India and Saars

India and SAARC: An Analysis
Author(s): Romi Jain

Source: Indian Journal of Asian Affairs, Vol. 18, No. 2 (December 2005), pp. 55-74
Published by: Manju Jain
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India and SAARC : An Analysis
Romi Jain
The establishment of SAARC in 1985 was a milestone in the
institutionalization of regional cooperation in South Asia, a region betra

glaring paradox: abundant in human and natural resources but mired in p
as well. SAARC aims at accelerating the process of socio-econ

development in member states through 'collective self-reliance". Its crea
therefore, kindled hopes amongst South Asian peoples for a better

marked by prosperity and freedom from want. SAARC has, however, fa
live up to such expectations. India, the predominant power in the region

commitment to SAARC, has had tried to ensure that the latter deliver th
by focusing on poverty alleviation, infrastructure development, re

economic integration and proper harnessing of region's resources, encou
people-to people contact, and by taking appropriate measures in this reg
India has urged the member states to put aside their rivalries and conce
their attention and energies on regional development delivering wi

results. Despite this, the hostility between the two developed regional p
India and Pakistan- as well as the in-built asymmetry in the Indo-centric
and the consequent threat perception among smal 1er countries of the reg
frustrated India's sincere but cautious attempts to make SAARC a meani
and productive regional organization.
This article will examine India's approach to SAARC since its incep
manifesting in its perception and attitude towards SAARC and its role i
contribution to SAARC. It will also deal with India's initiatives toward c
a better future for SAARC.
56 Indiati Journal of Asian Affairs, Dec. 2005
India's Profile
India is the world's second most populous country(after China) and the seventh
largest in area. With a land area of 32, 87, 263 sq. km, India is about 3,000 km(
1,875 mile) long and 3,000 km wide and has, because of its peninsular shape,
shore line of about 7,000 km( 4,400 mile) along the Bay of Bengal on the east
and the Arabian Sea on the west. The land frontier of about 5,700 km( 3,600
mile) is shared with Pakistan on the west- by China( mostly Tibet), Nepal and
Bhutan on the north , and by Bangladesh and Myanmar (Burma) on the east.
The Indian island groups of Lakshadweep are off the western coast and the
Andaman and Nicobar islands are located in the eastern part of the Bay of
Bengal.
India has a rich and varied minerals-resource base. Coal and iron ore are
abundant and located close to each other in the Chota Nagpur Plateau in the
eastern peninsula. Manganese, lignite, copper bauxite, kyanite, fire clays ,
mica, and lime stones are found in large quantities. 1
India is centrally located in the Indian subcontinent , sharing land borders with
four of the SAARC countries, namely Pakistan, Nepal, Bhutan and
Bangladesh while the latter do not share common borders with each other. This
naturally makes South Asia an Indo-centric region. India's prominent regional
position is also manifest in its population size over one billion population, its
being the fourth largest economy in the world with over 8 percent economic
growth rate ( 2005-2006) and a formidable military power with a large pool of
scientific and technical manpower as well as its impressive information
technology(lT), space and defence based capabilities.
Historical Background: SAARC Creation

SAARC has been a latecomer in history of regional organizations. However,
the need for forging Asian unity and fostering inter- Asia cooperation was badly
felt by Indian leadership even before independence. In 1928, Indian National
Congress passed a resolution advocating creation of an Asian Federation.
Nehru, architect of India's foreign policy, detested bloc politics prevailing in
international system during the Cold War era, jettison as it could the autonomy
and independence of newly independent states of the Third World. He,
however, favoured formation of associations fostering and accelerating inter-
Jain : India and SAARC 57
state cooperation for develo

