Taliban’s takeover leaves uncertainty looming over India’s investments in Afghanistan


As the world watches events unfolding in Taliban-led Afghanistan, worries loom large among countries that have trade ties with the war-torn country. This is a particular worry for countries in the neighbourhood like India that have invested heavily in Afghanistan and are now unsure of the future of their bilateral ties. Over the past two decades, since the US-Nato forces entered the region to help Afghanistan fight the Taliban, India has helped rebuild civic infrastructure. As far as infrastructure is concerned, India has helped Afghanistan build roads, dams, schools, libraries, and even its parliament. 

Since 2001, India has invested around $ 3 billion (Rs224 crore) in Afghanistan’s infrastructure, which includes over 400 projects across all provinces in the country. These projects are largely around infrastructure, human resource development and capacity building, humanitarian assistance, community development, and enhancing trade through air and land connectivity.

In 2015, prime minister Narendra Modi inaugurated the building, which was built at an estimated cost of $90 million. “This building will stand as an enduring symbol of that ties of emotions and values, of affection and aspirations that bind us together,” Modi said during the inauguration of the building that is spread over 86 acres.

In 2011, India signed an agreement with Afghanistan to enhance existing trade ties. As part of the agreement, Afghanistan got duty-free access to the Indian market. As of 2019-20, the trade between the two nations was estimated to be over $1.5 billion, which mostly includes dried fruits and vegetable products.

India is one of Afghanistan’s biggest export markets, especially for goods such as dried fruits, carpets, wool among other things. As of 2019, the total value of all Afghan exports to India was $410 million, increasing to $500 million in 2020-21. But now, these new developments have got Indian businesses worried.  For instance, the Taliban has reportedly sealed a couple of Afghanistan’s borders with Pakistan, which are the only land routes used for trade activities from India to Afghanistan.

Some of India’s other high-profile projects in Afghanistan are:

  • Zaranj-Delaram highway: A 218-km long highway, with an estimated cost of around $150 million, has been built by India’s Border Roads Organisation near Afghanistan’s border with Iran. The highway holds strategic importance for India as it provides an alternative route into Afghanistan through Iran’s Chabahar port after Pakistan denied India overland access to trade with Afghanistan.

  • HEALTH INFRA: India has reconstructed a children’s hospital it had helped build in Kabul in 1972 —named Indira Gandhi Institute for Child Health in 1985 — increasing shambles after the war. ‘Indian Medical Missions’ have held free consultation camps in several areas. Thousands who lost their limbs after stepping on mines left over from the war have been fitted with the Jaipur Foot. India has also built clinics in the border provinces of Badakhshan, Balkh, Kandahar, Khost, Kunar, Nangarhar, Nimruz, Nooristan, Paktia and Paktika.

  • Salma Dam: Also known as the Afghan-India Friendship Dam project, the Salma dam in Herat province was completed against all odds including several attacks from the Taliban and was inaugurated in 2016. With an estimated cost of around $275 million, this is one of the most expensive infrastructure projects by India in the region.

  • Power infrastructure: Another relevant contribution by India includes the revamp of power infrastructure, which includes a high-voltage direct-current line from Baghlan to the north of Kabul.

Due to the recent lack of ambiguity towards regulating laws and governance of FDI in Taliban led Afghanistan there might be a crisis of international funds that President Ghani led Afghanistan was receiving. India being no exception. Uncertainties are rising not only regarding India’s trade with the country but also its investments. Given the situation, it remains unclear how India will maintain diplomatic ties with a government controlled by the militant group. The Taliban rule could disrupt India’s friendly ties with Afghanistan and subsequently its strategic investments in the war-torn country.

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