Afghan economy in tatters, relations stalled, trade between Delhi and Kabul via Dubai

the chaos that followed the capture of Kabul by the Taliban in August last year, India terminated its mission and withdrew from Afghanistan. With the country’s economy in shambles and diplomatic relations suspended – India has still not recognized the Taliban regime – bilateral trade, which took a hit in the aftermath of the takeover, has resumed. Via Dubai, and its banks.

Afghanistan has been a major destination for Indian sugar, and India one of the biggest importers of Afghan spices and dried fruits, especially apricots and figs. The Taliban takeover came at a time when Afghanistan was expecting a bumper crop of dried fruits, most of which were destined for India.

With the economy collapsing and the absence of diplomatic relations, there was uncertainty over the fate of this two-way trade which included other exports from India and was valued at $1.5 billion in 2019. -2020.

Women walk through the old market as a Taliban fighter stands guard in Kabul city, Afghanistan. (AP)

But 10 months on, Indian traders say their Afghan exports and transactions are going smoothly after a short hiatus, even though total trade in FY 2021-22 has fallen nearly 40% in value from to the previous year.

In the last financial year, total trade was Rs 3,719.76 crore compared to Rs 6,106.20 crore recorded in 2020-21, according to trade statistics from the Ministry of Commerce and Industry.

While Indian traders said they lost a month of trade immediately after the Taliban takeover, the Afghan-Indian Air Cargo Corridor, inaugurated in 2017 and which by 2021 linked Kabul, Kandahar and Herat with Delhi, Mumbai and Chennai, has remained suspended since August last year. .

But Indian exporters continued to ship goods by sea to the port of Karachi, and from there by road to Afghanistan. Exports from Afghanistan arrive through the port of Chabahar in Iran and the Wagah border with Pakistan.

Taliban fighters guard a street in Kabul, Afghanistan. (Reuters)

Rahil Sheikh, managing director of MEIR Commodities, a Navi Mumbai-based agricultural wholesale company, said trade picked up in the month following the Taliban takeover and has now returned to previous export levels. 60,000 tonnes of sugar from India every month.

“The sugar is sent in large containers from Jawaharlal Nehru Port Trust in Mumbai or Mundra Port in Gujarat to Karachi. From there, trucks transport the cargo overland to Afghanistan,” he said.

Sheikh and other merchants used to route payments through Afghan banks, but now all transactions are routed through Dubai. Affirming that traders are not facing payment problems, he said the Taliban regime is also keen to maintain a normal supply of essential goods. Nearly 90% of the sugar entering Afghanistan comes from mills in Maharashtra.

For India, Afghanistan was the largest and nearest import source of apricots, dried figs, asafoetida (hing) and baby pistachios. Vijay Bhuta, director of the Mumbai spice market and chairman of the Dry Fruit Traders Association, confirmed imports resumed within a fortnight of the Taliban takeover. “Previously we dealt with the bank in Afghanistan, but then most of the trade moved to the banks in Dubai,” he said.

The Taliban regime and the Indian government are aware that trade has picked up and Dubai has become a payment hub. According to data available on the Indian Embassy’s online site, bilateral trade between India and Afghanistan crossed the US$1.5 billion mark in 2019-2020. Of this amount, India’s exports to Afghanistan amounted to nearly US$1 billion (US$997.58 million) and India’s imports from Afghanistan to around US$530 million. .

Afghan exports enjoy duty-free access to Indian markets under India’s concessions to SAARC Least Developed Countries. India’s main exports to Afghanistan were synthetic filaments, garments and clothing accessories, pharmaceuticals, cereals, synthetic staple fibers, tobacco products, dairy and poultry products, coffee/tea /meat and spices. The main imports from Afghanistan to India were fresh fruits, dried fruits/nuts, raisins, vegetables, oilseeds, precious/semi-precious stones.

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