, meat, cooking oil, pulses, sesame, fruit pulp, etc.
The second area that we could focus on is pharmaceuticals, where India is a global leader. In fact many companies from where Lebanon is importing their medicines are actually taking APIs from India and producing the medicines. Lebanese businesses can even explore investments in partnership with Indian companies and setting up manufacturing bases in Lebanon itself. You can then provide these products in the local market and also export. This sector does not require huge infrastructure. Land is a problem in Lebanon, but pharma does not require huge land. It requires more human capital, and Lebanon has a good pool of very highly educated and motivated youth.
Machinery and textiles are also sectors with good potential. But another emerging sector that we would like to propose is Ayurveda and wellness products. I know for sure that a large number of customers in Lebanon are very interested in these products, made from natural ingredients which enhance quality of life, enhances immunity and improve overall health. Of course there are issues of approvals and registration, but we should start looking at opportunities and the embassy would be very happy to coordinate with concerned authorities in Lebanon in this regard.
- Exchange of delegations is the fourth point that we should focus on. The two countries have not exchanged business delegation for very long time. There was a business delegation from India about 3-4 years back, but there hasn’t been a delegation from Lebanon to India for a very long time. The embassy is encouraging Lebanese chambers to take trade delegations to India, and we will be happy to arrange appropriate hosts for them in India who can, as per specific interests, organise B2B meetings, Buyer-Seller meetings, visits to business parks, trade bodies, etc.
- The last point of the strategy is publication of standards. There is some confusion about the standards in various products, particularly agricultural products in aspects like pesticide level approved, moisture level allowed when you import rice, etc. Clear communication on these standards is necessary, especially since they are liable to change from time to time, so that we can better advise Indian exporters, and they fulfil all requirements of Lebanese regulation.
These are the five strategic areas that I would like to highlight. There is a great amount of goodwill in India as far as Lebanon is concerned. We all love Lebanon, its culture, food, etc, and the feeling is mutually reciprocated by Lebanon as well. I am confident that if we work on these five areas, it will help to further extend this bilateral goodwill into the trade domain, and achieve the US$ 500 million target.
The author is present Ambassador of India to Lebanon. Views expressed are personal. Usual disclaimers apply.