India-Afghanistan trade suffers amid political uncertainty

The Taliban are said to have blocked land trade routes between India and Afghanistan, halting all exports and imports through transit routes in Pakistan. However, the Dubai route is still operational, according to reports citing Ajay Sahai, Director General of the Federation of Indian Export Organisations.

Over the past two decades, India has strengthened bilateral ties with landlocked Afghanistan. Trade between the two nations crossed $1.5 billion in 2019-2020, with India's exports to Afghanistan touching $997.58 million and imports about $530 million.

India's exports to Afghanistan grew 89 percent from 2015-16 to 2019-20 and imports rose 72 percent. In 2019-20, the value of exports increased 39 percent and imports 21 percent from 2018-19.

Notwithstanding land roadblocks created by Islamabad, India and Afghanistan established an air-freight corridor for the smooth flow of bilateral trade.

Afghan exports to India through the air-freight corridor were high-value products such as dried raisins, walnuts, almonds, gigs, pine nuts, pistachios, dried apricots and fresh fruit such as pomegranates, apples, apricots, cherries, melons, watermelons, medicinal herbs (asafoetida) and saffron.

The Afghanistan government had lately been keen to procure its needs from India through government-to-government contracts. This led to several agreements between Indian companies and the Afghan National Procurement Authority. Pharmaceuticals, medical equipment, IT and technical services, among others, were the focus of this procurement drive.

The crisis in Afghanistan is likely to adversely affect bilateral trade with India, the Confederation of All India Traders said in a Twitter post on August 17. Indian traders will suffer significant losses, it said, adding that prices of products imported from Afghanistan may go up due to political uncertainty in that country.