Mumbai: Commercial vehicle makers Ashok Leyland Ltd and Mahindra and Mahindra Ltd could soon access an Indian line of credit to sell their products in strife-torn Afghanistan.
New market: A file photo of a Mahindra & Mahindra auto plant in Mumbai. The firm is looking to supply tractors to Afghanistan. Abhijit Bhatlekar / Mint
“For cultivation, we need tractors. Mahindra and Mahindra are in talks with us,” said A. Munir Khan, commercial counsellor at the Afghan embassy. “They have offered to study the conditions of Afghanistan and supply us tractors suited for our environment.”
“Buses are the main form of transportation in Afghanistan and Ashok Leyland is very interested in supplying buses to us,” Khan added. “It has also offered to train Afghan automobile engineers at its manufacturing facilities in India.”
“Both the offers are under consideration of the Afghanistan government. India has provided a $400 million (Rs2,064 crore) line of credit (till August 2008) to Afghanistan, which Indian companies can use to do business in Afghanistan,” Khan said.
A line of credit is an agreement by a lender to provide a client with loans up to an approved limit, without a formal application. If Afghanistan agrees to import tractors and buses from these companies, which are looking at newer markets to battle a downturn at home, the cost of transaction would be deducted from the line of credit.
An Ashok Leyland spokesperson said he is not aware of the development. A Mahindra and Mahindra spokesperson refused to comment because top company officials were travelling.
“If the companies are getting line of credit to sell vehicles in Afghanistan, it augurs well for them as there is an untapped potential in countries like these where a lot of rebuilding needs to be done,” said Abdul Majeed, partner at audit firm Price Waterhouse.
Currently, only 6% of the land in Afghanistan is under cultivation though 15% of it is suitable for farming. Wheat and cotton are the most important crops; the country also grows barley, corn, and rice. Fruit and nuts are among Afghanistan’s most important exports.
Afghanistan has 3,500 km of asphalt roads and 10,000 km of partially constructed roads. In comparison, India has a road network of 3.3 million km.
India recently completed the 218km road link connecting the town of Delaram on the Kandahar-Herat highway to Zaranj in Afghanistan. The project is expected to transform Afghanistan’s economic landscape, by connecting its far-flung areas.
Samar Srivastava contributed to this story.