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India-Afghanistan Commercial Brief

Bilateral trade between India and Afghanistan has crossed US$1.5 billion mark in the previous financial year (2019-2020). India’s exports to Afghanistan almost touched US$ 1 billion (US$ 997.58 million) and India’s import from Afghanistan around US$530 million. The growth in trade value has consistently improved over the last five years. As a comparison, Indian exports  to Afghanistan witnessed a growth of over 89% between 2015-16 and 2019-20. Similarly, India’s imports also grew by 72% during the same period. In 2019-20, the export value increased by 39% and imports over 21% compared to 2018-19.       

2.         India and Afghanistan signed a Preferential Trade Agreement (PTA) in March 2003 under which India allowed substantial duty concessions, ranging from 50% to 100%, to certain category 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.

3.         Over the years, Pakistan has denied smooth and reliable land connectivity between India and Afghanistan. However, this has not been a deterrent in advancing trade relations between India and Afghanistan. To overcome this obstacle and ensure trade connectivity between India and Afghanistan, an Air-Freight Corridor connecting India and Afghanistan was established in June 2017. The inaugural flight was flagged off by President Ghani in Kabul and was received in New Delhi by EAM and Civil Minister for Aviation . So far, more than 500 flights have operated on the corridor since its inception, carrying nearly 7000 tonnes of cargo valued over US$200 million. Afghan exports to India through Air Freight Corridor are mainly high value products such as Dried Raisin, Walnut, Almond, Fig, Pine Nut, Pistachios, dried Apricot and fresh fruits such as Pomegranate, Apple, Apricot, Cherry, Melon, Watermelon, medicinal herbs (Asafoetida) and Saffron. Air Freight Corridor has connected - Kabul, Kandahar, Herat with New Delhi, Mumbai and Chennai. The Chahbahar port is under development and has started functioning partially.

4.         Of late, the Afghan government has shown intent to obtain its procurement requirements from India through Government to Government contract with Indian companies. The Mission has facilitated several agreements between Indian companies and the Afghan National Procurement Authority (NPA). Major Afghan procurement focuses include pharmaceuticals, medical equipment, IT and technical services.

5.         India-Afghanistan Trade and Investment Shows ‘Passage to Prosperity’ (P2P) were organised with the support of USAID consecutively during the last three years. In 2017, the first P2P was organised in New Delhi, second in Mumbai (2018) and again in New Delhi in 2019. The trade shows have facilitated Afghan business persons to showcase their products, undergo MoUs and agreements with Indian partners, strengthening further the economic ties between India and Afghanistan.           

India – Afghanistan Trade Chart

1.India’s Export to Afghanistan526.60506.34709.75715.44997.58
3.India's Total Export262,290.13275,851.71303,526.16330,078.09313,217.25
6.India’s Import from Afghanistan307.90292.90433.78435.44529.84
8.India's Total Import381,006.63384,355.56465,580.99514,078.42473,988.29
11.TOTAL TRADE834.50799.241,143.531,150.891,527.42
13.India's Total Trade643,296.75660,207.28769,107.15844,156.51787,205.55
16.TRADE BALANCE218.70213.44275.97280.00467.74
17.India's Trade Balance-118,716.50-108,503.85-162,054.83-184,000.33-160,771.04

(Source: Indian Department of Commerce)

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