"Small states of the world tom
be reduced to the status of sat
of India, Iraq, Afghanistan a

integration, India convened
which Prime Minister Nehru
and stressed on the need fo
Bandung Conference held in 1
Afro-Asian countries togeth
noteworthy that Nehru en
involving nations of Asia and
of cooperation in South Asian
immediate neighbourhood w
tenure.
In fact, India then pursued the goal of evolving a 'multilateral strategic

community1 on the subcontinent ; socio-economic issues in the region being
secondary. This was evident from the kind of bilateral treaties of peace and
friendship that India concluded with Bhutan, Nepal, and Sikkim, as also from
its repeated offers of a no-war pact to Pakistan. The principal motivation
behind building a multilateral strategic community in South Asia was to serve
India's vital national interests and to release India's energies for a greater and
more active involvement in world affairs. Thus, the Nehruvian model of
regionalism on the subcontinent was an integral part of the building-up of co-
operative relationships in the large Asian- African region3
Moreover, certain factors worked as a constraint on formation of the regional

association in South Asia. These included : colonial legacies involving partition
of the Indian sub-continent and undemarcated state boundaries, problems of
national integration, nation-building, unequal economic development, cold
war politics and role of external powers. 4
Turning to the Indira Gandhi regime, India continued with a policy of good
neighbourliness and bilateral cooperation towards South Asian countries.
However, Mrs. Gandhi's drive for India's 'power projection' in international
relations reflected in India's role in the independence of Bangladesh as an
58 Indian Journal of Asian Affairs , Dec . 2005
independent and sovereign nation, India's explosion of nuclear

1974, and "annexation" of Sikkim to the union of India in 1975, gav
perception among smaller countries in the region that India was
hegemon. Moreover, apart from India's strained ties with Pakistan's
dictatorship in the aftermath of the 1971 Indo-Pak War, India's rela
Bangladesh turned sour after the assassination of Sheikh Mujib-ur R
August 1975. Given this state of affairs, regional cooperation could h
place. India was apparently comfortable with prospects of socio
cooperation in the region. But it was apprehensive of regional
arrangements given the prevailing cold war politics in international
and consequent possibility of extra-regional role of outside powers in
Asian regional association as well as the possibility of South Asi
misusing of such a regional forum against India collectively. Howev
ongoing process of regional integration in the world politics, fo
regional organization in South Asia was considered desirable for
common goals such as alleviation of poverty, hunger , dis
unemployment facing the entire region.
The initiative for establishing regional cooperation in South Asia cam

President Zia- ur Rahman who mooted the idea of setting up
organization in South Asia. He had begun efforts in this direction a
1977 when he visited India to hold discussion with the Indian prime
Moraiji Desai on the imperative of regional cooperation among S
states. He welcomed the Nepalese King Birendra's call for a clos
cooperation in sharing river waters while delivering an inaugural sp
Colombo Plan Consultative Committee that met in Kathmandu in De
1977. President Rahman had also informally discussed the idea

cooperation with the leaders of the South Asian countries d
Commonwealth Summit in Lusaka (1979) and the Non- Aligned
Havana (1979). Finally, the Bangladesh president seemed to hav
concrete shape to the proposal after his visit to Sri Lanka and discu
the Sri Lankan president, J. R. Jayawardene, in November 1979. 5 F
1980, Rahman made the first concrete proposal for establishing a f
for regional cooperation in South Asia.
President Zia -ur Rahman addressed a letter to the Heads of State and
Governments of Bhutan Ind

indicating economic, technica
areas of cooperation. The Pres
explore the possibility of es
regional cooperation. To thi
level.6
Factors influencing Rahman's thinking on establishing a regional

