Economic integration of all the eight South Asian countries posses a challenge to the political leaders of the region.
Though South Asia Free Trade Agreement (SAFTA) was operationalised from July 2006 the intra regional trade increased at a snail space from 3.2% in 1980s to only 5.5% in 2008, which is far below when compared with 58% in NAFTA, 54% in European Union, 25% in ASEAN and 22% in COMESA.
Several bottlenecks like poor infrastructure and trade facilitation measures, inadequate connectivity, non-tariff barriers and lack of political will have come in the way of faster integration.
SAFTA was launched under South Asian Association for Regional Cooperation (SAARC) which is an eight-nation body consisting of Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal , Pakistan and Sri Lanka.
The Indian minister for external affairs, SM Krishna addressing a conclave jointly organised by the SAARC Chamber of Commerce and Industry, Asian Development Bank and FICCI in Delhi on Tuesday said that the region has “become captive to the security situation. Issues such as cross-border terrorism and incidents of anti-India activities from terrorists of our neighbouring countries have impacted on the process of regional economic engagement, connectivity and people-to-people contacts.”
He, however, committed that India would fulfil its responsibilities in SAARC in an asymmetric and non-reciprocal manner for the benefit of the countries in the region. “The need of the hour for South Asia is to move beyond security issues that shackle it, into an era of mutual trust and mutually reinforcing growth and development.
United, the South Asian countries can swim and smoothly tide over obstacles like global financial crisis,” he said.
Krishna disclosed that a draft Agreement for Trade in Sercives would be finalised for signature in the next SAARC Summit scheduled in Bhutan in 2010. Discussions are also ongoing in SAARC to strengthen financial integration with a view to move towards a regional Customs Union.
The SAARC Food Bank is now operationalised with a total stock of 243,000 tonne contributed by all member states. The South Asian University is likely to set up on a 100 acre land in Delhi in July, 2010. Also