As Prime Minister Manmohan Singh heads for the Maldives next week to participate in the 17th Saarc summit, it is expected that he will be suggesting some mechanisms to promote a greater level of regional economic integration.
As for Pakistan’s decision to accord India Most Favoured Nation (MFN) status, New Delhi feels that other than having an impact on bilateral ties, it will also impact the larger process of implementation of SAFTA (South Asian Free Trade Agreement). One of the primary aims of Saarc has been to promote greater regional economic integration. With this end in mind, the seven Saarc countries put in place SAFTA.
While officials here admit that the process of reducing the number of tariff lines and the value at which tariffs are raised has been slow under SAFTA, at the same time they note that there has been some progress. However, a lot of ground still remains to be covered and they hope that some of it is covered when the leaders of the seven Saarc nations meet at the summit.
Despite SAFTA, trade within its ambit is worth just $1.3 billion which is a very small fraction of the intra-regional trade outside it. Of course, even the outside trade is worth just $14 billion dollars, which again is much less than the region’s potential, say officials. So when India heads for the Saarc summit, it will be hoping to give a boost to the faster growth of trade under SAFTA.
Among the areas of concern are the low investment flows as well as the need to agree on the definition of services. There is also the need to have more clarity on the offer lists of products that can be exchanged.
Apart from the focus on facilitating improved trade in goods and services and investment flows in the Saarc region, India also heads for the Maldives summit hoping to get attention drawn to the need for better connectivity, transportation networks and communication links among Saarc countries. for an improvement in these links is also seen as a a contributor towards better regional economic integration.