At a time when the issue of Pakistan granting its eastern neighbour a ‘most favoured nation’ status has taken the centre-stage, Indian industry leaders have called for greater integration and stronger economic bonding under the South Asian Association for Regional Cooperation (Saarc).
The economic bloc that consists of India, Bangladesh, Pakistan, Bhutan, Nepal, Maldives, Afghanistan and Sri Lanka has failed to provide any significant thrust to intra-regional trade even after 26 years of its existence.
Indian industry has said that the November 10-11 Saarc Summit in Maldives should have member-countries focusing on implementation of the South Asian Free Trade Agreement (Safta). This, they noted, would boost intra-regional trade that stands at around 5 per cent in South Asia, compared to over 50 per cent in East Asia and about 20 per cent in Latin America, according to the Confederation of Indian Industry (CII).
India’s trade with Saarc countries has gone up from $6.9 billion in 2005-06 to $15 billion in 2010-11. While exports from India to these countries have grown, imports have not seen such a rise.
“Much of the intra-regional trade gain is seen in intermediates, which indicates scope for vertical integration,” CII said. “Since countries in this region specialise in similar goods, lower border costs and reducing non-tariff barriers will allow them to more easily obtain raw materials and intermediate inputs from their South Asian neighbours.”
The industry body has also argued that trade in services should be given utmost priority, while bringing many more services within the provision of Safta. It has also asked for an improved and friendlier investment environment, especially in sectors such as hospitals, schools and transport services.
