The Nigeria and India Trade and others Relationship

Project and Seminar Material for International Relations

The Nigeria and India Trade and others Relationship


The establishment of the Diplomatic House in Nigeria in 1958 (two years prior to Nigerian independence) by India laid the foundation for what was to become solid, warm and concrete bilateral relations between India and Nigeria. The subsequent diplomatic and commercial visits between officials of the two countries crystallised and concretised their cooperative ties regarding political, economic and socio-cultural issues.

This paper examines the politico-diplomatic, socio-cultural and economic relations between India and Nigeria. Using a historical approach, the paper argues that although in economic terms the balance of trade is in favour of Nigeria due to increasing importation of Nigeria’s crude oil into India, Indian investment activities in Nigeria have exemplified what might be termed an unequal relationship in which India has an edge over Nigeria.

Nevertheless, in view of the magnitude of the cordial relations between the two countries, their development potentials and some socio-political and cultural commonalities, they stand a very good chance of further solidifying and enriching their interactions with regard to several important issues, such as the development of democratic institutions and the redefinition of economic relations between the two states. This, the paper argues, would not only strengthen their political and economic relations, but also bring mutual benefits.

Chapter One


1.1 Background of the Study

The bilateral relations between the Republic of India and the Federal Republic of Nigeria have considerably expanded in recent years with both nations building strategic and commercial ties.

Oil-rich Nigeria stated recently that India has replaced the United States as its largest crude importer 20 – 25 percent of India’s domestic oil demand. India, however, now purchases some 30% of Nigeria’s daily crude production which currently hovers around 2.5 million barrels. With bilateral oil trade valued at US$10 billion, Indian oil companies are also involved in oil drilling operations in Nigeria and have plans to set up refineries there.

Trade between Nigeria and India nowadays is strategically becoming important and of global considerations because of the increasing need of Nigeria’s crude oil by India and India’s pharmaceutical products by Nigeria. This has significantly boomed bilateral trade relations between Nigeria and India and again expected to further and enhance trade relations between the two countries. Nigeria is now the largest trading partner of India in the whole African continent, because it is the largest market for India’s exports and India also is Nigeria’s second largest trading partner in the whole world (Kabiru & Dilfraz, 2014).

The Nigeria’s exports is mostly covered by crude oil which constitutes 95% of the total exports of the country, out of which India patronized 11% of these crude oil exports (Rupa, Saikat, & Aayush, 2010). In addition there are so many agreements that are still been put in place in order to increase supply of crude oil to India from Nigeria in order to help India meet its energy security (requirements). In 2000 there was an agreement between India and Nigeria as per the content of the agreement, Nigeria will be supplying crude oil to India at the rate of 1 20,000 barrels per day and hydro-carbon of 6 MT (Harshe, 2002).

In addition to this Nigeria exports cotton, wood, cashew nuts, gum Arabic, pearls, rubber to India while India’s exports to Nigeria is made up of Pharmaceuticals and drugs, wood products, transport equipment, textiles materials, chemicals, plastic and machineries. Trade between Nigeria and India have since 1999 been increasing with trade balance in recent years been in favour of Nigeria (Sulaiman, 2009). Presently now the nature of Nigeria and India trade relation is dominated by commodity trade. India as a country with the growing service sector will now look for other areas to trade with Nigeria in order to boost their trade relation, and help India narrow the current trade imbalance/deficit with Nigeria.

(Rupa, Saikat, & Aayush, 2010), have identified the service sectors in Nigeria that requires immediate Foreign Direct Investment (FDI) attention, these are Oilfield services, Health care, Information technology, and Agro based. These sectors of the Nigerian economyif properly look into with huge amount of investment by India as one of the worlds leading service provider will help India in narrowing it trade deficit or imbalance with Nigeria. The rationale behind this study is to establish trade complementarily and similarities between Nigeria and India in order to explore, establish and investigate the commodities of their trade having comparative advantage and those having comparative disadvantage. The study of Nigeria and India trade complementarily and similarities is very much important because of the just recent booming commodity trade between the two countries.

