The stadium is set to come up in Aino Mina, a northern suburb of Kandahar city, on land donated to the Afghanistan Cricket Board in 2012, a report in 'espncricinfo' said.
The funding was granted under the Indian government's Small Development Project Scheme.
"The construction of this stadium will be a major boost to the development of cricket in the southern region as well as in the whole country," the report quoted Dr Noor Murad, the ACB's chief executive officer, as saying.