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The Taliban are desperate for investment from India. Here's why.

The Taliban realises that India is a far safer bet for infrastructural investments than the Chinese, and Pakistan does not have the economic strength to support big ticket projects.

A Taliban team with an Indian official in June 2022.

The question of bilateral relations between India and Afghanistan has once again surfaced with Afghanistan’s renewed interests in attracting investments from India. In a meeting held earlier this month with the head of the Indian technical mission in Kabul, the Taliban had urged India to resume its investment activities in the country. Increasing the investment in Afghanistan’s development infrastructure would mean a greater involvement and scope for cooperation among both the countries. However, the road to cooperation between India and Afghanistan may not be as straightforward.

It was only after Taliban’s takeover of Afghanistan that India reduced its engagements with the country. Prior to this regime change, there was a rapidly growing system of Indian investments and aid in Afghanistan to boost the country’s education, healthcare and other development projects. Projects like the Salma Dam, Zalanj-Delaram highway were among the most important ones. Now, the Taliban government is looking towards India once again to provide much needed investments.

It has to be noted that ever since Afghanistan returned to the hands of the Taliban, India’s engagement with the country has not only reduced but also changed form. Ever since the regime change, Indian engagements with Afghanistan have been primarily limited to humanitarian aid. The humanitarian assistance provided to the country since the Taliban takeover has included about 40,000 metric tonnes of wheat, 50 tonnes of medical and healthcare assistance, 50,000 doses of covid-19 vaccination and about 28 tonnes of disaster relief material. The steady supply of humanitarian assistance to Afghanistan from India was aimed at aiding to improve the human security crisis that has erupted in the country after dealing with years of war and turmoil.

Why does the Taliban need Indian investments?

Before the Taliban takeover, India was said to have invested almost $3 billion in the span of two years on various developmental projects. Most of these projects were paused prematurely after the country fell into another cycle of turmoil and political vacuum as the United State’s forces started to withdraw from Afghanistan.

Over the years, India has been a significant partner to Afghanistan in aiding the stabilisation efforts in the country. Under the Strategic Partnership Agreement with Afghanistan, India and Afghanistan jointly committed themselves to improving the bilateral commercial relations, contributing to cultural exchanges, sports cooperation, investing in high impact community development projects and contributing holistically to capacity building especially in the case of education and healthcare infrastructure in Afghanistan. Adhering to this central agreement between the countries, India had involved itself in building dams, hospitals, roads and schools in Afghanistan, the resources that the country desperately needed to draw itself out of the ravages of war.

At present, India is an important focal point for Afghanistan, especially when the Taliban is attempting to create a moderate foreign policy in South Asia. While its relations with Pakistan are no secret, Afghanistan is aiming to build stronger ties with critical countries within the region and most importantly India. Economically, India has the potential to provide a significant market to Afghanistan for building its economy. Strategically, India can be a strong power to provide security to the country and the political backing of India for Afghanistan would go a long way for the Taliban government to attain international legitimacy. However, no matter how crucial India remains for Afghanistan, it may be difficult to garner the desired support from the country.

The Taliban have now requested Indian investments in a number of infrastructure projects especially related to urban development. The Taliban realise that seeking Chinese investements could well be a path towards a debt trap, as experienced by many countries including Sri Lanka, and Pakistan is too financially crippled to be of any real assistance.

Would investing in Taliban’s Afghanistan be an option for India?

If the Indian government chooses to pursue the opportunity of improving its investments in various projects across the country, there would be implications from the regional security point of view as well. It could also shift the dynamics of cooperation within South Asia as it can have an impact on the strong partnership that Afghanistan and Pakistan seem to share.

Taliban’s invitation to India for improving investments and aiding in the country’s development might hold merit for India in a way. It could possibly contribute to safeguarding the security concerns that exist in the region as India could become an important stakeholder in ensuring developmental activities within the country. Afghanistan’s closer relations with Pakistan have always been a perceived security threat for India and some could argue that investing greatly in Afghanistan at this point could help India steer the country to its own side.

A critical dilemma, however, lies at the core of improving bilateral relations with the country. There have been deliberations on a ‘reformed Taliban’ that promises a more moderate approach to governance and a Taliban that understands the importance of strong bilateral ties. On the other hand however, there is a significant trust deficit with the Taliban government especially when India has been on the receiving end of Taliban’s extremist activities. Ever since the takeover of Afghanistan by Taliban once again, the threat of perception of South Asia increased manifolds as there remained a looming threat of Taliban’s attacks in the region. India, as a strong democratic power, might also be wary of providing legitimacy to the Taliban government which is increasing human rights oppressions every day including its continuing ban on women's education. These are some issues that have to be navigated through before India decides to involve itself in promoting economic engagements and investing within the country.

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