A New Chapter in India–Afghanistan Trade: What the $100 Million Pharma Pact Means
- MGMMTeam
- 4 hours ago
- 4 min read
In late November 2025, a major milestone was reached in India–Afghanistan economic cooperation: a memorandum of understanding (MoU) worth US $100 million was signed between Afghan firm Rofi's International Group of Companies and Indian pharmaceutical giant Zydus Lifesciences.
Under this agreement, Zydus will first export medicines to Afghanistan. Over time, it plans to relocate a representative office into Afghanistan and begin local drug manufacturing there — complete with transfer of technical know‑how and data to enable domestic production.
Afghan authorities have described the deal as transformative. It is expected to raise healthcare standards, reduce dependence on lower‑quality imported drugs, and strengthen Afghanistan’s pharmaceutical infrastructure. Traders and health‑sector stakeholders in Kabul have welcomed the initiative as a model for future strategic collaborations.
Trade Revival and Institutionalisation of Economic Ties
This pharma deal is not an isolated event — it comes amid a broader revival and institutionalisation of trade ties between India and Afghanistan. During the visit of Afghan Industry and Commerce Minister Alhaj Nooruddin Azizi to New Delhi, both countries agreed to appoint dedicated commercial attachés at their respective capitals to oversee and encourage bilateral trade.
Further, a new joint chamber of commerce and industry between the two nations has been green‑lit — signalling intent to coordinate trade, investments and commerce across sectors including pharmaceuticals, agricultural goods, SMEs and manufacturing.
To ease trade flows, discussions have reportedly addressed visa and connectivity challenges that previously hindered commerce. Both parties have indicated interest in improving landing rights, air‑corridors, shipping lines and customs/banking procedures to simplify cross‑border business operations.
A Strategic Shift: Reducing Dependence on Pakistan, Embracing New Corridors
The timing and nature of this renewed engagement come against a backdrop of geopolitical realignment in the region. Afghanistan, long dependent on Pakistan’s ports and transit routes for imports and exports, has started shifting much of its trade through alternative corridors — notably via Iran and Central Asia.
Key to this reorientation is the role of Chabahar Port in Iran — an Indian‑backed and operated port which offers Afghanistan a route to the Indian Ocean that bypasses Pakistan entirely. Use of Chabahar, along with revived air‑freight corridors between Kabul and Indian cities such as Delhi and Amritsar, reflects Afghanistan’s efforts to insulate trade from political instability at the Pakistan border.
This shift not only serves Afghanistan’s economic needs but also represents a strategic recalibration: reducing Pakistan’s historical leverage as a transit hub, and opening the door for India to expand its economic influence in Afghanistan and beyond.
Implications: Healthcare, Economics and Geopolitics
The pharma MoU and broader trade push carry multiple layers of significance:
In humanitarian and public-health terms, the agreement could help ensure the timely supply of quality medicines to Afghanistan — a critical need, especially as domestic pharma capacity there has been limited and prior supply chains disrupted. Establishing local production could lower costs, improve availability, and increase self‑reliance.
Economically and commercially, the partnership signals a push towards long-term investment and industrial cooperation — not just import‑export exchanges. The joint chamber, relaxed visa/shipping regimes, and institutional attachés provide a framework for diversified economic engagement spanning more than just healthcare.
Strategically, the developments mark a clear pivot in regional trade alignments. By reducing dependence on Pakistan’s transit routes and embracing alternate corridors (via Iran, Central Asia, air‑freight), Afghanistan appears to be reconfiguring its trade geography — which may reshape power dynamics in South Asia.
For India, this presents an opportunity to deepen economic presence, build goodwill, and secure a stable trade link to Central Asia via a friendly partner, thus enhancing its geopolitical footprint.
Challenges & What Could Go Wrong
Despite the promise, the path ahead is not without obstacles. Afghanistan remains volatile — political instability, governance uncertainties, and security risks may dampen foreign investment and long-term business commitments.
Executing a pharmaceutical manufacturing setup entails regulatory, technical and logistical challenges: ensuring quality standards, reliable supply chains, skilled workforce, transparent banking and customs processes, and institutional stability. Any breakdown could undermine the benefits of this MoU.
Moreover, sustaining trade and cooperation depends heavily on continued diplomatic coordination, regional stability, and international acceptance — especially as routes like Chabahar involve geopolitical sensitivity.
The MGMM Outlook
The recent $100 million pharmaceutical MoU between Afghanistan’s Rofi’s International Group and India’s Zydus Lifesciences marks a decisive step in strengthening India–Afghanistan economic ties. Beyond simply exporting medicines, the agreement envisions local production in Afghanistan, technology transfer, and the establishment of a representative office, reflecting a commitment to long-term industrial collaboration. Afghan authorities have hailed the deal as transformative, promising higher-quality healthcare, reduced dependence on substandard imports, and the growth of domestic pharmaceutical infrastructure. This initiative is complemented by broader trade institutionalisation measures, including dedicated commercial attachés, a joint chamber of commerce, and efforts to streamline visa, customs, and connectivity protocols, signaling a comprehensive approach to bilateral economic engagement across multiple sectors.
Strategically, the timing of this engagement underscores a shift in Afghanistan’s trade orientation away from traditional dependence on Pakistan. By leveraging alternative corridors such as the Indian-backed Chabahar Port and revived air-freight links to Indian cities, Afghanistan is reducing vulnerabilities linked to regional political instability while opening avenues for India to expand its economic influence. The partnership thus carries multiple implications: it strengthens healthcare capacity, promotes investment-led economic cooperation, and recalibrates regional trade dynamics. For India, this offers a dual advantage—enhancing economic presence in a key neighbor while participating in the restructuring of South Asian trade networks in a way that reduces reliance on politically sensitive routes.
(Sources: NDTV, India Today, The Economic Times)