Afghan President Hamid Karzai and Indian Foreign Minister Pranab Mukherjee opened a new road on Thursday that will help link Afghanistan with a port in Iran.
At present, Pakistan dominates trade routes to Afghanistan, which is landlocked.
The 220km road in the southwest Afghan province of Nimroz is part of a $US1.1 billion Indian reconstruction effort in Afghanistan.
India hopes to be able to deliver goods to Afghanistan through the Iranian port of Chahbahar.
The road cost $US150 million and was entirely funded by India. It runs from Delaram in Nimroz to Zaranj on the Iranian border, which connects to the Iranian port of Chahbahar.