The South Asian Free Trade Area (SAFTA) agreement was signed in 2004 with the aim of strengthening economic relations between member countries and promoting regional trade. India and Afghanistan, both members of SAFTA, signed the agreement in 2011, with the intention of boosting bilateral trade between the two countries.
Under the SAFTA agreement, India and Afghanistan have committed to reducing tariffs and non-tariff barriers on goods traded between them. This allows businesses in both countries to operate more easily and competitively, reducing the cost of trade and providing opportunities for growth.
The agreement covers a wide range of goods, including agricultural products, textiles, and industrial goods. India has a strong manufacturing base and expertise in various sectors, including pharmaceuticals, engineering goods, and information technology. Afghanistan, on the other hand, has an abundance of natural resources, such as minerals, and has a growing agricultural sector, offering potential for trade in raw materials.
India is one of Afghanistan`s biggest trading partners, with bilateral trade between the two countries worth around $1.5 billion. India has invested heavily in Afghanistan`s infrastructure and development projects, such as the construction of the Chabahar port in Iran, which provides a direct sea route for India to Afghanistan, bypassing Pakistan.
The SAFTA agreement has the potential to enhance the economic partnership between India and Afghanistan further. The reduction in tariffs and the easing of trade barriers will facilitate the growth of trade and investment between the two countries. It will also allow businesses to access new markets and products, leading to increased competitiveness and innovation.
However, there are challenges to the implementation of the SAFTA agreement, particularly in the areas of infrastructure and logistics. Improvements in these areas will be essential to support the growth of trade between India and Afghanistan.
In conclusion, the SAFTA agreement between India and Afghanistan provides a framework for strengthening economic ties between the two countries and promoting regional trade. It offers opportunities for businesses to increase trade and investment, reducing costs, and promoting innovation and competitiveness. While challenges remain in the implementation of the agreement, with the right investments and policies, it has the potential to bring significant economic benefits to both countries.