Trade Complementarity and Similarity between Nigeria and India in the Context of Bilateral Trade Relations

This study established trade complementarity and similarities between Nigeria and India based on twenty major product categories for the periods 2000-2014 using the Revealed Comparative advantage index. The potentialities of increasing Nigeria and India trade were found in commodities such as mineral fuels, organic chemicals, nuclear reactors, fish crustacean and other aquatic, copper, residues and waste from food industries, coffee tea mati and spices, rubber and articles, foot wears, man-made staple fibres, edible fruit and nuts, ores slag and ash, cereals. The study has also found the possibility of increasing Nigeria and India's trade with other countries with high RCA index in products such as cotton, plastic and articles thereof, electrical machinery and equipment, aluminium and articles thereof, vehicles railway tram roll-stock and parts of such because there is no scope of increasing trade of these products because of low RCA index possessed by Nigeria and India in these products. I. Introduction 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(1)). 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(2)). 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(3)). 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(4)). 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(2)), 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 economy if properly look into with huge amount of investment by India as one of the world leading service provider will help India in narrowing it trade deficit or imbalance with Nigeria. The rationale behind this study is to establish trade complementarity 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 complementarity 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 complementarity and similarities of trade among them.