Afghan President Hamid Karzai held talks with Indian Prime Minister Manmohan Singh in New Delhi
on Monday, appealing for increased investment in his war-torn country.
India has provided billions of dollars of aid to Afghanistan since the fall of the Taliban in 2001, and is keen to help prevent the return of a radical Islamist regime in Kabul after international troops pull out in 2014.
But any Indian activity in Afghanistan triggers sensitivities in neighbouring arch-rival Pakistan, which fears losing influence in Afghanistan and being encircled.
In October last year India and Afghanistan signed a "strategic partnership" aimed at deepening security and
economic links, with Karzai keen to elevate India's involvement further.
At a weekend meeting with business leaders in Mumbai, he promised a "red carpet" welcome for Indian investment as
US-led coalition forces prepare to withdraw.
"Indian businesses need not be shy while thinking about Afghanistan," he said.
"Chinese businesses were there long before you came, five or six years ago.If you don't arrive on the red carpet, it will get dusty. Therefore, do hurry up in coming and take advantage of the opportunities in Afghanistan."
Karzai met Singh on Monday morning and the two leaders were to hold a press conference later in the day.
India has not contributed to the international forces deployed in Afghanistan, but has worked on low-key troop and police training as well as infrastructure development.
The US was previously wary of India's presence in case it led to a "proxy war" with Pakistan on Afghan territory,
though US Defence Secretary Leon Panetta encouraged India to play a more active role while visiting New Delhi in
At a meeting soon afterwards to promote trade with Afghanistan, then-Indian foreign minister SM Krishna said
potential business interests must overcome "the anxiety of withdrawal, uncertainty, instability and foreign interference."
Last year a consortium of Indian companies won the right to develop Afghanistan's largest iron ore deposits, underscoring growing ties between the two countries.
Afghanistan is believed to have mineral reserves worth at least $3 trillion which could generate billions of dollars in
Karzai, who has been in power since 2001 and is due to stand down in 2014, is expected to sign fresh mining deals
in New Delhi, as well as pacts on youth affairs, development and fertiliser trade.
The 'Indian Express' said on Monday that Prime Minister Singh would announce a new $100 million package of development projects, and the newspaper called for more training of Afghan forces.
"Short of sending combat troops into Afghanistan, India must offer all the military assistance it can to beef up
Kabul's capacity to defend itself," it said.
"Further hesitation on Delhi's part can only undermine India's ability to secure its long-term interests... and its reputation as a credible regional power."