In the latest news, the Taliban has stopped trade between India and Afghanistan through Pakistan. "We keep a close watch on developments in Afghanistan. Imports from there come through the transit route of Pakistan. As of now, the Taliban has stopped the movement of cargo to Pakistan so virtually import has stopped" said Ajay Sahani, The Federation of Indian Export Organisation's director-general.
Talibani spokesperson in the latest briefing said that we do not want to stop trade with any country. Instead, we are making some changes so there might be some delay in the trade. One might ask that how India was doing trade with Afghanistan through Pakistan when there aren't any trade relations between India and Pakistan itself as of now. What is the Taliban’s motive behind this decision? Read along and we will answer all the questions.
Trade Relations with Pakistan
August 9, 2021, marked two years since Pakistan cut diplomatic and economic ties with India by expelling the Indian envoy and suspending bilateral trade and postal services. This was Pakistan's retaliation for India's decision to scrap Article 370 in Kashmir. Since then, both countries have not done any trade with each other officially. Does that mean we had trade relations with Pakistan unofficially?
The answer is Yes!! For example, let's say there is high demand for Indian cotton in Pakistan. Now that two country does not have official trade relation, cotton from India will first go to a third country, mostly UAE and then finally to Pakistan. One more question which arises is that since there isn't a land route directly between India and Afghanistan, does that mean Pakistan allowed both nations to continue trade with each other through itself when it does not have trade relations with India. The answer is both yes and no!
Pakistan had to allow Afghanistan to export its products to India through itself because of the binding by THE AFGHANISTAN-PAKISTAN TRANSIT TRADE AGREEMENT (also known as APTTA). It is a bilateral trade agreement signed in 2010 why Pakistan and Afghanistan that calls for greater facilitation in the movement of goods amongst the two countries. But the agreement only includes export by Afghanistan to India and does permit export by India to Afghanistan. India had to use Iran as an intermediary stop for its export to Afghanistan.
Despite all these problems, bilateral trade between India and Afghanistan crossed the $1.5 billion mark in the previous financial year i.e., 2019 -2020. India mostly exports Sugar, tea, coffee, clothing, pharmaceuticals, transmission power, cherry, and watermelon. Out of $1.5 billion, Indian export accounts for roughly $835 Million.
Imports to India from Afghanistan primarily consist of dry fruit. 85% of the country's dry fruit comes from Afghanistan. Afghan exports to India also include onions, dried raisins, gums, and spices such as hing and shah jeera. With the Taliban banning the trade routes with India, prices of dry fruits in India are expected to spike up to Rs100 rupees per KG.
Why is the Taliban doing this right now?
Even though the Taliban is not openly recognizing this step of banning export and import with India, Indian authorities are clearly saying that this is happening. Experts say that there could be two reasons for this step.
Even though the Taliban right now is sitting inside the presidential palace of Afghanistan, they are not yet the government. None of the international community has yet recognized the Talibani government. Most of the big countries have already said that they will not recognize this forceful power grab. India is one of them. So if the Taliban wants to rule Afghanistan, it will have to establish international relations. Countries like Russia, China, and Pakistan are already eager to recognize the Taliban. Presurrising India to do the same makes sense.
With US withdrawal and Afghan troops surrendering, Northern Alliance is the biggest threat to the Taliban right now. They have shown significant resistance towards the Taliban in the past as well as right now in the present. The flag of the "Northern Alliance" or United Islamic Front for the salvation of Afghanistan has been hoisted for the first time since 2001 in the Panjshir Valley.
When everyone including Afghan forces, the US, NATO abandoned Afghanistan, Northern Alliance is the only force that is standing against the Taliban in the Panjshir province. Experts believe that the world will divide into two halves after the Kabul fall. One side will comprise countries that support the Taliban and help it to rule Afghanistan. Another side will be countries that do not like the Taliban. Funding Northern Alliance against the Taliban will make sense for them. The Taliban will not like this move. Hence, it wants to pressurize India to not fund and establish any kind of relationship with the Northern Alliance.
"We imported goods worth around USD 510 million. But besides the trade, we have a sizeable investment in Afghanistan. We have invested around USD 3 billion in Afghanistan and there are 400-odd projects in Afghanistan some of which are currently going on,” Sahani further told the media. With the difference in the Taliban's words and actions, forming a policy towards Afghanistan will be challenging for India.