India has granted Africa radically improved terms of trade in the clearest signal yet that it intends to compete head-to-head with China for access to the continent’s natural resources.

Speaking at the inaugural India-Africa Forum Summit in New Delhi, Manmohan Singh, the Indian Prime Minister, said that tariffs would be scrapped on a host of African imports, from diamonds and copper ore to sugar cane and clothes. The abolition of duties will cover 94 per cent of the in-bound goods from 34 African nations.

The summit, which is being attended by the leaders of 14 African states, is widely regarded as India’s riposte to the China-Africa Cooperation Forum of 2006, at which China unveiled $9 billion in preferential loans, export credits and other incentives to reinforce its grip on Africa’s mineral-rich regions.

Mr Singh yesterday tabled a rival set of financial sweeteners including plans to more than double credit lines to Africa, to $5.4 billion, over the next five years and $500 million in state aid. The measures join an estimated $15 billion in investment in Africa from India’s corporate sector last year, much of it in mining, power and IT projects.

He said: “India wishes to see the 21st century as the century of Asia and Africa with the people of the two continents working together to promote inclusive globalisation.”

Indian diplomats, who are lobbying for a permanent seat on the UN Security Council, studiously avoided any public mention of China in the build-up to the landmark summit. However, policymakers privately acknowledge that India must close the yawning gap its eastern neighbour has built up in the race to tap Africa’s resources.

Access to raw commodities is essential if India’s economic renaissance is to continue and will become a more pressing concern as the subcontinent’s consumers grow more affluent, analysts say. The International Energy Agency, for instance, forecasts that India will overtake Japan, the US and China as the world’s largest net importer of oil by 2025.

India already imports 11 per cent of its oil from Nigeria and wants access to alternative reserves in Angola, sub-Saharan Africa’s largest producer. However, it faces fierce competition from Chinese interests, which have already poured $15 billion in investment into Angola.

Similar scenarios are playing out across Africa. While India has increased its bilateral trade with the continent more than 30-fold since its own economy was liberalised in the early 1990s, it is still worth only about half of the $60 billion achieved by China last year.

Mr Singh yesterday advocated harmony between Africa and India on a range of topics from education to terrorism but the race for resources risks upsetting his relations with Europe and the United States, one Western diplomat said. State-controlled Indian companies have entered controversial tie-ups with their Chinese equivalents. In Sudan, China National Petroleum Corp and India’s Oil And Natural Gas Corp are working as partners on the Greater Nile Oil Project – a move critics say has allowed the Sudanese to reject Western attempts to mediate in the conflict in Darfur.

The Indian Government is also trying to eliminate Western middlemen wherever possible. This week it proposed reshaping the global trade in diamonds by importing unpolished stones directly from Africa, the source of 70 per cent of the world’s gems, and bypassing historical markets such as London, Tel Aviv and Antwerp.

At present, 95 per cent of the world’s diamonds are cut and polished in India, but most pass through Europe on the way to the subcontinent.

Foreign ministers from India and Africa have agreed that this week’s summit will produce two documents. The Delhi Declaration will cover positions on UN reforms, climate change, trade negotiations and terrorism. A second document, The Framework for Cooperation, will cover agreements in areas including education, technology, food security and health.

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