Continue, pull out or wait and watch? India Inc in a huddle over its investments in Afghanistan

The Indian industry has approached the government to assess its investments in Afghanistan and take a call on a plan of action — to continue, pull out or wait and watch.

Industry groupings have also had talks internally on the matter and are awaiting political clarity. “The wider issue is a political one... Other things will soon follow. It is a wait and watch situation,” said an official with an industry lobby group.

Indian investment of about $3 billion in developmental and infrastructure projects is at stake.


A number of companies in the automobiles sector, including commercial vehicle and three-wheeler makers, as well as those in the fast-moving consumer goods (FMCG) space have some involvement in that country, where the Taliban has taken over after ousting the Ashraf Ghani government.

“We have held discussions with the government about the future of investments, which range from infra projects to sales and distribution networks,” said an industry representative.

Companies cannot depute or send staff from here and will have to depend on local management. “The situation is fluid and no one knows whom to talk to or negotiate with in Afghanistan,” said Sanjay Aggarwal, president, PHD Chamber of Commerce and Industry.

‘Taliban has to Allow Trade’
Developmental projects could deteriorate if not maintained, he said.

“It needs to be seen how much of a working relationship we can have with them since the Taliban has to allow trade with us first,” Aggarwal said.

Godrej Consumer, Marico, Tata Motors and Ashok Leyland are among those that have a sales presence — direct or indirect — in the country, people familiar with the matter said. Indian companies that have been active in the infrastructure sector include Kalpataru Transmission, KEC International, Wapcos, Ircon International and BHEL, they said.

In the past 20 years, Afghanistan has received active support from India and other countries after the Taliban was driven out by US-led forces.

The 2011 India-Afghanistan Strategic Partnership Agreement committed Indian assistance to help rebuild Afghanistan’s infrastructure and institutions. The Indian government, together with the industry, partnered Afghanistan in efforts to strengthen the private sector. They have been involved in building vital roads, dams, electricity transmission lines, substations, schools and hospitals.

India had pledged to take up an additional 116 high-impact community development projects in 34 provinces of Afghanistan in the areas of education, health, agriculture, irrigation, drinking water, renewable energy, flood control, micro-hydro power, sports and administrative infrastructure.

Financial losses to industry would not be substantial as the projects are government ones that were being executed by the private sector, an industry representative said.

“The main issue is to give legitimacy to the Taliban and recognise the government there. Only then can we think of trade and investment in Afghanistan — these are linked issues,” said a trade body representative.

Traders are not pushing for normalising trade with Afghanistan because that would mean recognising their government. “So, we are in wait and watch mode,” the person said.