organization in South Asia included: (1) change in the political leadership in
the South Asian countries and demonstration of accommodative diplomacy by
the new leaders; (2) Zia ur Rahman's need for Indian support to legitimize his
coup d'etat regime; (3) an acute balance of payment crisis of almost all the
South Asian countries, which was further aggravated by the second oil crisis in
1 979; (4) failure of the North-South dialogues, and increasing protectionism by
the developed countries; (5)assurance of economic assistance for multilateral
cooperative projects on sharing water resources of the Ganga and Brahmaputra
by United States President Jimmy Carter and British Prime Minister James
Callaghan during their visit to India, Pakistan and Bangladesh in January 1 978;
and (6) the Soviet military intervention in Afghanistan in late December 1979
and the resulting rapid deterioration of the South Asian security situation.(7)
During this critical period, President Zia-ur Rahman's initiative for establishing
a regional organization, which would permit the leaders of the South Asian
countries an opportunity to improve their understanding of one another's
problems and to deal with conflicts before they turn into crisis, became much
more appealing.7
There was also an understanding on Rahman's part that the countries in the
region could better their lot through collective endeavour rather than by
'drifting apart'. Besides, Bangladesh's " "Proposal for Regional Cooperation in
South Asia" notes that: "The countries of South Asia share many common
values that are rooted in their social, ethnic, cultural and historical traditions." It
further argues: " Shared perceptions and values are an important factor for the
success of any venture for regional cooperation. . .the beginning of cooperation
on a regional basis may be a positive force in generating a climate of harmony
conducive to a better perception of what the countries in the region have in
60 Indian Journal of Asian Affairs , Dec. 2005
common and the value of this heritage."8
India's Response
Bangladesh President Zia -ur Rahman's proposal for setting up
organization in South Asia had quick takers in Nepal, Sri Lanka, the
and Bhutan. However, India and Pakistan had initially express
reservations for a host of reasons. While Pakistan feared that such
institution would only serve to establishing India's economic an
dominance in the region. New Delhi was concerned about the
reference to security issues and was also struck by an apprehension
smaller neighbours would use the proposed organization to "gang u
India by forging a united front. According to J.N. Dixit, India was c
the dilemma that if it did not join that forum it would be accused of
centred and a deterrent to genuine effort to create institutions for s
development of the region, despite being the most well-endowed cou
region with the greatest potentiality to contribute to such an effo
joined the group, it faced the possibility of its neighbours ganging u
and using the S AARC institutions to generate pressure on various
which they had differences of opinion with India. In other words,
be under pressure through this collective regional instrumentality. A
introspection and extensive consultations, Mrs. Gandhi took the
join the negotiations for creating SAARC. She felt that despite
facing potential collective pressure from its neighbours, India coul
itself out of a regional grouping, the declared aim of which w
political and institutional mechanisms for generating cooperation a
collective benefit of the peoples of the South Asian region. India ,
joined the consultative process for the creation of SAARC.9
On the other hand, given the sensitivity of India and Pakistan, Ban
draft paper eliminated security issues, dealing only with " nonpoliti
-controversial areas of cooperation". The ball was set rolling. It
Delhi that the first South Asian Foreign Ministers' conference
August 1983, adopting Declaration on South Asian Regional Co
(SARC) and launching an Integrated Programme of Action (IPA), se
mutually agreed areas of cooperation. Declaration's general provisio
for unanimity at all levels

bilateral and contentious issue
Prime Minister Indira Gandhi
eliminate tension and promot

seven who are gathered her
suffered from the same poli
Our cooperation in no way li
work together. We are all equ
We want to be friends with all
Finally, at the first Summit h

establishing the South Asian
was adopted. The main objec
promote the welfare of the
growth and social progress:
growth and social progress; to
social, cultural, technical and
international forums on matt
international and regional org
While articulating India's at

December 1985 at the inaugur
Gandhi observed: " Today, we
to forming an association. A sp
brought us together. . .certain
not impose constraints on us.
the realties of our condition. The model we have evolved for ourselves is a
model which is in accord with our realties, our compulsions and our genius. We
have not sought to melt our bilateral relationships into a common regional
identity but are to fit South Asian cooperation into our respective foreign
policies as an additional dimension. We have evolved modalities which do not
allow bilateral stresses and strains to impinge on regional cooperation. Our
cooperation tempers enthusiasm with pragmatism, and initiative with
consensus."11
From Rajiv Gandhi's statement it was crystal clear that India was desirous of
forging a close cooperation with South Asian states in various fields o

