- Four years after Kabul embassy closure, bilateral trade between India and Afghanistan has nearly returned to pre-2021 levels - while Afghanistan’s trade passing through Pakistan has collapsed.
- India-Afghanistan trade before 2021 was US$1.33 billion (India exports US$826 m, imports US$509 m). After the Taliban takeover exports plunged to US$437 m in 2022-23; by FY 2023-24 trade surged to US$997.7 m, largely driven by Afghan exports of dried fruits, saffron, nuts and apples - at US$642 m, causing India to run a trade deficit with Kabul for the first time.
- Between April 2024 and March 2025 trade reached about US$1 billion signalling a full recovery. India and Afghanistan are exploring Iran’s Chabahar Port (Indian-developed) to bypass Pakistan. India plans to reopen its Kabul embassy and resume direct flights - shifting from “cautious engagement” to reconnection.
- Meanwhile, Afghanistan’s transit trade via Pakistan collapsed: from US$7 billion in 2022 down to US$2.9 billion in 2024 (≈ 60 % drop); in Nov 2023-24 it plunged 84 % to US$1.2 billion. Causes include Pakistan’s anti-smuggling drives, tighter customs, frequent border closures amid Kabul–Islamabad tensions.
- The trade collapse signals Pakistan’s waning leverage; India’s re-emergence as a key economic and diplomatic player is increasingly connected to Afghanistan’s revival. For India, Afghanistan is the gateway to Central Asia and a strategic counter-weight to Pakistan and China.
- India’s outreach to the Taliban regime is driven by pragmatism: in the context of Russia’s recognition of the regime, China’s growing role, and deteriorating Pakistan–Afghanistan ties, New Delhi aims to regain lost influence and prevent Afghanistan from tilting fully toward Beijing or Islamabad.
- Afghanistan offers India business potential in minerals, horticulture and agriculture; India wants connectivity via the KTA (Kazakhstan-Turkmenistan-Afghanistan) route rather than the China-linked UAP (Uzbekistan-Afghanistan-Pakistan) corridor.
- The Chabahar port deal anchors India’s westward strategy: under a 10-year deal signed May 2024, the port can handle 8.5 m tons of cargo and serves as a corridor to Eurasia. India is investing US$120 m in upgrades and offering US$250 m credit line; Taliban officials declared US$35 m investment. The route bypasses Pakistan and aligns with India’s goal of breaking strategic encirclement by China.
- Ultimately, India’s engagement with Afghanistan is more than trade: it represents a larger strategic repositioning - facing encirclement by China’s influence and Pakistan’s alignment, India is turning westward via Afghanistan and Iran, reviving the logic of concentric alliances (inspired by ancient strategist Chanakya) to balance Chinese and Pakistani influence and re-assert its role in the emerging Eurasian order.
