#13: Indian investments in Afghanistan.

That may go awry.

September 11, 2001. That’s the date when the twin trade towers of the World Trade Centre were hit in the US as suicide attacks by al-Qaeda terrorists. The US was quick to launch a war against terrorism in Afghanistan, which brought curtains on the Taliban rule in the landlocked country.

With a more certain future in sight for Afghanistan, India spent considerably on various projects in Afghanistan. Out of a total of USD 4 billion spent by India on grant-in-aid projects globally, USD 3 billion was spent in Afghanistan alone.

Almost all the investments have been made in the past decade, post the signing of the Strategic Partnership Agreement (SPA) between the two countries in October 2011, under which India committed humanitarian and development assistance to Afghanistan.

Now, with the Taliban back at the helm of affairs in Kabul, the entire Indian investments in the country are at questionable crossroads. Let us take a look at the kind of projects undertaken by India over the years and the companies involved -

• WAPCOS Ltd, an undertaking wholly owned by the Ministry of Jal Shakti constructed the Salma Dam (also called the Afghan-India Friendship Dam) in the Herat Province.

• The electric-transmission power maker KEC International developed power infrastructure in the country, with various employees being often kidnapped and abducted over the years.

• Kalpataru, an EPC specialising company, also spent a considerable sum of money on Afghanistan infrastructure.

• India had undertaken many other projects in Afghanistan - the Shahtoot Dam, drinking water project for Kabul, water supply for Charikar city, road connectivity to Band-e-Amir in Bamyan province, etc.

• BSCPL Infrastructure, a Hyderabad-based company, constructed the Afghan Parliament, the Indian Embassy in Kabul, and the Kabul-Kandahar road.

Now, with the Taliban seizing control of Afghanistan, the future of all these investments is uncertain. Worse still, the Chinese and Russian have taken a keen interest in the country, quickly giving legitimacy to the Taliban rule.

Bilateral Trade

New Delhi and Kabul had been natural trading partners despite the difficulty in transit via Pakistan. Since the launch of the dedicated India-Afghanistan air-freight corridor in 2017, the bilateral trade grew to reach a total of USD 1.5 billion for 2019-20.

The operationalisation of Chabahar Port in Iran had further strengthened our trade relations with Kabul. However, the Chabahar Port is another Indian investment with an uncertain future right now. This port was seen as India’s gateway to Central Asia (without any dependence on Pakistan).

Now, as China makes inroads into the war-torn country with its ambitious Belt and Road Initiative and an intention to pour billions into the country, India seems to not have a plan in place as of now.

Let’s just say 2021 has been a rough year for Indian investments abroad.

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Surbhi Singhal is a Chartered Accountant and a Company Secretary; and the founder of Advance Thinktank. The company specializes in preparing custom research reports regarding investment opportunities in India, tailored to the client's needs.