Investments and trades between India and Afghanistan

After two decades of fighting, the Taliban have taken control of Afghanistan, and the US has opted to
remove its forces, which included soldiers from other Nato countries. The Taliban declared victory
against Afghan government forces just four months after launching a countrywide attack, causing
havoc throughout Afghanistan. The return of Taliban might be the start of a very dark period for
Afghanistan with concerns about countries economic progress and ties with the rest of the world.

If we look deep into the India’s economic relation with Afghanistan we can say that Afghanistan have
been a strong ally for India in south Asia for a long time , this is why, during the last two decades,
India have been a key player in Afghanistan's nation-building process. India gave the country with
much-needed development aid, both in terms of investments and bilateral trade. Few of the key
projects are, the 42 MW Salma Dam or the Afghan-India Friendship Dam project in Herat Province,
The Zaranj-Delaram highway, a 218-km path built by the Border Roads Organisation (BRO) and The
Afghan Parliament is another high-profile project completed by India at a cost of $90 million. Also
India has helped Afghanistan rebuild power infrastructure including the 220KV DC-transmission line
from Pul-e-Khumri, capital of Baghlan province to the north of Kabul.

Apart from investments, In 2020-21, India's exports to Afghanistan stood at $825 million, whereas
imports were at $509 million. Also, Over the past 20 years, India's bilateral trade with Afghanistan
has also grown by leaps and bounds. India imports around 85% of its dry fruits along with most of
the piquant spices from war-torn Afghanistan. Afghan exports include fresh fruits, dry fruits such as
anjeer, walnuts, almonds, apricot, green and black raisins, aromatic asafoetida and figs. Exports from
India include garments, pharmaceuticals, medical equipment, computers, hardware materials,
cement, sugar and synthetic fibre.

But with the capture by Taliban in the country, trade routes have shut down and the government
and the Taliban yet to arrive at a trade agreement, prices of dry fruits in India have doubled and
tripled over the past few weeks, increasing troubles for local traders of India. On the other hand,
Pakistan plays a crucial role in this trade, because Export items from India to Afghanistan are shipped
via Karachi port in Pakistan.

Currently, Indian traders are facing huge amount amount of losses, with the festive seasons ahead if
situations continue to remain same it is going to affect common man’s pocket as majority of the
materials used are imported from Afghanistan. Mumbai based MIER commodities Managing director
recently clarified that this disruption in trade is a temporary glitch and within few days it will restart.
But without a stable government in Afghanistan , future of all the investment agreement between
both the countries remain uncertain.