India’s Investment in Afghanistan

News: India is concerned because of the ongoing crisis in Afghanistan. After the exit of US and NATO forces, Taliban is capturing many parts of the nation. India is worried because:

  • It may have no role to play in that country, and in the worst-case scenario, not even a diplomatic presence.
  • That would be a reversal of nearly 20 years of rebuilding a relationship that goes back centuries.
  • The Taliban’s possible triumph also threatens $3 billion worth of Indian investment in various projects — dams, roads, trade infrastructure.

Projects across the country

  • Salma Dam: Already, there has been fighting in the area where one of India’s high-visibility projects is located — the 42MW Salma Dam in Herat province. The hydropower and irrigation project, completed against many odds and inaugurated in 2016, is known as the Afghan-India Friendship Dam. In the past few weeks, the Taliban have mounted attacks in nearby places, killing several security personnel. The Taliban claim the area around the dam is now under their control.
  • Zaranj-Delaram Highway: The other high-profile project was the 218-km Zaranj-Delaram highway built by the Border Roads Organisation. Zaranj is located close to Afghanistan’s border with Iran. With Pakistan denying India overland access for trade with Afghanistan, the highway is of strategic importance to New Delhi, as it provides an alternative route into landlocked Afghanistan through Iran’s Chabahar port.
  • Afghan Parliament: The Afghan Parliament in Kabul was built by India at $90 million. It was opened in 2015; PM Modi inaugurated the building. A block in the building is named after former PM AB Vajpayee.
  • Stor Palace: In 2016, Afghan President Ashraf Ghani and PM Modi inaugurated the restored Stor Palace in Kabul, originally built in the late 19th century. It is famous for the 1919 Rawalpindi Agreement by which Afghanistan became an independent country.
  • Power Infra: Other Indian projects in Afghanistan include the rebuilding of power infrastructure such as the 220kV DC transmission line from Pul-e-Khumri, the capital of Baghlan province to the north of Kabul.
  • Indian contractors and workers also restored telecommunications infrastructure in many provinces.
  • Health Infrastructure: India has reconstructed a children’s hospital it had helped build in Kabul in 1972 —named Indira Gandhi Institute for Child Health in 1985 — that was in 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.
  • Transportation: According to the MEA, India gifted 400 buses and 200 mini-buses for urban transportation, 105 utility vehicles for municipalities, 285 military vehicles for the Afghan Army. It also gave three Air India aircraft to Ariana, the Afghan national carrier, when it was restarting operations.
  • Other Projects: India has contributed desks and benches for schools, and built solar panels in remote villages, and Sulabh toilet blocks in Kabul. New Delhi has also played a role in building capacity, with vocational training institutes, scholarships to Afghan students, mentoring programmes in the civil service, and training for doctors and others.
  • Ongoing project: India had concluded with Afghanistan an agreement for the construction of the Shatoot Dam in Kabul district, which would provide safe drinking water to 2 million residents. Last year, India pledged $1 million for another Aga Khan heritage project, the restoration of the Bala Hissar Fort south of Kabul, whose origins go back to the 6th century. Bala Hissar went on to become a significant Mughal fort, parts of it were rebuilt by Jahangir, and it was used as a residence by Shah Jahan.

India-Afghanistan Bilateral trade

  • Despite the denial of an overland route by Pakistan, the India-Afghanistan trade has grown with the establishment in 2017 of an air freight corridor. In 2019-20, bilateral trade crossed $1.3 billion.
  • The balance of trade is heavily tilted — exports from India are worth approximately $900 million, while Afghanistan’s exports to India are about $500 million. Afghan exports are mainly fresh and dried fruit.
  • Some of this comes overland through the Wagah border; Pakistan has permitted Afghan trade with India through its territory. Indian exports to Afghanistan take place mainly through government-to-government contracts with Indian companies. Exports include pharmaceuticals, medical equipment, computers and related materials, cement, and sugar. Trade through Chabahar started in 2017 but is restricted by the absence of connectivity from the port to the Afghan border.