Over the last one and half decade the trends in Nigeria and India trade for both import and export has risen which again necessitate the rise in their total trade, and with increased in the number of group of commodities that are being traded between the two nations, the intensity of their trade has become very much significant, as their import, export and total trade intensities are found to be high in these days (Kabiru & Dilfraz, 2014[1]). As a result of the recent rise in India and Nigeria trade with accompanying increase in the number of commodities or sectors traded and the high trade intensity the study centred on exploring complementarily and similarities of trade among them.

1.2 Objective of Study

  1. To examine the trade relationship and other relation between Nigeria and India.
  2. To examine the relationship between International Trade and Economic Development.
  3. To evaluate the disadvantages of International Trade.
  4. To study the importance of International Trade in the World.

1.3 Research Questions

How does the international trade between Nigeria and India affect the economic development of Nigeria, and what are the disadvantages of international trade.

1.4 Significance of Study

The study reviews bilateral trade relation and other relation between Nigeria and India and how it led to improved and economic growth of the both country. However this study will contribute to the growing body of knowledge in globalization and its linkage with trade policy and will therefore aid researchers who might want to carry out research in related areas.

1.5 Scope and Limitation

The study examines the linkage between Nigeria and India trade relationship It is also limited in part to the information available from books, journals, books and internet resources as we undergo an empirical review of the Nigeria and India trade on the economic developments in Nigeria.

1.6 Definition of Terms

The Terms of Trade:

The terms of trade refer to the rate at which the goods of one country exchange for the goods of another country (Jhingan20l2). It is a measure of the purchasing power of exports of a country in terms of its imports, and is expressed as the relation between export prices and import prices of goods. When the export prices of a country rise relatively to its imports prices, its terms of trade are said to have improved.

Exchange Control:

Exchange control is one of the important devices to control international trade and payments. It aims atequilibrating foreign receipts and payments not through such market forces or flexible exchange rates but through direct and indirect control of foreign exchange. Thus exchange control means that all foreign receipts and payments in the form of foreign currencies are controlled by the government.

1.7 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  1. Chapter one is concerned with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  2. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  3. Chapter three deals on the research design and methodology adopted in the study.
  4. Chapter four concentrate on the data collection and analysis and presentation of finding.
  5. Chapter five gives summary, conclusion, and recommendations made of the study

Chapter Five

Summary, Conclusion and Recommendation

5.1 Introduction

It is important to reiterate that the objective of this study was the Nigerian and Indian trade and other relationships.

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in the Nigerian and Indian trade and other relationships.

5.2 Summary

This study was undertaken to examine party politics and electoral violence in Nigeria. The study opened with chapter one where the statement of the problem was clearly defined. The study objectives and research questions were defined and formulated respectively. The study reviewed related and relevant literatures. The chapter two gave the conceptual framework, empirical and theoretical studies. The third chapter described the methodology employed by the researcher in collecting both the primary and the secondary data. The research method employed qualitative survey as Newspaper and journal reviews were taken and quantitative approach to analyse peoples view using mean percentages. While the fifth chapter gives the study summary and conclusion.

5.3 Conclusion and Recommendations

Empirical studies have shown that international trade is linked to economic growth. The study examines the effect of Nigerian and Indian trade and other relationships on Nigeria’s economic growth. The influence of imports is favourable likewise exports while on the contrary, trade openness had an adverse effect. Overall, international trade is a catalyst to boost the economic prosperity of Nigeria Notwithstanding the positive effect international trade has had on Nigeria, it is still imperative to make recommendations in order to garner greater benefits. The recommendations are highlighted below;

  1. Government should reduce over-dependence on oil exports and increase and diversify its export base to earn more revenue.
  2. Government should put in place policies that promote industrialization and enhance domestic production.
  3. Government should ensure political and macroeconomic stability so as encourage investment, both local and foreign and guarantee business survival.
  4. Adopt tight trade openness by keeping trade openness rate below or at ceiling level in order to ensure economic growth.

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