interest- culture, trade, science and information technology so that t
might move forward in the direction of self-reliance in key areas o
development. Besides that Gandhi was quite optimistic that desp
"political hurdles" emanating from Pakistan, India would play its pr
role in making SAARC a successful instrument for economic transf
and well being of the people of South Asia. He further added that t
should not be allowed as an instrument to pressurize India to resolv
disputes with its neighbours to undermine its national unity and the
integrity.
India's approach
India has always adopted a low-profile in the SAARC set up so that wrong
signals do not go out to other member countries that it desires to dominate the
region as a hegemon. This is evident from institutional arrangements at
SAARC. For example, New Delhi did not come in the way of setting up of the
SAARC Secretariat in Kathmandu despite the fact that India possessed far
better infrastructural facilities, better communication and transportation
means and more animated media and intellectual environment. Also India did
not express its desire to have its first Secretary General to SAARC , rather
preferring his appointment in an alphabetic order to avoid any
misunderstanding among member nations about India. It is also significant to
note that despite being a leading country in agriculture science, India allowed
the establishment of SAARC Agricultural Information Centre(SAIC) at
Dhakainl988.
India has been consistently endeavouring to make South Asia a prosperous

region economically and also to make it a stable and peaceful region by
addressing common problems and threats facing all member nations. This
apart, India has emphasized on the imperative of people- to-people contact
including the role of NGOs in order to boost government efforts for regional
cooperation. In his speech at the second SAARC summit, as a chairperson, at
Bangalore (India)in 1986, Rajiv Gandhi pointed out ¡"Regional cooperation
cannot merely emerge from the fiats of leaders. It has to grow from contacts
between professionals at all levels." 12 Indian perception was shared by other
members. Consequently, regional apex bodies of professionals like SAARC
Chamber of Commerce and

South Asia's legal communit
Parliamentarians, have been se
India as Summit Chairman : Outcome
At the Bangalore Summit, held from lóto 17 November, 1986, Heads of State
and Government approved the following ideas aimed at strengthening
cooperative programmes under SAARC:
• A South Asian Broadcasting Programme covering both radio and

television.
• Concrete steps should be taken to facilitate tourism in the region, including

facilities for limited convertibility of national currencies for tourists from
SAARC countries.
• Creation of SAARC Documentation Centre as the repository of reliable

and up-to-date information pertaining to technical, scientific and
development matters.
• Aconcerted programme of exchange of scholars should be formulated and

action be taken for an early institution of SAARC scholarships,
fellowships and chairs, with a view to promoting greater cross-fertilisation
of ideas through greater interaction among scholars, students and
academics in the South Asian countries.
The Summit leaders also emphasized on promoting people-to-people contact

in the region and had approved the following five initiatives in this regard:
1. SAARC Audio- Visual Exchange Programme (SAVE); 2. SAARC
Documentation Centre; 3. SAARC Chairs, Fellowships and scholarship
Schemes; 4. SAARC Scheme for promotion of Organized Tourism;5. SAARC
Youth Volunteers Programme.
"The Heads of State or Government agreed that co-operation among SAARC

states was vital if terrorism was to be prevented and eliminated from the region.
They unequivocally condemned all acts, methods and practices of terrorism as
criminal and deplored their impact on life and property, socio-economic
development, political stability, regional and international peace and co-
operation. They recognized the importance of the principles laid down in UN
Resolution 2625 which among others required that each state shoul
from organizing, instigating assisting or participating in acts of civ
terrorist acts in another state or acquiescing in organizes activities
territory directed towards the commission of such acts." 13
The Second SAARC Summit in India- the Delhi Summit:
At the Eighth SAARC Summit held in Delhi from 2 to 4 May, 1 995, the South
Asian Heads of State and Government took a decision to create SAARC Free
Trade Area (SAFTA) as early as possible to allow free movement of goods

without any tariff or non-tariff barriers. An another milestone of this summit
was the establishment of South Asian Development Fund (SADF)for
institutional and human resources projects and; social and infrastructural
proj ects. The S ADF currently has a capital fund ofU S$ 5 million.
The Heads of State or Government also reaffirmed their "resolve to intensify

regional cooperation in order to accelerate the process of promoting the welfare
and improving the quality of life of the peoples of South Asia. They reiterated
their commitment to the principles and objectives enshrined in the SAARC
Charter.... They recalled their conviction that in an increasingly
interdependent world, regional cooperation was a dynamic instrument for
promoting economic prosperity , mutual understanding and good neighbourly
relations to achieve the objectives of peace and stability in South Asia. In this
context, a climate of peace and stability would contribute to the economic
growth."14
For eradication of poverty, Summit leaders at New Delhi reaffirmed their

