Afghanistan Invites Indian Companies to Invest in Rare Earth Mining – Strategic Move to Challenge China's Global Dominance

During his ongoing visit to India, Afghanistan's Commerce & Industry Minister, Alhaj Nooruddin Azizi, on Friday, November 21, invited Indian companies to invest heavily in the landlocked nation post its economic fallout with Pakistan.

In 2011, the biltateral trade between Afghanistan and Pakistan totalled to USD 5 billion, however, post border clashes and heightened diplomatic tensions it now hovers around USD 1 billion.

After having pushed back on bilateral trade with Pakistan, Azizi said, "We extend an open invitation to Indian businesses to participate in sectors such as mining, cement, agriculture, healthcare, pharmaceuticals, IT, energy, and textiles."

When Republic Media Network inquired about allowing access to Indian firms for mining rare earth elements (REEs) in Afghanistan, Taliban's Commerce and Industry Minister said, "There is a brilliant scope for mining in Afghanistan. I extend an invitation to Indian firms to set-up a processing plant there. The labour is cheap, and policies are extremely condusive to support industries."

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Afghtanistan is considered the Saudi Arabia of rare earth elements, especially Lithium, which are critcial to defense, renewable energy, and eletric vehciles (EV) sectors. This makes the country well-poised to fight the China's trade bullying when it comes to rare earth mining. Currently, China is credited for over 55% of the world's rare earth mining.

Weighing in on the same, Naveen Seth, Deputy Secretary General, PHDCCI, said, "India is exploring new markets given the evident shift in the business landscape. There are several low hanging fruits in Afghanistan, mining is one of them. Indian players are definetely encouraged to built up Afghanistan."

The siginficance of REEs are such that it has a considerable impact in forming global partnerships as countries rush to control its supply chain.

Afghanistan Trade Minister Announces Tariff Incentives To Bolster India Trade

Offering a push for Indian firms to invest in Aghanistan's growth story, Azizi introduced a 1% tariff on raw materials and machinery, free land allocations, reliable power supply, and proposed five-year tax exemptions for new industries—particularly those established by returning Afghan refugees.

In terms of bilateral trade between India and Afghanistan, in 2024-25 the south Asian nation imported USD 689 million from Afghanistan, whilst exporting USD 318 million, crossing the USD 1 billion milestone.

Additionally, he requested Indian conglomerates to invest in Afghanistan's textile industry given factors like easily available cotton, silk, and cashemere make it an attractive choice.