Trade agreement mandates 50/50 split in Afghan-India trade volume

The parties agreed to expand trade based on mutual advantage, with specific schedules of goods for exchange and mechanisms for payment and licensing.

Who it concerns: The agreement involves the Government of India and the Government of the Republic of Afghanistan. It affects commercial establishments, real or legal persons authorized by their respective governments for trade, and specific sectors including agriculture (fruits, spices, oilseeds), textiles, engineering goods, electrical goods, and pharmaceuticals. The Ministry of Commerce (India) and Ministry of Commerce (Afghanistan) are the signatories.

What was agreed

• Trade volumes for Schedule A (Afghanistan to India) and Schedule B (India to Afghanistan) must be equal in total value.
• Schedules A and B are to be agreed upon for every calendar year and can be altered via letters exchanged between the parties.
• Goods not in Schedules A and B may be traded if permitted by local laws, with payments in freely convertible currencies.
• Banking arrangements for payments will be concluded between the Afghanistan Bank and the State Bank of India.
• Goods must be of Indian or Afghan origin and for consumption in the respective countries; re-export to third countries is prohibited.
• Fifty percent of the trade volume must be carried by Afghan real or legal persons and fifty percent by Indian real or legal persons.
• The agreement requires annual reviews in India and Kabul alternately to set a rate of trade growth based on the 1974-75 trade period.
• The agreement is valid for three years from the date of exchange of notes confirming approval, extendable by mutual agreement.

Also in the document

• The agreement mandates a 50/50 split in trade volume carried by Afghan and Indian entities respectively.
• Specific commodity lists are provided, including Afghan exports of medicinal herbs (e.g., Hysop, Rosa Rose Flower) and Indian exports of engineering goods (e.g., diesel engines, sewing machines) and textiles.
• The agreement includes provisions for using part of export proceeds to pay for services in the other country, subject to authority agreement.