Afghanistan is going through serious turmoil with the Taliban taking over. The Taliban had managed to capture the country at a lightning speed following the US decision to pull out from the country and Kabul was captured on August 15, more than two weeks before the US deadline to withdraw the last of its troops from the country. The upset is impacted Indian traders as well.
As per an Economic Times report, textile traders in Surat are worried over pending payments of about Rs 4,000 crore from Afghanistan which has got stuck with the Taliban taking control of the country. Note that Afghanistan’s central bank has instructed commercial banks to not allow corporate bank account holders to withdraw money for any purpose or to carry out any electronic transaction inside or outside of Afghanistan.
The financial daily quoted Champalal Bothra, general secretary, Federation of Surat Textile Traders Association saying, “Earlier, we used to send garments and textiles through Dubai to Afghanistan. Lately, we were exporting to the nation through Bangladesh as we saw that it was cheaper to send through Bangladesh. Exports have stopped now, but we are not sure when we will get our payments. Nearly Rs 4,000 crore is stuck.”
India had good export relations with the country as Afghanistan used to buy silk for turbans, textiles and readymade garments such as scarves, dresses and kaftans from India. As per the ET report, the Federation of Indian Export Organisations (FIEO) has advised exporters and importers to wait and watch before taking any step.
“The Afghani currency has depreciated to 87 Afghan afghani against US dollar from 80 Afghan afghani in the last one week. While that augurs well for exporters, it pinches the importers,” Ajay Sahai, director general, FIEO, told ET. Sahai further informed that businesses in Afghanistan have informed them that the central bank of the country has said that it will not provide enough dollars to the local banks which means that Afghan business houses will not be able to pay the exporters.
As per an earlier ToI report, Punjabi suits and dupattas manufactured in Surat are in high demand in countries like Afghanistan and Pakistan. Until three years ago, businessmen used to visit Surat from Afghanistan frequently to buy finished garments for women. The report stated it is estimated that garments worth t least Rs 100 crore were sent every month to Afghanistan via Pakistan or Dubai.
Raju Bhatia, a broker working for multiple exporters was quoted in the national daily report saying, “In the textile market, the credit period is up to three months and in goods supplied to Afghanistan via Pakistan or Dubai, the payment is received in three to four months.”
However, due to the unrest, payment is several hundred crores of many exporters in stuck. The industry has furthered suffered because over Rs 100 crore worth of textile products exported monthly to Afghanistan has now stopped.
It is worth noting that Surat is among the largest textiles hubs in the country, with an annual turnover of Rs 1 lakh crore. The city has 380 textile mills, 650,000 looms, 65,000 traders and 100,000 embroidery units. The textile trade in Surat employs 1.1 million people.
