Monday 29 / December / 2025
The world witnessed the grand welcome received by the Indian PM Narender Modi on his December 2025 visit to the African country Ethiopia . Prime Minister Modi was received very warmly in Ethiopia, with all the signs that the visit was treated as a major diplomatic event.This is an unusually good moment to examine India–Ethiopia relations because the relationship has just been formally upgraded to a Strategic Partnership and given a concrete roadmap for a high priority engagement for the next decade.
Over the last several decades, India–Ethiopia trade relations have evolved into a multi-dimensional partnership that combines sturdy merchandise trade, significant Indian investment in Ethiopian industry and infrastructure, and a strong development cooperation framework underlined by South–South solidarity. Both countries view each other as gateways to wider regions. India towards the African Continental Free Trade Area, and Ethiopia towards the Indian Ocean and Asian markets, which gives their commercial ties a strategic angle.
For 2024–25, Indian official data indicate total bilateral trade of roughly 550.19 million US dollars, with India exporting 476.81 million US dollars’ worth of goods and importing 73.38 million US dollars from Ethiopia . The numbers highlight both India’s strong presence in the Ethiopian market and the scope for increasing Ethiopian exports to India.
It is interesting because, historically, trade between the two countries was relatively modest, with volumes such as 660 million US dollars in 2011–12 and a policy aspiration to reach 1 billion US dollars by the middle of the last decade.However, recent numbers indicate that while the scale remains below the earlier target, the structure of trade has become more diversified and resilient. More recent estimates cited in trade analysis suggest that bilateral commerce had at one stage climbed close to 2.8 billion US dollars in the early 2020s , before adjusting to the current levels as Ethiopia struggled with foreign exchange shortages and domestic macroeconomic pressures. But despite the fluctuations, India continues to rank among Ethiopia’s top trading partners underscoring how resilient the economic connection between the two countries is.
India’s exports to Ethiopia are broad-based and reflect India’s strengths in manufacturing and pharmaceuticals as well as Ethiopia’s developmental needs. Key Indian export items include pharmaceuticals and medical products, iron and steel, machinery and transport equipment, vehicles and auto components, electrical and engineering goods, chemicals, plastics, and consumer items ranging from textiles to food products. Data confirms India’s role as a major supplier of essential industrial and consumer goods to the Ethiopian economy . This export basket supports Ethiopia’s industrialization aspirations and infrastructure expansion, while also reinforcing India’s image as a reliable partner supplying affordable medicines and technology.
Imports from Ethiopia into India are smaller in value but are strategically significant and concentrated in agricultural and natural resource–based products. India imports pulses, oilseeds, spices, leather and leather products, flax yarn, and select mineral or semi-precious stone consignments from Ethiopia, integrating Ethiopian producers into Indian and global value chains. There is both the potential for expansion and fixing the structural challenges that Ethiopian producers face in scaling up export capacity, including logistics, finance, and value addition constraints. Expanding this import basket, especially in agriculture and agro-processing, remains a key policy priority repeatedly highlighted in bilateral dialogues as both sides seek a more balanced trade profile. It is an encouraging sign that agriculture (including sustainable agriculture, natural farming, and agri-tech) was explicitly discussed during PM Modi's bilateral meeting with PM Abiy Ahmed as a part of the efforts.
Beyond just trade, India has also emerged as one of the most important foreign investors in Ethiopia. Various assessments note that Indian companies rank among their top three foreign investors, with approved investments valued at nearly 5 billion US dollars and land lease arrangements covering more than 600,000 hectares across the country, especially in commercial agriculture and allied activities . In 2024 alone, at least 11 Indian companies invested in sectors such as agriculture, automobiles, iron and steel, information and communication technology, and textiles, demonstrating sustained investor confidence in Ethiopia’s long-term growth prospects despite short-term macroeconomic volatility. These investments have massively contributed to employment creation, export earnings, and technology transfer in Ethiopia’s industrial parks and special economic zones, aligning with Ethiopia’s ambition to transform the country into a regional manufacturing hub.
India’s development cooperation architecture also plays a central role in shaping the trade and investment landscape, especially through concessional Lines of Credit extended by the Export-Import Bank of India . Ethiopia is among the largest African recipients of Indian LoCs, with sanctioned credit lines worth over 1 billion US dollars that have financed strategic projects in sugar production, power transmission, railways, and industrial infrastructure. Examples include the Finchaa and Wonji Shoa sugar factories, as well as Phase I of the Tendaho sugar project, which were built under an EXIM Bank line of credit of about 640 million US dollars, representing one of the largest single LoCs extended by India anywhere . These projects not only deepen commercial ties through procurement of Indian machinery and services, but also help Ethiopia reduce sugar imports. In addition, it can generate exportable surpluses and enhance its agro-industrial capabilities, creating a quality link between development cooperation and long-term trade.
On the policy side, both countries have put in place mechanisms and initiatives aimed at strengthening trade facilitation and market access, which complement the investment and credit pillars. Ethiopia is a beneficiary of India’s Duty-Free Tariff Preference scheme for Least Developed Countries, which provides concessional or zero-duty access for a wide range of Ethiopian exports to the Indian market, thereby lowering the cost barrier for Ethiopian producers and encouraging product diversification .
In addition, regular Joint Trade Committee meetings, business forums, and sector-specific delegations tackle practical issues like customs, standards, and payments. They also spot new opportunities in growing areas such as digital infrastructure, mining, critical minerals, clean energy, and food processing—topics raised in recent high-level visits . These setups create a stable, business-friendly environment for traders and investors from both countries.
Ethiopia offers India a strategic partner in the Horn of Africa and access to a growing market of over 100 million people, while India provides Ethiopia with diversified sources of finance, technology, pharmaceuticals, and industrial goods at competitive prices. With continued efforts to diversify Ethiopia's exports to India, increase Indian involvement in high-value manufacturing (not just raw resource extraction), and improve trade processes through digital tools and better logistics, the partnership can shift from India's heavy exports to a more balanced, higher-value relationship that supports both countries' growth goals.
