March 2018 — When Afghan cashmere producer Abdul Basir Hotak participated in a trade show in New Delhi last September, he did not expect to revive an old business relationship with an Indian clothing company and strike a lucrative investment deal worth $35 million.

Hotak, president of the Herati Cashmere and Skin Processing Plant, had met C.B. Kataria, marketing manager of Indian clothing company Katbro Corp. Pvt. Ltd., over three years ago when the Indian businessman visited his factory in Afghanistan’s western Herat province, which exports nearly all of the country’s cashmere exports.

The two had maintained some contact, but Hotak’s participation in the USAID-supported Passage to Prosperity: India-Afghanistan Trade and Investment Show provided an opportunity for the two businessmen to review samples and discuss ways they could work together to add value to cashmere production in Afghanistan and increase exports over the long run.

In the first phase of the investment, which is expected to take place over five years, Katbro will transfer finishing, pressing and washing machinery to Herati Cashmere’s factory. Indian expertise will also arrive to train factory staff on operating the machinery.

During this initial stage, Herati Cashmere will also send raw cashmere to Katbro for immediate processing into finished goods. Katbro caters to about 50 brands worldwide, including the Raymond Group, Pashma, Lacoste, and the ITC Maurya Hotel.

“We will invite four to five Herati Cashmere staff to India as well to train them as knitting operators so that this expertise can be transferred back to Afghanistan as part of our partnership,” said Kataria.

Toward the end of the tradeshow, Hotak traveled to Katbro’s factory located just outside New Delhi to gain a better understanding of the company’s capabilities. The factory is Sedex-approved, allowing its products to be sold in the European Union, and is one of the only air-conditioned factories in the Indian textiles industry. Sedex is the Supplier Ethical Data Exchange, a not-for-profit, membership organization that works to improve ethical practices throughout business supply chains.

“As part of the agreement, we aim to replicate our facility in Afghanistan together with Herati Cashmere. It will take time, but the quality of Afghan cashmere and access to duty-free imports presents huge potential,” said Kataria.

For Hotak, the tour of the facility sweetened the deal and provided inspiration. “In addition to striking the deal, it is important to understand each other. We will take everything step by step, and seeing Katbro’s production firsthand gives me added assurance that we can achieve great things together,” said Hotak.

In an effort to strengthen commercial and economic ties between Afghanistan and India through trade and investment, the Governments of India and Afghanistan, along with USAID, opened the first Passage to Prosperity: India-Afghanistan Trade and Investment Show last September. The event brought together more than 1,000 representatives from Afghan and Indian companies to forge new business connections and discuss potential investment opportunities. During the conference, companies signed over $23 million in deals and discussed over $50 million in potential deals.

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