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Indian Prime Minister Manmohan Singh, left, and Afghanistan President Hamid Karzai, right, shake hands after a press conference at the Presidential Palace in Kabul, Afghanistan, Thursday, May 12, 2011
Image: AP

Fishing for investment

June 30, 2012

Afghan ministers have traveled to New Delhi to woo Indian investors. India is keen to expand its influence in the region but many wonder what will become of Afghanistan after international troops leave the country.


The three halls in New Delhi's famous Taj Hotel are jam-packed with people. Even the organizers of the Indian Industries Association are surprised about the overwhelming interest in Afghanistan.

The fact that the conference took place in New Delhi is no coincidence and the Afghan delegation - consisting of high-ranking ministers from government - made that clear.

Afghan Commerce Minister Anwar ul-Haq Ahady was also there to spark Indian interest in investing in his country.

"India has been traditionally, historically, the major market here. Their project is the largest investment that we have had thus far and probably will remain the largest investor for some time to come. Initially we were told it would be over 8 billion dollars but now it could be even 13 billion dollars," Ahady said.

Anwar ul-Haq Ahady
Anwar ul-Haq Ahady wooed Investors in New DelhiImage: AP

India has been presenting itself as a self-confident regional power in South Asia. In Afghanistan, India is a big financer of the country's reconstruction. And last year, the two sealed a deal for strategic partnership. In winter, an Indian syndicate received a permission to mine iron ore in Central Afghanistan - a major deal for giant Indian steel groups.

"Yes, there is a certain political interest in doing this. So the idea was to bring in something that could be more enduring. And we thought investments, especially given that there is a huge potential in both the mining sector and other areas like agriculture," said a high-ranking official from the Indian foreign ministry.

Regional competition

India is competing against its biggest rival China for influence in Afghanistan. China has also invested large sums into mining projects in Afghanistan.

India is also competing with Pakistan for influence in Afghanistan. The Pakistani secret service for years has not only been suspected of aiding and abetting extremists in Afghanistan but also of approving terrorist attacks on India establishments there.

The hope is that major investment will help bring the two together. The Indian consortium that will soon be mining iron ore in Afghanistan is considering giving Pakistan a slice of the cake. India and Pakistan would then be able to use Afghanistan as a transit country. The alternative would be a long detour through Iran.

Using business to attain peace in the region?

"Any investor would be acquiring a stake in that country's economy, in that country's future and also in that country's security. So in a way, with investment, you would bring in a kind of security as well," says the Afghan expert from the Indian foreign ministry in New Delhi.

A billboard about an Indian TV program is seen from a street in Kabul, Afghanistan
India has been vying for influnece in AfghanistanImage: AP

But all of this is still a long way off.

Representatives of industry and commerce listened to new ideas in New Delhi but no one seemed interested in making any concrete commitments. The Afghan industry and commerce minister, however, did not tire of emphasizing the advantages of investing in his country as well as encouraging India to stay on the ball.

"India is an industrial country and we can import almost anything given the proximity of India to the Afghan market, I think India has an advantage in this regard," Ahady said. "We are currently importing a lot from China and we're importing industrial goods from Turkey. India can compete with both of those countries."

But what is on everyone's mind, Ahady admits, is the question of what will become of Afghanistan in two years' time, after international forces have left the country.

Author: Jürgen Webermann / sb
Editor: Richard Connor

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