WITHOUT BUSINESS: A group of Indian CEOs in Kabul (below), but the city's markets were bereft of Made in India products

Ambassador cars, Tata trucks, Hero cycles, Bajaj electrical appliances, Dabur personal care products ... some of the best known Indian brands have made their first appearance in post-Taliban Kabul. Not in the showcases and streets of the Afghan capital, but at the sprawling Kabul Polytechnic Grounds on the outskirts of the city where a three-day exhibition of Indian products was held on September 26.

The stream of visitors at the "Made In India Show" organised by the Confederation of Indian Industry (CII) for the first time in 25 years is symbolic of the high hopes and abysmal reality that confound India Inc. in doing business with Afghanistan. On the exhibition ground thousands of Indian products of 170 companies vied with each other for visitors' attention. Outside in the buzzing marketplace of downtown Kabul, Indian products were nowhere to be found. All that was available in abundance was goodwill for Indians and a craze for Bollywood films.

NO INDICA: Indian goods are nowhere to be seen as Toyotas queue up at a car dealership

The heartwarming goodwill across the Afghan society and the diplomatic and political bonhomie between the two countries, however, has not yet begun to yield dividends for Indian business. No big purchases of any Indian product, no big contracts for any Indian company, no serious enquiry for partnerships from Afghanistan has come through yet. Admits Adi Godrej, chairman, Godrej Soaps, who was one of the Indian CEOs present at the Made in India show: "In terms of actual business, there's little happening between the two countries."

That's in sharp contrast to the enthusiasm for business in a newly liberated country that had filled Indian industry in January this year soon after the war on terror had ousted the Taliban from Kabul. The spate of workshops and meetings held in Delhi earlier this year had attracted industrialists and traders of all sizes and regions in droves, all eager to seize the first available opportunity to get a toehold in that country. Only, those opportunities didn't come through.

The enthusiasm of Indian businessmen was understandable. Out of the $4.5 billion (about Rs 22,000 crore) grant for Afghanistan finalised at the Tokyo donors' meet in January, $1.8 billion is earmarked for 2002. Pinning their hopes on the warm diplomatic ties between the two countries and their geographical proximity, corporate India was hopeful of boosting trade on one hand and getting some of the big infrastructure projects on the other. But though an estimated $1 billion of multilateral grants have flowed into Afghanistan, Indian companies have not been able to bag a single project of any significance.

The question dogging Indian businessmen is: will the great hope of doing big business in Afghanistan turn out to be a hoax? Not exactly. But the road to Kabul is surely going to be much tougher than was initially expected.

The first hurdle is logistical. How do Indian products reach Afghanistan? The stand off with Pakistan rules out possibilities of transporting goods through or even via the airspace of that country. With the most economical route out of bounds, Indian companies can only reach Afghan markets through Iran or Central Asia. But that makes Indian products 30 to 40 per cent more expensive than the competing Chinese products that have already swamped Afghanistan. Says Mohammed Omar Sait, director, ANL, a Mumbai-based shipping company: "Transportation problems and inadequate stocking facilities is significantly affecting exports to Afghanistan."

The other big impediment is the absence of a banking system in Afghanistan. There are no functioning banks in Afghanistan as yet and most transactions are made on cash basis. The country has at least four currencies circulating in different regions. In Kabul itself, the currency transactions are still carried out in a retail market with an exchange rate of Re 1 for 1,000 Afghani or $1 for 40,000 Afghani. The Hamid Karzai Government is planning to set up a central bank, Da Afghanistan Bank, soon.

The country also does not have a telephone network and communication is largely dependent on expensive satellite phones. With virtually no power, businesses run on generators. That rules out the feasibility of setting up any big manufacturing facility in the country in the immediate future.

Security concerns too have dented business confidence. Investors fear that the Karzai Government isn't strong and stable enough. "The demand here has not grown as per our expectations. The internal administration has not yet stabilised," explains Godrej.

While international contracts have not come to India, the Indian Government too has not lined up any big projects funded by the $100-million country grant. Most of the $31.5 million (Rs 151.2 crore) spent by India on Afghanistan has been in the form of cash assistance, medicines, medical equipment, three Airbus aircraft and 50 Tata buses. Recognising the lead role to be played by the Government, Indian Foreign Secretary Kanwal Sibal, who inaugurated the CII exhibition in Kabul, admitted that the good diplomatic relations between India and Afghanistan should have strong economic underpinning. He announced that the next phase of India's assistance to Kabul will be in the form of infrastructure projects.

Sibal, who was accompanied by a delegation of Indian CEOs, was joined by Afghan Commerce Minister Syed Mustafa Qazmi and Foreign Minister Abdullah Abdullah at the exhibition. The first Indo-Afghan private joint venture between a Kolkata-based company and a private party in Afghanistan was signed for setting up a $250,000 industrial gas manufacturing plant. Qazmi announced that the new investment laws of Afghanistan would allow for 100 per cent foreign direct investment, security guarantees for investors and up to nine years of tax holiday.

Though only a few drops in the ocean of uncertainty surrounding Afghan business environment, such promises hold out hope for Indian businesses. Says Vinayak Chatterjee, chairman, Feedback Ventures: "We had envisaged that serious business will happen no sooner than two years -after confidence building and opening up of trade channels." Hope springs eternal.