India's External Affairs Minister S. Jaishankar announced the decision to upgrade the "technical mission" in Kabul to the status of a full Embassy of India.
The announcement was made during the first-of-a-kind visit by a senior Taliban official, Afghan Foreign Minister Amir Khan Muttaqi, to New Delhi.
India expressed readiness to commit to six new development projects to renew its support for the country's infrastructure.
India's deepening diplomatic engagement is partly driven by a strategic need to push back against China.