commitment to the eradication of poverty in South Asia, preferably by the year
2002 AD through an Agenda of Action. They decided to declare 1995 as the "
SAARC Year of Poverty Eradication" and committed themselves to addressing
the fundamental causes of poverty and to provide for the basic needs for all.
They also reaffirmed the necessity to ensure that financial systems and other
public polices are geared towards poverty eradication and warned against
increase in socially divisive disparities.15
Further, the Heads of State or Government directed that all necessary steps
should be taken to facilitate ratification by all Member States and
operationalise S APTA by the end of 1995, which was realised in December
1995.
India's dilemma
India has treaded cautiously on the path of ushering in regional cooperation

given the sensitivities of its small neighbours. In fact, it is caught up in a
dilemma. If it moves fast in taking initiatives to step up the regional
cooperation, other member countries harbour suspicion of its hegemonic
designs. On the other hand, if India moves slowly , it is charged with being
indifferent to the SAARC.
India has tried to allay fears of its neighbours and to address the common
complaints made by them. For example, on economic front, India is not only
not demanding reciprocity in trade, it is in fact "institutionalizing positive
asymmetry" in favour of its neighbours reflected in Free Trade
Agreement(FTA) with Sri Lanka, and trade with Nepal and Bhutan. India is
willing to adopt similar framework with regard to Bangladesh too which
frequently complaints about 'huge1 trade deficit with India. Yashwant Sinha,
former External Affairs Minister of India, refuted the allegation that India's
foreign policy is trapped in 'a sub-continental framework1 on the ground that the
Indian government, while promoting the idea that India is a major power in the
world, had " articulated the concept of an extended neighbourhood for India
which stretches from the Suez Canal to the South China Sea and includes within
it West Asia, the Gulf, Central Asia, South East Asia, East Asia, the Asia Pacific
and the Indian Ocean Region". Besides, through the projects like India -
Myanmar- Thailand trilateral road project, the Open Skies policy announced
for South East Asia and the agreement to use Chabahar Port of Iran for transit to
Central Asia and Russia through Afghanistan, India has tried to improve
connectivity with its extended neighbourhood. 16
India claims that its approach towards SAARC is 'positive and constructive'.
For example, at the twelfth SAARC summit India made constructive proposals
aiming at strengthening the SAÀRC which included, creation of a Poverty
Alleviation Fund and India's willingness to make an initial contribution of US$
100 million for projects in SAARC countries other than India; a regional food
bank and a campaign for zero-hunger in the region; advocacy of the free
movement of media persons and media products in South Asia, and
establishment of cultural sub centers under the main S AARC Cultu
Kandy. Also, S AARC countries agreed on Indian proposal to "initi

on advancing the deadline for a South Asian Economic Union f
2015, including on a common currency." Above all, the memb
signed agreement on the S AFTA which was a milestone in intra-r
relations given South Asian countries' apprehensions abut Indi
dominance in the region. Sinha pointed out: "The outcome of t
Summit is, equally, product of a slow but steady change in the 'min
neighbours towards India. This change, in turn, is to a large extent,
conscious policy shift India has made towards the region as
perseverance in advocating the virtues of regionalism". 17
In this regard, it may be pointed out that at the Male S AARC Sum
1 997, a decision was taken to recognize the right of three or more
enter into sub-regional cooperative arrangements without wa
members to sign on. This decision, taken largely at the initiative of
Nepal and Bhutan, permitted them to pursue multilateral ec
technical cooperation arrangements with India under the SAA
without being hamstrung by Pakistani opposition." 1 8 In pursuant
and Sri Lanka reached an agreement in 1998 to create fre
bilaterally. This boosted the bilateral trade between the two count
reached 1.8 billion dollars in 2004. On these lines, BIMSTEC w
originally consisted of Bangladesh, India, Myanmar, Sri Lanka , Th
joined by Nepal and Bhutan in order to give impetus to ec
technological cooperation between member countries. The BIMS
was held at Phuket in Thailand in 2004 to create free trade area am
countries with the exception of Bangladesh. This has ushered in a
political and economic understanding among members who have r
significance of sub-regional cooperation as an instrument of
progress benefiting their people. According to some scholars, tran
cooperation in the form of BIMSTEC was an imperative to go bey
" Once India overcomes its own internal inhibition and subscribe t
free trade, it will find that SAARC is only one instrument
economic integration."19
It is also felt that sub-regional and trans-regional cooperation
marginalise SAARC. Shoul

