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Taliban takeover of Afghanistan will severely impact India’s economic outreach to Central Asia, Eurasia

Taliban makes rapid progress in Afghanistan: Concerns rise worldover

There is one question that India and the rest of the world are looking for an answer to — what happens to Afghanistan and the region if the Taliban takes control? The economic impact will be severe for the Asian countries—besides, India and China the central, middle and South Asian nations would be affected too.

While bilateral trade between India and Afghanistan crossed the $1.5 billion mark in 2019-20, New Delhi’s investments and other development assistance in Afghanistan is estimated at $3 billion.

The two countries are connected by air freight corridors — Kabul, Kandahar, Herat with New Delhi, Mumbai and Chennai. Since the commencement of an air freight corridor in 2017, over 500 flights have ferried more than 5,000 metric tons of cargo directly benefiting Afghan farmers and small traders, Carnegie India, in a report, said.

Also read: Doha accords go up in smoke as Taliban assaults key Afghan cities

According to the Indian Embassy in Kabul, trade in terms of value has consistently improved over the last five years. Indian exports to Afghanistan increased by over 89 per cent between 2015-16 and 2019-20. Similarly, India’s imports also grew by 72 per cent during the same period. An increased trade between the two countries would mean that Afghanistan’s dependence on Pakistan is eased.

In 2019-20, the export value increased by 39 per cent and imports over 21 per cent compared to 2018-19.

India’s imports from Afghanistan mainly include high value dried fruits such as dried raisin, walnut, almond, fig, pine nut, pistachios, dried apricot. Fresh fruits have also been coming in from the country besides asafoetida or hing and saffron. Indian exports include pharmaceuticals, medical equipment, computers and related materials, cement, and sugar.

“A troubled Afghanistan means troubled Asia, especially South, Central and Middle east. Afghanistan is rich in natural resources including some rare minerals and hydrocarbons. Though in the immediate term, Indian economy may not be adversely impacted at all, but in the medium to long run, this will have some serious economic implications too,” leading energy expert Narendra Taneja told India Narrative.

Also read: India’s friend “Lion of Herat” Ismail Khan vows to crush Taliban in Afghanistan

Due to its geographical location, Afghanistan is strategically important for India for its interests in the entire South West and Central Asian regions, he added.

Foreign policy experts also said that the issue of connectivity will come up as political uncertainties rise. Afghanistan with its strategic location acts as a gateway to the Middle East and Central Asian countries. India has significant investments in the Central Asian countries such as Uzbekistan and Tajikistan.

The proposed Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, which has remained a non starter could be given a quiet burial. Questions over the Chabahar Port, which is under construction, have also risen. According to a report in the Hindu, after a brief halt, India accelerated the work on Chabahar Port early this year and the strategic Iranian port is expected to be operational soon.

Taneja noted though India need not be worried about supply of natural gas and oil as several other markets including Saudi Arabia, Qatar and other countries in the United Arab Emirates are willing to supply energy, concerns over medium to long term geoeconomic implications remain.

“All our gas and oil imports are by sea and they are safe and secure,” Taneja said.

Earlier this year, Foreign Minister S Jaishankar, while addressing the Heart of Asia-Istanbul Process meeting in Dushanbe in Tajikistan said that peace within Afghanistan would mean peace around Afghanistan.

Center for Strategic & International Studies highlighted that even without the completion of the highway and rail system between Chabahar and the Iran-Afghanistan border, India successfully shipped 110,000 tons of wheat and 2,000 tons of pulses to Afghanistan in 2018, as a part of its promise to deliver a total of 1.1 million tons of food supply on a grant basis.

“Connectivity which is directly linked to economic growth will suffer..there is growing concern over this,” an analyst said.