Afghanistan’s Trade Shifts from Karachi to Indian Funded Chabahar Port

Over 80% of Afghanistan’s cargo traffic has shifted from the Karachi seaport to Abbas & Chabahar Port in Iran. The move comes as a response to the new trade tariffs introduced by Pakistan and the inauguration of the Chabahar Port. Barely 100 km from China funded Gwadar port, the Chabahar Port is expected to greatly impact the role Pakistan played in trade transit for Afghanistan.

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Being Iran’s closest sea link to the Indian Ocean, Chabahar port is expected to see a more strategic inflow of trade from Afghanistan. Sponsored jointly by India, Afghanistan, and Iran, the Chabahar port is likely to see a transit of goods worth USD 5 billion from Afghanistan. The freedom of Afghan from dependence on Pakistan for the transit of trade goods was announced by the Afghan Chief Executive Abdullah Abdullah last November.

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Over the last one year, constant border shutdowns and military standoffs have resulted in a USD 2 billion slip in trade from Afghanistan. The trade has slipped from USD 2.5 billion in 2016 to USD 500 million in the current fiscal year. PAJCCI director Zia Ul Haq Sarhadi said the leadership of Pakistan and Afghanistan must not use bilateral trade to settle disputes.

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He added that the decline in trade is a result the rising tension across the borders. He further said that the shift of trade to Chabahar port is due to the incentives offered by India to the Afghan traders. Sarhadi revealed that the opening of an aerial route between Mumbai and Kabul further helped strengthen the ties with the first flight on the route carrying 40 tons of dried fruits, fresh fruits, and medicinal herbs to India.

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The Pakistan Bureau of Statistics (PBS) said that the Pakistan economy has suffered a major hit following the reduction of USD 2 billion in trade from Afghanistan. Between July and November of 2017, Pakistan’s trade deficit increased to USD 15.03 billion.