perception. In fact, in the a
economy to global and region
SAARC only. What is impor
expand their scope of econom
and regional economies. In thi
integrate with EU in trade
initiatives in the larger intere
India's Focus on TVade and
India has been playing a sig

cooperation in South Asia so t
unemployment facing the reg
among member nations. In
among SAARC countries,
Ministers Conference from
SAARC trade under the S
cooperation in the region. Als
Fair was hosted by India, with
fair has now become an annua
the SAARC Chamber of Com
Meeting on Promotion and Pr
29-30 September 1997, with M
of India, urging the meetin
strengthen intra-SAARC priv
enhance the attractiveness
evolving coordinated invest
approach to investments. It
Promotion and Protection A
mechanism in the region woul
attracting foreign investmen
paper for operational work-
mechanism will be prepared by
India has had urged the SAA
hostage to their mutual disputes and differences. In his speech at th

SAARC summit held in Kathmandu in January, 2002, Indian Prime
A.B. Vajpayee, said: "What we need today is the dose of maturity w
lead SAARC from adolescence to adulthood. It would enable us to p
mutual rivalries, so that our scarce resources can be concentra
pressing agenda of eradication of poverty, hunger, disease, and illi
would not let political obsessions cloud our collective vision of a vi
prosperous South Asian community." He further pointed out: "It i
that we recognize the primacy of the economic agenda in SAARC.
is home to one-fifth of humanity. With a market of this size, our natu
our human resources, our technical skills and our intellectual stren
integrated South Asia can be an economic powerhouse, by using its
creatively and building on the mutual complementarities of its con
economies."21
At the SAARC Communication Ministers' conference in Islamabad in
2004, India proposed setting up a task force to monitor and map developments
in the communications sector among the SAARC member countries with a
view to take the benefit of technology to the masses and bring down costs.
During the Indian Economic Summit held in December 2004, Kamal Nath,
Minister of Commerce and Industry of India, said India was looking at the
possibility of a comprehensive economic cooperation agreement with the
SAARC countries, in line with the CECA with Singapore, to boost intra-
regional trade within SAARC. He said : "Negotiations are on and we must
move away from the mindset of PTAs and FTAs. We should not look at PTAs
and FTAs alone but must look at the bigger picture/1 He further added that India
would strive to make SAFTA a success to make it a force to reckon with, a
group that is respected the world over, and an economic union that is cherished
by the common people of our countries, is the goal which India strives for.
India-SAARC Trade
According to India Express Bureau, 20 February, 2005, ASSOCHAM has

predicted that India's trade with SAARC nations is expected to increase five-
fold in the next eight years to Rs 1,00,000 crore from the present level of Rs
2 1 ,000 crore with the introduction of Free Trade Agreements (FTAs) among th
SAARC countries with effec

Chamber noted that countr
potential to double every five
region explored investment
SAARC countries in the post-
of 1 9.99 per cent as compared
Till now, India's trade exports

yarn fabrics, transport equipm
instruments and drugs, pharm
to the country's total exports
per cent, transport equipmen
machinery and instruments 6
per cent. Similarly, promin
countries include fruits and n
and inorganic share. The shar
contributing 14 per cent, fru
articles 8 per cent, jute raw 8
The chamber has suggested th

products such as textile, rubbe
tourism as well. It also called
for exporters to successfully p
"It is also essential to encou

infrastructure to internationa
trading partners. These effor
investment flows at the level
the chamber said. The cham
communication system, util
lowering import restrictions
fairs, encouraging joint ventu
between India and SAARC cou
It is an established fact that I

than any other country. In
shown strong growth durin
70 Indian Journal of Asian Affairs, Dec . 2005
overall regional trade and weak regional integration. During the p

