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Afghan economy in tatters, relations on hold, Delhi and Kabul trade via Dubai

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.

Written by Parthasarathi Biswas | Pune |
Updated: May 20, 2022 12:19:49 pm
Afghanistan, Taliban, Afghanistan Taliban takeover, Kabul, Kabul takeover, Indian Express, India news, current affairs, Indian Express News Service, Express News Service, Express News, Indian Express India NewsEarlier this year, India sent wheat trucks to Afghanistan. Reuters

The chaos that followed the Taliban takeover of Kabul in August last year saw India shutting down its mission and pulling out of Afghanistan. With the country’s economy in a shambles and diplomatic ties suspended — India has still not recognised the Taliban regime — bilateral trade, which took a hit in the immediate aftermath of the takeover, picked up again. 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 took place at a time when Afghanistan was expecting a bumper crop of dried fruits, most of it meant for India.

With the collapse of the economy and no diplomatic relations, there was uncertainty over the fate of this bilateral trade which included other exports from India and was valued at $1.5 bn in 2019-2020.

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

But 10 months down the road, Indian traders say their Afghan exports and transactions are proceeding smoothly after a short interruption, even though total trade in the 2021-22 fiscal fell by nearly 40 per cent in value over the previous year.

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Last fiscal, total trade was Rs 3,719.76 crore, as against Rs 6,106.20 crore recorded in 2020-21, according to trade statistics of the Ministry of Commerce and Industry.

While Indian traders said they lost a month’s trade immediately after the Taliban takeover, the Afghan-India air freight corridor, inaugurated in 2017 and which by 2021 connected Kabul, Kandahar and Herat to Delhi, Mumbai and Chennai, has remained suspended since August last year.

But Indian exporters have continued to send goods by sea to Karachi port, and from there by road to Afghanistan. Afghanistan’s exports have been trickling in through the Chabahar port 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 commodities wholesale company, said trade resumed within a month of the Taliban takeover and is now back to the previous export levels of 60,000 tonnes of sugar from India every month.

“Sugar is sent in large containers from Jawaharlal Nehru Port Trust in Mumbai or the Mundra port in Gujarat to Karachi. From there, trucks transport the load via the land route into Afghanistan,” he said.

Sheikh and other traders used to route payments through Afghan banks but now all transactions are routed via Dubai. Claiming traders are not facing payment troubles, he said the Taliban regime too is keen to maintain normal supply of essential commodities. Almost 90 per cent of sugar which makes its way into Afghanistan has its origins in the mills of Maharashtra.

For India, Afghanistan was the largest and the nearest source for import of apricots, dried figs, asafoetida (hing) and small pistachio nuts. Vijay Bhuta, director of Mumbai Spice Market and president of Dry Fruit Traders Association, confirmed that imports resumed within a fortnight of the Taliban takeover. “Earlier, we were dealing with the bank in Afghanistan, but then most trade shifted to banks in Dubai,” he said.

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

Afghan exports have duty free access to Indian markets under concessions granted by India to Least Developed Countries in SAARC. The major exports from India to Afghanistan have been man-made filaments, articles of apparels and clothing accessories, pharmaceutical products, cereals, man-made staple fibres, tobacco products, dairy and poultry products, coffee/tea/meat and spices. Major imports from Afghanistan to India have been fresh fruits, dried fruits/ nuts, raisins, vegetables, oil seeds, precious/ semi-precious stones.

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