Prime Minister Narendra Modi reiterated India´s commitment to helping the war-torn country strengthen its education, health, agriculture and other sectors during talks with Afghan President Ashraf Ghani.
In a joint statement, India announced the $1 billion offer, but there was no mention of providing weapons to help Afghanistan fight militants, which it has previously asked for.
Modi and Ghani called in the statement for an end to sponsorship and support of militants.
India, the fifth largest bilateral donor in Afghanistan, has been a key supporter of Kabul´s government and has poured more than $2 billion into the country since the Taliban was toppled in 2001.
Delhi´s active engagement has led analysts to point to the threat of a “proxy war” in Afghanistan between India and its arch-rival Pakistan.
Modi visited Afghanistan in June to inaugurate a $290 million hydroelectric dam project, and opened Afghanistan´s new parliament complex in Kabul in December, built by India at an estimated cost of $90 million.