period of 1 975-85, India's exports increased from $ 1 60 million in 1
in 1984, a compound growth rate of 7.8 percent. However, during
SAARC period, India's exports increased from $277 million in
billion in 1995, showing an additional growth of 22 percent. For m
data, India's exports increased from $622 million in 1991 to $2 bill
year 2000, indicating 9 percent growth during this period. However
time, India's imports from SAARC countries were quite low. It
million in 1975 and rose to only $105 million during 1984, and wa
million in 1 995 . This created a situation where it was obvious that
a good importer in intra-S AARC trade.23
India and SAFTA
The idea of South Asian Free Trade Area (SAFTA) was endorsed first at the
Eighth's SAARC Summit held in New Delhi in May 1995. The members of
SAARCStandingCommitteeinitsmeetingheld atNuwara Eliya in Sri Lanka
in March 1999 stressed the importance of accelerating trade and economic
cooperation within the region . The Committee of experts set up to draft the
treaty on S AFTA was asked to outline a definitive programme of work which
will enable finalization of the text of a comprehensive treaty regime for
creating a free trade area by the year 200 1 .24 At the 1 2th SAARC summit, held in
Islamabad, an agreement on South Asian Free Trade Area was signed, under
which following terms were spelt out:
1 . Pakistan and India will reduce their tariffs to 0-5 percent within seven year
beginning in 2006, and the least developed countries (LDCs) are to reduce
their tariffs to 0-5 percent in a period of 10 years in the same period. Each
member state will maintain a sensitive list of products in which tariffs will
not be reduced.
2. The three developing countries - Pakistan, India and Sri Lanka - will
reduce their maximum tariffs to 20 percent, and the LDCs, including
Bangladesh, Nepal, Bhutan and the Maldives, will reduce their maximum
tariffs to 30 percent before January 1, 2008. At the conclusion of the first
phase, all developing states of SAARC will reduce their maximum tariffs
to the 0-5 percent range for LDCs from January 1 , 2009.
3. In the second phase, the

reduce tariffs to the 0-5 per
will do the same before Jan
January 1 , 20 1 5 . At this s
Asian Preferential Trade Ag

list of positive items to free
4 All member states will es

to identify the list of sensi
barriers and other restrictive measures within three months from the
signing of the S AFTA treaty.25
It is estimated that, a free flow of goods in the region will enhance intra-
SAARC trade from current low levels of US$4-6 billion per annum to $14
billion.
Within a month following the 12th summit held in Islamabad in January 2004,
Indian government in its commitment to regional economic integration
reduced import duty on South Asian items including textiles, colours, inks,
paper glassware, ceramic items, machinery parts, pharma adhesives. The duty
on cotton yarn, shampoos, hair oils and creams, hair dyes and hair fixers,
polishes and creams for footwear and furniture had been pruned to 1 0%. In case
of items like tiles, marble, granite, millstones, grindstones, grinding wheels,

