India has signed a new trade agreement with the Afghan President, Hamid Karzai, on the first day of his official visit to Delhi.
Mr Karzai stressed the importance of Indian aid
The turmoil in Afghanistan has hit trade with India in recent years.
President Karzai received fresh grants worth $70m on top of the $100m that Delhi pledged last year to help with highway reconstruction.
He said India had already given a lot of help to Afghanistan, and could provide yet more.
Earlier on Thursday, Mr Karzai met his Indian counterpart, President APJ Abdul Kalam, and Prime Minister Atal Behari Vajpayee.
The trade agreement offers up to 100% tariff concessions on 38 Afghan exports to India.
Last year, we only hoped for change; today, I'm before you with achievements
Last year, India-Afghanistan trade fell to $41.89m from $54.26m in 1999-2000.
President Karzai said India could assist in the fields of education, engineering, technology and reconstruction.
But he stressed the importance of expanding trade and investment between the two countries.
"The Afghan businessman is very, very keen to expand trade relations with India," he said.
"From last year to today, Afghanistan has changed. Last year, we only hoped for change; today, I'm before you with achievements. So, welcome to Afghanistan."
Aid, a key element of bilateral relations, is high on the agenda during Mr Karzai's visit.
Mr Karzai drew attention to the historic ties that bind the two countries
On Wednesday, India presented another 57 buses to Afghanistan, taking the total of Indian buses given to the country to 192.
On Friday, Delhi will hand over the third of three Airbus airliners to Ariana, the Afghan national carrier, at a ceremony Mr Karzai will attend.
And on Wednesday, India's junior Foreign Minister Digvijay Singh said India had already spent $31.5m of the $100m earlier committed by Delhi to Afghan reconstruction.
"The remaining $68.5m will be utilised over the next couple of years," Mr Singh was quoted by the AFP news agency as saying.