Guard against Afghanistan payment defaults, exporters warned

Guard against Afghanistan payment defaults, exporters warned

NEW DELHI: Amid a freeze on fund flow kicking in, Indian exporters have been advised caution while dealing with their partners in crisis-hit Afghanistan, where the Taliban government has taken over the reins.
“There is a fear of default in payments due to banking-related issues and the overall impact on lives. We are advising exporters to take a credit cover for their shipments and in cases where there is time to meet the deadline, they should wait for things to stabilise,” a key functionary with trade body Federation of Indian Export Organisations told TOI.
India’s trade with Afghanistan was not large, with the country accounting for less than 0.3% of India’s exports and 0.1% of imports, with overall trade during the last fiscal year pegged at $1.4 billion.

But it may lead to temporary impact on some segments such as dry fruits, which accounted for 63% of all exports from Afghanistan. Over the next few weeks, traders expect other countries to fill the gap.
For India, sugar and textiles were the two largest export items with pharma, cereals, tea, coffee and spices making it to the top seven products (see graphic).

Besides, some aspects such as EPC contracts that were executed by Indian firms and project exports had slowed down in recent years.
For the moment, political instability and payments are a big concern, although the trade route — which was largely via air or via Dubai and the International North South Transport Corridor — technically remain open.
“Greater impact is seen on imports from the land route which passes through Pakistan to India. As informed by businesses today, while restrictions on Afghanistan side no longer remain, Pakistan continues to seal the Torkham border while some movement of personnel was permitted on Chaman border. This is encouraging development as goods movement may start soon,” said Fieo director general Ajay Sahay.

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