Krishnanand Tripathi
Senior Journalist
India’s bilateral trade with Afghanistan has registered impressive year-on-year growth of over 40 percent in 2017-18 (April-March) after the opening of two air corridors between India and the landlocked country. It’s a significant achievement which was dully recognized by the leadership of both the countries in the summit meeting held in New Delhi this week on 19 September 2018.
As per the latest official data, India’s total trade with Afghanistan was $799.24 mn during 2016-17 which has hit an all-time high of $1,143.53 mn in 2017-18, a historic jump of 43.08 percent.
But it is far below the potential as it accounts for just 0.15% of India’s total global trade which was pegged at over $769 bn in 2017-18.
The issue of improving connectivity to boost trade and commerce was discussed prominently during the official visit of Afghanistan President Abdul Ghani that took place at the invitation of Prime Minister Modi and both the leaders pledged to take the strategic partnership between the countries to a new height and work with their regional and international partners.
India’s trade with Afghanistan for the previous four years had been in the range of $650 to $850 million. In 2013-14 it was $683.10 mn, in 2014-15 it was almost at the same level of previous year at $684.47 mn, which crossed $800 mn for the first time in 2015-16 to reach the figure of $834.50 mn but again dipped below the mark of $800 million to come down at $799.24 mn in 2016-17.
However, the operationalization of two air corridors between Delhi and Kabul in July 2017 and Mumbai and Kabul in December 2017 changed all that and bilateral trade hit a record high with the expectation that it may even touch $2 bn by 2020.
In their bilateral summit meeting, both the leaders also expressed satisfaction over the successful conclusion of the US supported India-Afghanistan Trade and Investment Show in Mumbai from 12 to 15 September 2018 and expressed ‘determination to strengthen connectivity, including through Chabahar port and Air-Freight Corridor’.
However, any effort to increase it beyond the level of $1 bn to $1.2 bn through air corridors may prove difficult as flights are not allowed to land at Kabul airport during night time due to a threat from militants.
Another connectivity option is becoming available through Chabahar port in Iran. The opening of the Chabahar port is expected to provide further momentum to India’s trade ties with landlocked countries in Central Asia, particularly with Afghanistan.
Earlier this month, Iran’s minister of roads and urban development, Abbas Akhoundi, who was in New Delhi to participate in the Mobility Summit, has said that his country would handover the strategic Chabahar port to an Indian company within a month as per an interim pact.
India also looks at connecting the Chabahar port with INSTC (International North-South Transport Corridor) that has been envisioned as a multimodal rail-road-sea link between Moscow and India’s commercial capital Mumbai.
India was also formally admitted into Ashgabat Agreement in February this year which seeks to establish an international transport and transit corridor between Iran, Oman, Uzbekistan, and Turkmenistan.
India’s accession into Ashgabat Agreement and the opening of Chabahar port will diversify India’s connectivity options in the region and its ability to carry out trade and commerce with these countries.
It is also expected to significantly improve India’s ability to exploit the hydrocarbon resources available in resource-rich Iran as its main port Bandar Abbas is over congested. But the shadow of US sanctions looms large over India’s trade ties with Iran.
During the meeting of Prime Minister Modi and Afghan President Ghani, both sides also agreed to deepen their partnership in infrastructure, human resources development and other capacity-building projects in Afghanistan.
However, continued terror activities in Afghanistan act as a dampener for Indian investors. Last month, an Indian national working for a multinational company was kidnapped and killed in Afghanistan along with two other nationals from Malaysia and Macedonia.
During the summit meeting, India reiterated its unwavering support to the security and sovereignty of Afghanistan and unequivocally condemned terrorist attacks and violence there.
However, mere improving connectivity or finding new routes will not help India to increase its bilateral trade with the landlocked country. It requires sustained efforts by the global community to bring down the cycle of violence and terrorism in the war-torn country before it could meaningfully participate in trade and commerce with India and others.