Economy

Indian firms face uncertainty over political turmoil in Afghanistan

Ayushi Kar/ Suresh P Iyengar/ P Manoj Mumbai | Updated on August 17, 2021

Officials welcome Indian nationals on their arrival from Afghanistan by an Indian Air Force’s C-17 aircraft, in Jamnagar, on Tuesday.   -  PTI

All companies have withdrawn Indian employees from Afghanistan and the projects are now being run by its local employees/sub-contractors.

The ongoing political turmoil in Afghanistan has impacted a number of Indian companies, including WAPCOS Ltd, KEC International Ltd, Kalpataru Power Transmission Ltd and smaller exporters of sugar, cereal, textile, pharma, spices and transmission machinery.

“The situation in Afghanistan is very dire, in fact a week or so ago local Taliban fighters took control of our project Salma Dam in Chishti Sharif District. We had built a colony for engineers which has 25 quarters which was also taken over,” NN Prasad, Executive Director, WAPCOS Ltd, told BusinessLine.

Wapcos was in fact bidding for a new hydro developmental project Shetoot Dam, proposed by Ashraf Ghani’s government to meet Kabul’s growing water demands. “We estimated that the cost of building the Shetoot Dam would be around ₹2,500 crore, of which we would have gotten 7 per cent, which is ₹175 crore. Now, it is uncertain if we will even bid for the contract,” Prasad added.

Employees withdrawn

Similarly, KEC International Ltd has withdrawn all the Indian employees from Afghanistan and the projects are now being run by its local employees/sub-contractors. “I think it is too early to say anything on this. The only comment we have is that all the projects which KEC is executing are funded by international lenders and are developmental projects essential for the country,” said Vimal Kejriwal, Managing Director & CEO, KEC International Ltd.

The Federation of Indian Export Organisations is not optimistic of the days ahead for trade ties with Afghanistan.

Not conducive for trade

“The situation is certainly not conducive for trade. Yet, at the moment, exports to Afghanistan have not been affected too much. That is primarily due to the Taliban’s insistence that business will be conducted as usual. In a fortnight or so, we will know how India’s export trade with Afghanistan, valued at about $825 million, is going to be affected,” said Ajay Sahai, Director General and CEO at FIEO.

Exporters with long-standing deliveries are delaying dispatches and are reaching out regarding their concerns about the situation, he said. “We are also advising exporters conducting trade with Afghanistan to look for credit protection since businesses using these goods might not be able to pay the exporters,” he added.

Shams-ull Rhman Auobi, Founder and CEO of Silkways Pvt Ltd, said the situation is not likely to be the same with Taliban taking over Kabul. “Now that the banks are closed, we have suspended exports to Afghanistan for the past month after Taliban took over Customs operations in Kandahar and Herat,” said Shams-ull, an Afghan based in India, who exports machinery pods and compressors for borewell needs.

Exports hit

Arvind Goenka, President, Plastics Export Promotion Council, said the government’s target of exporting $14 million worth of plastic to Afghanistan for this fiscal may not be achieved.

Kalpataru Power Transmission said it has evacuated all its personnel in Afghanistan. “The overall situation in the region is still evolving and it would be premature to speculate on its outcomes. Our ongoing projects there are funded by multilateral funding agencies and are also insured,” said a spokesperson.

Published on August 17, 2021

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