India and Afghanistan have maintained strong relationships over the years, especially when it comes to trade. However, the two countries are experiencing a stoppage in exports and imports of goods. This standstill comes after the Taliban took over Afghanistan last Sunday, 15 August 2021. Ever since Afghanistan fell into the hands of the Taliban, exporters predicted that the same would significantly impact the country's trade with India during these times of uncertainty.
The Taliban has currently imposed a ban on the movement of cargo through Pakistan, the trade route for India and Afghanistan, resulting in a subsequent stoppage in the transfer of goods from India. "It (Afghanistan) is a landlocked country, and the air route is the main medium of exports, and that, has been disrupted. Trade will resume only after the uncertainty will get down," said Khalid Khan, FIEO Vice-President.
India is one of the largest trade partners of Afghanistan, having exported around 835 million USD worth of products in 2021 and imports valued at approximately 510 million USD. Aside from trade, India's level of investment in Afghanistan has a value of nearly 3 billion USD. At the same time, India also has around 400 ongoing projects in Afghanistan.
Ajay Sahai, Director General of Federation of Indian Export Organizations (FIEO), emphasized that moving forward, Indian exporters must take adequate precautions with regards to trade deals and payments due to the uncertain political environment in Afghanistan since the Taliban have taken over. With similar thoughts, former FIEO President and India’s leading exporter, S K Saraf, expressed his concern regarding a fall in bilateral trade, previously valued at approximately 1.4 billion USD from 2020-21 and 1.52 billion USD from 2019-20. However, he also mentioned that while India might experience a loss in trading with Afghanistan, not everything will change due to the importance of trading with India since the country continues to be a key supplier to Afghanistan.
However, everyone at the FIEO continually remains hopeful that the trade relationship between India and Afghanistan will soon go back to normal despite the ever changing situation in Afghanistan. However, this will only be achievable when Afghanistan realizes the importance of economic development and resumes trading at high volumes, which might improve India's standing in trading with Afghanistan important once again.
Written By: Akshita Sehgal
Edited By: Kabir Chadha