The Associated Chambers of Commerce and Industry of India (ASSOCHAM) signed a memorandum of understanding with the Afghanistan Chamber of Commerce and Investment (ACCI) in New Delhi in late June 2026 to strengthen bilateral trade and investment ties between the two countries. The pact aims to nearly double the current bilateral trade volume of around $1 billion to $2 billion, with a sharp focus on mining, oil and gas, and sugar. It also envisions setting up reciprocal manufacturing units in both countries as a long-term goal.
The MoU: Key Provisions and Targets
The agreement was signed by Saurabh Sanyal, Secretary General of ASSOCHAM, and Sayed Mohammad Karim Hashemi, Chairman of ACCI, during a meeting of business leaders from both countries at the ASSOCHAM headquarters in New Delhi. The Afghan delegation, led by Hashemi, also held talks with Nirmal Kumar Minda, President of ASSOCHAM, and other officials on expanding trade flows, investment opportunities, and private sector cooperation.
ASSOCHAM, established in 1920, is India’s oldest apex chamber of commerce with a membership of over 4,50,000 companies, including a large number of MSMEs. Headquartered in New Delhi, it acts as a conduit between the industry and the government. ACCI, on the other hand, was formed in 2008 through a merger of the former Afghanistan Chamber of Commerce and Industries and the Afghanistan International Chamber of Commerce. It is an independent, non-governmental, non-political organization that serves as the unified voice of Afghanistan’s private sector.
Under the MoU, both chambers have agreed to a structured timeline for evaluating mutual commercial interests. They will hold bi-weekly and monthly virtual meetings over the next 60 days to assess interest among private sector enterprises on both sides. Depending on the outcome, an Indian business delegation of 15 to 20 members may travel to Afghanistan to explore ground-level opportunities in the identified focus areas.
Beyond trade in goods, the partnership aims for reciprocal industrial establishment. The long-term roadmap includes setting up two Indian manufacturing units in Afghanistan and two Afghan manufacturing units in India. This goes beyond standard import-export arrangements and targets deeper economic integration between the two business communities.
India-Afghanistan Trade: A Relationship in Transition
Bilateral trade between India and Afghanistan has seen a notable realignment in recent years. In the solar year 1404 (March 2025 to March 2026), total trade crossed $1 billion, a 12% increase over the previous year. Afghan exports to India stood at nearly $890 million, while Indian exports to Afghanistan were about $237 million. Afghanistan’s exports to India jumped 23% in 2025 to $755 million, making India its largest export destination, overtaking Pakistan.
| Metric | Value |
|---|---|
| Total bilateral trade (1404 solar year) | ~$1.001 billion |
| Afghan exports to India | ~$890 million |
| Indian exports to Afghanistan | ~$237 million |
| Growth in Afghan exports to India (2025) | 23% |
| Target under MoU | $2 billion |
Afghanistan’s primary exports to India include dry fruits, medicinal herbs, carpets, and mineral products. India exports pharmaceuticals, tea, coffee, textiles, and engineering goods to Afghanistan. The trade relationship has historically been shaped by cultural and people-to-people ties that go back centuries, as ASSOCHAM President Nirmal Kumar Minda noted.
During his visit, ACCI Chairman Hashemi held meetings with Anand Prakash, India’s Special Representative for Afghanistan, and officials from the Ministry of External Affairs and Ministry of Commerce. He identified mining, food processing, pharmaceuticals, and healthcare as priority areas where Afghanistan seeks Indian investment and technical cooperation. He also highlighted that Afghanistan has put in place incentives for foreign investors, including land allocation, simplified business licensing, and a five-year tax holiday.
The Geopolitical Landscape and Connectivity Challenges
The MoU comes at a time when trade between India and Afghanistan is being reshaped by major geopolitical shifts. Pakistan’s denial of overland transit access for India-Afghanistan trade has forced both countries to develop alternative routes. The Wagah-Attari land route and the Karachi port route, once the primary channels for bilateral trade, remain closed.
