Afghanistan seeks deeper trade ties with India, pitches for easier business access
Afghanistan's trade representatives have asked India for easier business procedures, faster business-visa issuance, and improved market access to deepen bilateral trade.
The push comes as Afghanistan seeks to diversify its trade routes away from Pakistan, whose land border crossings (including Torkham) have periodically been shut amid strained relations.
India has been strengthening connectivity with Afghanistan through Iran's Chabahar port, alongside proposals for dry ports in Afghanistan's Nimruz province, regular shipping services from Chabahar, and simplified customs clearance at India's Nhava Sheva (JNPT) port.
Both sides have also discussed appointing dedicated commercial attachés in New Delhi and Kabul to institutionalise trade facilitation; bilateral trade between the two countries is currently valued at just over USD 1 billion.
The two sides indicated intent to broaden cooperation into pharmaceuticals, cold storage, fruit processing, and industrial parks, alongside addressing operational bottlenecks at Chabahar and financial-transaction restrictions.
Chabahar Port and India's Investment
Chabahar is a deep-water port on Iran's southeastern coast, on the Gulf of Oman, outside the Persian Gulf and just about 75 km from Pakistan's Gwadar port (developed by China). It gives India access to Afghanistan and Central Asia without transiting Pakistani territory, making it central to India's connectivity strategy in the region.
Key Details
- India signed a long-term (10-year) contract in 2024 for India Ports Global Limited (IPGL) to operate the Shahid Beheshti terminal at Chabahar; overall port and associated infrastructure development has involved investment commitments of around USD 370 million historically, with IPGL committing roughly USD 120 million to equip and operate the terminal.
- India has also extended a credit line (rupee-denominated, equivalent to roughly USD 250 million) for infrastructure projects linked to the port.
- Chabahar is being positioned as a key node of the International North-South Transport Corridor (INSTC).
Afghanistan's push for regular shipping lines from Chabahar and new dry ports in its Nimruz province is a direct attempt to operationalise the India-Iran-Afghanistan connectivity route that Chabahar was designed to enable.
International North-South Transport Corridor (INSTC)
The INSTC is a multi-modal (ship, rail, road) trade corridor connecting India to Russia and Europe via Iran, Azerbaijan, and Central Asia, bypassing the Suez Canal route. It was conceived in 2000 by India, Iran, and Russia and has since expanded.
Key Details
- Current INSTC membership includes India, Iran, Russia, Azerbaijan, Kazakhstan, Armenia, Belarus, Oman, Kyrgyzstan, Tajikistan, Turkey, and Syria, with Bulgaria as an observer.
- The principal route runs: Mumbai (India) → Bandar Abbas/Chabahar (Iran) by sea → across Iran by road/rail → Bandar-e-Anzali (Iran, on the Caspian Sea) → Astrakhan (Russia) by ship across the Caspian → onward into Russia and Europe by rail.
- Studies estimate the INSTC route can be around 30% cheaper and 40% shorter than the traditional Suez Canal route for India-Russia/Europe trade.
- India has proposed formally linking Chabahar port into the INSTC framework to give the corridor a southern maritime gateway.
Afghanistan's trade diversification effort dovetails with India's broader INSTC ambitions — deeper Afghan trade through Chabahar strengthens the corridor's southern leg and reduces dependence on routes through Pakistan.
CPEC as the Regional Counterpoint (comparative angle)
The China-Pakistan Economic Corridor (CPEC) is a Chinese-funded infrastructure network in Pakistan, running through Pakistan-administered Kashmir to Gwadar port on the Arabian Sea, intended to give China an overland energy and trade route bypassing the Strait of Malacca. India objects to CPEC because it passes through territory India claims as its own, and views the associated development of Gwadar as extending Chinese strategic presence in the Indian Ocean Region.
Key Details
- CPEC is valued at over USD 60 billion in committed investment, several times larger than India's Chabahar-linked commitments.
- Gwadar port lies roughly 75 km from Chabahar, making the two ports a frequently cited strategic pair in South Asian geopolitics.
- India does not participate in CPEC and does not endorse China's Belt and Road Initiative, of which CPEC is the flagship component.
Afghanistan's pivot toward India-Iran routes, away from Pakistan, is best understood against this larger contest between the India-backed Chabahar corridor and the China-Pakistan Gwadar/CPEC corridor.
- India-Afghanistan bilateral trade currently stands at just over USD 1 billion.
- Chabahar port is roughly 75 km from Pakistan's Gwadar port.
- India's Chabahar-related commitments include an approximately USD 120 million operating investment by IPGL and a credit line equivalent to about USD 250 million, against CPEC's overall committed value of over USD 60 billion.
- INSTC currently has 13 member states, with India, Iran, and Russia as the founding members (2000).