Relations Between India and Afghanistan

India and Afghanistan have close technical, economic, cultural and political relations. The relations between India and Afghanistan can be traced back to the Indus valley civilization. The relationship is not limited to the governments in New Delhi and Kabul, and has its foundations in the historical contacts and exchanges between the peoples.

Following the 9/11 attacks and the resultant US-led war in Afghanistan, the ties between India and Afghanistan grew strong once again. India’s interest is always in seeing Afghanistan move towards greater peace and prosperity. India is one of the closest regional powers and it has invested in institution and infrastructure building in Afghanistan; and there is more trust among the people of Afghanistan towards India because it has made significant investments in developmental projects in the war-torn country. It enjoys immense goodwill among ordinary Afghans and that it has earned due to its decade-long investment in Afghanistan. In the recent past, Indo-Afghan relations have been further strengthened by the Strategic Partnership Agreement signed between the two countries in 2011.

As Afghanistan was under-going three simultaneous political, security and economic transitions in 2015, India had allayed its fears about its future by making a long-term commitment to the security and development of Afghanistan. For India, Afghanistan has immense strategic potential. Geo-strategically India-Afghanistan partnership has considerable value as a counter to the Pakistan threat. Strengthening the security dimension of India-Afghanistan ties is extremely important for India as it is in New Delhi’s interest to help Kabul preserve its strategic autonomy at a time when Pakistan has made it clear that it would like the Haqqani network and the Taliban to be at the centre of the post-American political dispensation in Kabul. India is keenly interested in cultivating a significant partnership with Afghanistan. Due to strategic and security concerns the Indo-Afghanistan cordial relations are in favour of both the nations.

Commercial Relations

Indo-Afghan Trade and Investment India recognizes the pre-eminence of Afghanistan as a junction of trade routes between central, south and west Asia for 3000 years. The bilateral trade at USD 683.02 million for 2013-14 (US$ 474.25 million export and US $ 208.77 million import by India) and$684 million for 2014-15 ($422 million export and $ 262 million import by India) is a modest figure going by the actual potential. However, the trade relations can realize its true potential if the Wagah-Attari route is opened for bilateral trade with Afghanistan. So far, the Afghanistan Pakistan Transit Trade Agreement (APTTA) has been restrictive in this aspect. India after Pakistan is the major export destination of Afghanistan. One of the objectives of building Zaranj-Delaram road by India was to boost bilateral economic relations besides offering Afghanistan another outlet to Sea port. The successful operation of the Chabahar port in Iran could capitalize on this road to offer a new transit route of Afghan products to India while opening a new route for India, and the rest of the world, for trade with Central Asia. India and Afghanistan signed a Preferential Trade Agreement in March 2003 under which India allowed substantial duty concessions, ranging from 50% to 100%, to certain category (38 times) of Afghan dry fruits. Afghanistan in turn has allowed reciprocal concessions to Indian products, including tea, sugar, cement and pharmaceuticals. In November 2011, India removed basic customs duties for all SAARC LDCs at the SAARC Summit in Male which gave all products of Afghanistan (except alcohol and tobacco) duty free access to Indian market. Afghanistan (as LDC) is signatory to SAFTA and is required to lower its tariffs of all goods not on its sensitive list of 5% or less. This decade-long process helps avoid any sudden or dramatic reductions in tariffs and eases the changes with minimal disruption to Afghan industry. Afghanistan recently reduced its sensitive list from 1,063 tariff lines to 850 out of roughly 6,000 total tariff lines. Only30% of the tariff lines on Afghanistan’s sensitive list have tariff rates above the requisite 5%.Under Afghanistan’s sensitive list, the highest tariff rates are applied on fruits, vegetables and nuts, basic construction materials, beverages, plants, articles of leather and carpets.

Some other items that are not produced in Afghanistan are also subject to higher tariffs for revenue collection purposes such as tobacco, ceramic products, perfumery, minerals and fuel. Transit isa major bottleneck in Indo-Afghan trade due to denial of export of Indian goods via Wagah border and delays at Karachi port. Most of the trade occurs via Bandar Abbas port in Iran or through Dubai. Earlier Banks/Insurance companies were refusing to provide their services via Bandar Abbas port due to US sanctions but after lifting of sanctions now the situation may change. Many Indian companies are engaged in the infrastructural development of Afghanistan and are contributing in the development of the country. During the visit of President Ghani toIndia in September 2016, to further deepen the commercial engagement, Prime Minister proposed to supply world class and easily affordable medicines from India and cooperation in solar energy through mutually agreed instruments. Both the countries are now working on air corridor to increase the trade and commerce