India Steadily Turning to Egypt, The Gateway To Lat Am And Gulf

Egypt, which controls the 193-km-long Suez Canal, a crucial maritime route, enjoys duty-free trade access with Gulf nations and other countries. The closure of the Strait of Hormuz following the US-Iran war has underlined the need for alternative routes. The Suez Canal not only serves as a key link between Asia and Africa but also connects Europe with the Indo-Pacific.

Egypt and the Mercosur bloc, comprising six nations in South America, have a free trade agreement, which can also be beneficial to India, which is looking to expand its trade not only with West Asia but also with the Latin American economies.

Under the Egypt-Mercosur Free Trade Agreement (FTA), exporters can either seek duty-free or lower preferential tariff access to a large number of goods.

“India must take more advantage of the duty-free access to several countries as it focuses on aggressively expanding trade,” Egypt’s Ambassador to India, Kamel Zayed Galal, told The Secretariat.

Focus on the Suez Canal

The focus on the Suez Canal, supporting about 15% of global trade and roughly 30% of containers worldwide, has been amplified in the last few months following the US-Iran war, leading to uncertainty over the Strait of Hormuz.

The Ambassador said that India, which is expanding its trade with Gulf countries as well, must tap the opportunity, as current trade and investment between the two countries lies far below the potential, creating significant room for expansion.

Bilateral trade between India and Egypt stood at US$ 7 billion in 2025.

Ambassador Galal, who travelled extensively through the Southern states of the country to understand investment opportunities, said the opportunities here are huge and a lot can be tapped.

“The Suez Canal Economic Zone offers a host of economic incentives along with an industrial zone, or the Knowledge Valley. Egypt is keen to invite data centres and companies working on digitalisation, for which incentives are in place. The Indian side can surely tap into this,” he said.

“I am keen that Egyptian countries invest in India just the way Indian firms need to increase their presence there. Business-to-business dealings will be as crucial for the two countries as the government-to-government framework,” he added.

Cairo-based infrastructure and energy multinational Elsewedy Electric, among the most prominent Egyptian multinational firms operating in India, already has a manufacturing facility in Noida.

Even as the two countries have traditionally shared close ties, trade and economic engagements have not taken the desired shape. In 2023, India and Egypt signed a ‘Strategic Partnership’.

Prime Minister Narendra Modi’s visit to Egypt in 2023 marked the first official trip by an Indian Prime Minister since 1997.

Chinese Investment In Egypt

More than 2,000 Chinese companies are currently operating in Egypt. The number is rising rapidly. China has steadily increased investments in Egypt, especially in energy, technology, finance, defence, and infrastructure sectors. The Belt and Road Initiative (BRI) has also taken shape in the country. 

According to Teda Suez, “the acceleration of Chinese investment in Egypt is partly due to the Egyptian government's opening of a direct RMB investment channel” last year. A host of preferential policies also created “unprecedented favourable conditions” for Chinese companies to increase their investments in Egypt.

Contrast this with India. Less than 1,000 Indian companies are registered in Egypt, of which about 70 are in operation.

In the coming years, India is looking to increase oil imports from Egypt, an exercise to diversify New Delhi’s crude markets. Besides, Cairo is also rapidly expanding the supplies of critical minerals.

Egypt’s production of phosphate and fertiliser will also be a boon for India.