India-Afghanistan trade halts; A deep dive into its implication on India's exports
India and Afghanistan had signed a Preferential Trade Agreement (PTA) in 2003, under which India enjoys substantial duty concessions. India's exports to Afghanistan had grown almost 89 per cent that was between 2015 and 2016, but all of that comes to a grinding halt for now.
The Taliban's takeover of Afghanistan has put a question mark on the $1.5 billion trade between India and Afghanistan. The two nations had signed a Preferential Trade Agreement (PTA) in 2003, under which India enjoys substantial duty concessions.
India's exports to Afghanistan had grown almost 89 percent that was between 2015 and 2016, but all of that comes to a grinding halt for now.
According to the Federation of Indian exporters, they were hopeful that trade would resume in the next two to three weeks and these are temporary issues because the political situation in Afghanistan is extremely uncertain right now.
Meanwhile, India is a huge beneficiary of the historic Preferential Trade Agreement with Afghanistan.
India has an air freight corridor agreement, signed in 2017 to, in a way make sure that tensions due to Pakistan do not interrupt India-Afghanistan trade and goods worth 200 million or 7,000 tonnes have been delivered through that air freight corridor.
Now, while India will have to re-engage with the Taliban-led government in Afghanistan on these issues as the trade between the two nations has halted currently.
In fact, traders told CNBC-TV18 that the Taliban has closed the border crossing between Afghanistan and Pakistan. The road transit route, which was taken for trade through Pakistan has been blocked as well.
Commercial flights are also halted and hence cargo flights cannot take off or land in Kabul.
The International Monetary Fund (IMF) has said Afghanistan will not be able to access special drawing rights or IMF resources. There is also a lack of clarity whether the international community will recognise the Taliban led government there as well.
The Confederation of Indian traders has appealed to commerce minister Piyush Goyal to look into the situation that traders are facing because trade between India and Afghanistan could be impacted adversely in the days to come
CNBC-TV18’s Parikshit Luthra has more information on what is the way forward and is there any indication on whether a resumption is likely.
(Edited by : Ankit Gohel)
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