This has elevated the strategic importance of Chabahar Port in southeastern Iran. Located about 90 kilometres from the Afghan border, Chabahar is the only Iranian deep-water port on the Gulf of Oman and a key node of the International North-South Transport Corridor (INSTC), a 7,200-km multimodal network connecting India, Iran, Russia, and Central Asia. India has invested approximately $120 million in equipping the Shahid Beheshti terminal at Chabahar and has committed additional funds for its development.
However, the port faces operational uncertainty. The United States revoked a sanctions waiver for Chabahar in September 2025, though a six-month extension was granted until April 26, 2026, after Indian diplomatic efforts. Reports in June 2026 indicated that India and Iran may resume talks to restore normal operations at the port as regional conditions show signs of stabilising. Afghanistan itself has invested $35 million in Chabahar and remains committed to the route.
Afghan traders have flagged several persistent obstacles. High air freight costs make the Kabul-Delhi and Kabul-Amritsar air corridors, activated in late 2025, an expensive alternative. Shipping via Chabahar involves transit times of 25 to 45 days, far longer than the two days the Wagah-Attari route once offered. Delays in cargo clearance at Chabahar, difficulties in financial transactions, and the detention of export containers remain unresolved issues.
| Challenge | Impact |
|---|---|
| Closure of Wagah-Attari and Karachi routes | Loss of cheapest, fastest land route |
| Chabahar transit time | 25-45 days vs 2 days via Pakistan |
| High air freight costs | Limits viability of air corridors |
| US sanctions uncertainty | Threatens Chabahar operations |
| Delayed payments and customs clearance | Discourages new trade commitments |
| Visa difficulties for Afghan traders | Restricts business-to-business engagement |
The Way Forward
The ASSOCHAM-ACCI MoU provides a structured framework for the private sector to drive economic engagement even as formal diplomatic relations remain limited. India does not formally recognise the Taliban-led administration in Kabul, but it has maintained pragmatic engagement through trade, humanitarian assistance, and development projects. India reopened its embassy in Kabul in 2025 and has resumed select development partnerships.
India has also signalled a broader commitment to expanding connectivity with Afghanistan and Central Asia. India plans to invite a 200-member delegation of Afghan traders and investors to participate in the India International Trade Fair. An online meeting between business leaders from both countries is expected within weeks. An Indian industry delegation may visit Kabul to assess investment prospects if the initial virtual engagements generate sufficient interest.
For Afghan businesses, the priorities remain clear: easier business visas from India, smoother cargo clearance at Chabahar, lowering of high air freight costs on the Kabul-Delhi and Kabul-Amritsar routes, and resolution of payment bottlenecks. On the Indian side, the appeal lies in accessing Afghanistan’s vast mineral reserves, including lithium, lead, zinc, and talc, and in expanding markets for Indian pharmaceuticals, textiles, and agricultural products such as Basmati rice.
The MoU sets an ambitious but achievable target. Whether the vision of doubling trade and establishing reciprocal factories materialises will depend on how quickly the logistical and regulatory obstacles on the ground can be resolved.
Key Takeaways
- ASSOCHAM, India’s oldest apex chamber established in 1920, and ACCI, formed in 2008, signed an MoU in New Delhi in June 2026 to boost bilateral trade.
- The agreement targets doubling trade from $1 billion to $2 billion, with focus sectors including mining, oil and gas, and sugar.
- India has become Afghanistan’s largest export destination, with Afghan exports to India growing 23% in 2025 to $755 million.
- The MoU plans reciprocal industrial establishment: two Indian factories in Afghanistan and two Afghan factories in India.
- Chabahar Port in Iran, located 90 km from the Afghan border, is the primary transit route for India-Afghanistan trade, with India investing $120 million in its development.
- Afghanistan offers foreign investors incentives including land allocation, simplified licensing, and a five-year tax holiday.
