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India, Afghanistan Plan Air Link to Bypass Pakistan for Trade

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The Pulse

India, Afghanistan Plan Air Link to Bypass Pakistan for Trade

The air cargo link is expected to unleash the potential of trade between India and Afghanistan.

India, Afghanistan Plan Air Link to Bypass Pakistan for Trade
Credit: Flickr/ MEAPhotogallery

Indian and Afghan officials confirmed over the weekend that the two countries are planning to move forward with an air cargo service over Pakistan. Along with the establishment of the Iran-based Chabahar port, the air link will serve as an important enabler of two-way trade between India and Afghanistan.

The plan was announced after a bilateral meeting between Indian Prime Minister Narendra Modi and Afghan President Ashraf Ghani on the sidelines of the 2016 Heart of Asia conference on Afghanistan in Amritsar, India.

According to Reuters, which spoke to Indian officials, the air cargo link will “boost the growth prospects of its fruit and carpet industries while [Afghanistan] battles a deadly Taliban insurgency.”

Currently, Afghanistan — a landlocked country — depends overwhelmingly on access to the Arabian Sea port of Karachi in Pakistan for a access to overseas markets.

Iran is Afghanistan’s top export partner, with an annual trade volume of $1.49 billion between them according to the World Bank’s 2014 data, representing 19.5 percent of Afghanistan’s total trading activity. Exports to Pakistan, meanwhile, came in at $1.3 billion, representing 17.25 percent of total imports.

Imports from India, meanwhile, measured at just $100 million, according to the World Bank.

Though Pakistan allows Afghanistan to convey some exports to India through its territory, India conversely is unable to export goods to Afghanistan through Pakistan.

Given bilateral tensions between India and Pakistan over Kashmir, the two nuclear-armed South Asian neighbors maintain a closely guarded border, with a single official crossing between them at Wagah in Punjab.

Afghanistan senses a large potential for trade with India, which currently exports less to Afghanistan than even Japan, which exported $259 million to the country in 2014.

“We have a lot of potential for trade on both sides. On our side, it’s mostly fruit and dried fruit and potentially through India to other places for products like carpets and others,” Afghan Director General for Macro Fiscal Policies Khalid Payenda remarked before the Heart of Asia conference.

The Chabahar port agreement was signed between Iran, India, and Afghanistan during Modi’s state visit to Iran in May 2016. Once the port if fully operationalized, it will allow an amplification of trade volumes between India and Afghanistan through Iran.

Aerial trade, even when completed, will be cost prohibitive for some goods compared to sea-based container traffic.