Indo-Afghan trade could double to one billion dollars from $520 million in 2008-09 if both countries exploit business opportunities, said a Ficci study. In April–June 2009-10, trade between the two countries was valued at $120 million.

The Ficci study said Afghanistan offers opportunities in sectors like construction, agro-business, energy and mining, natural resources, textiles and carpets, transport and logistics, chemical and pharmaceutical products, banking and financial services, telecom services, real estate and tourism.

Ficci has recommended strengthening of Afghan trade links with eight member Saarc nations through its active participation in South Asian free trade area (Safta); interface between Safta and India-Afghanistan preferential trade agreement (PTA), trade and transit facilitation, capacity building in industry, customs, banking and insurance sectors and speeding up of export finance, procedural rationalisation and customs harmonisation to boost the Afghan economy.

"A wide variety of opportunities remain unleashed across various sectors. These include small-scale power generation, management contracts in power distribution, fixed-line telephony, value-added services in telecommunications, construction and maintenance of roads and small-scale water systems," said study.

Afghanistan is rich in natural resources. There are currently more than 1,400 identified mineral deposits. These include energy assets such as oil, gas and coal as well as iron and copper deposits.

It has a liberal trade regime. Most import tariffs are comparatively low compared to other countries in the region.

The study said while there are opportunities to improve bilateral trade with Afghanistan.

There are challenges like security concerns and lack of transparency that create uncertainty in the investment climate and thus raise the cost of doing business. Afghanistan has poor infrastructure.

“Overall, Afghanistan needs to be considered as a strategic economic partner of India in the South Asian region” the study concluded.