polishing stones, cement tiles for mosaic, concrete boulders; non-electrical
articles of graphite or other carbon, graphite filter candle, sanitary ware and
kitchenware import duty was halved to 1 0 percent.
At the 13th SAARC summit held in Dhaka, November 2005, Prime Minister
Manmohan Singh made fruitful suggestions for collaborative projects
including provision of reciprocal, transit facilities to third countries, by South
Asian countries to each other; improvement in intra-regional air connectivity;
India's offer to all SAARC neighbours, on a reciprocal basis, the facility of
daily air services, to its metropolitan cities; establishment of Regional Food
Bank to ensure food security; South Asian Energy Dialogue for regional energy
security; healthcare project involving a regional Tele-medicine network; and a
SAARC Museum of Textiles and Handicrafts.
Conclusion
India has had undertaken moderate policy initiatives with respect to SAARC
activities and pursued accommodative policy to inspire confidence among its
neighbours in order to help fulfil SAARCs cherished goals. India has,
however, not achieved the desired outcome in its endeavours. Being held
hostage to factors such as India-Pakistan rivalry, mutual mistrust , and lack of
requisite political will among leaders of South Asian countries, SAARC has got
mired in confusion and uncertainty .This does not augur well for SAARC
moving forward.
However, the current peace process between India and Pakistan as well as the
notable success of the Twelfth SAARC Summit in respect of Agreement on
S AFTA inter alia, has raised optimism among smaller countries of the region
that SAARC is likely to register progress in economic, trade and social issues
which are of prime concern to the betterment of South Asian peoples who are
the real victims of poverty and deprivation. It is indeed an onerous task for the
SAARC leaders to uplift the poor and down trodden people by bringing about
positive change in their old mind sets fraught with mutual mistrust and
suspicion.
Clearly, the success of SAARC will hinge on an enduring peace between the
two major powers- India and Pakistan- in the region as well as determination of
the leaders to strengthen the SAARC in promoting shared regional interests.
Member states need to look at the ugly reality that about 40 percent of the
people in the world living on less than a dollar a day belong to South Asia. In
face of the non-availability of even the basic amenities of life to a large chunk of
the people, it becomes a moral responsibility of India , being a giant member
country, to boost good will and cooperation within the SAARC community.
The regional socio-economic cooperation deserves top priority. India has had
therefore, advocated such cooperation extending into regional economic
integration in order to eliminate poverty, raise peoples' living standard and
usher in regional prosperity. India will continue to lay emphasis on enhancing
the regional trade and cooperation as well as people-to-people contact. At the
same time, by the logic of economic globalisation and the consequent primacy
of economic strength in a national power calculus, India cannot be tied to the
unmoving SAARC (living in

manifest from India's ever d
regional economic blocs such
burgeoning bilateral trade wit
has no future without India. The role of India is inevitable if SAARC has to
make any progress but with a word of caution that India needs to act as a
statesman to harmonize its neighbourhood policies while taking account of
sensitivities and legitimate concerns and interests of smaller countries of the
region. At the same time India needs to demonstrate through its action that it
will take appropriate steps and initiatives like providing more funds to address
socio-economic problems of the region as well as by stepping up confidence
building measures among with member states with whom India has long
standing bilateral disputes.
Endnotes
1 . Spectrum , Kathmandu, Vol. H , No.3, August 1 997, pp. 1 7 and 20.
2. Shashi Upadhyaya and Sushma Sharma, "India's Contribution to

SAARC" in VirendraNarain et al, ed., SAARC: A Study ofPerceptions
and Policies, New Delhi: South Asia Publishers Pvt. Ltd.:, 1991, p.52.
3. S.D. Muni, " India and Regionalism in South Asia: A Political

Perspective" in Bimal Prasad, ed., India's Foreign Policy: Studies in
Continuity and Change, Vikas: New Delhi, 1 979, p. 1 1 6. Muni defines
multilateral strategic community as a group of countries in a region
having broadly shared and mutually coordinated security, strategic
and foreign-policy interests.
4. Ibid. See also Partha S, Ghosh, Cooperation and Conflict in South

Asia, New Delhi: Manohar, 1989.
5. S.D. Muni and Anuradha Muni, Regional Cooperation in South Asia,

New Delhi: National Publishing House, 1 984, pp. 29-3 1 ; Bhabani Sen
Gupta,, South Asian perspectives, Seven nations in conflict and
cooperation, New Delhi: B.R. Publications, 1988.
6. Golam Hossain, " Bangladesh and SAARC", in Virendra Narain op.

cit, p. 73.
7. Kishore C. Dash, "The Political Economy of Regional Cooperation in
74 Indian Journal of Asian Affairs, Dec. 2005
South Asia," Pacific Affairs, Vol. 69, No. 2, Summer 1996.
8. Quoted in Kanti Bajpai, "Bangladesh and SAARC: Or

Expectations" in S.R. Chakravarty, ed, Foreign Policy of Ban
New Delhi: Har-Anand Publications, 1 994, p.248.
9. J.N. Dixit, India's Foreign Policy 1947-2003, Picus B

Delhi, 2003, pp.149-150.
1 0. Quoted in Golam Hossain, op cit, p.77.
11. Quoted in Dixit, op. cit, p.202.
12. ShashiUpadhyaya,op.cit.p.60
13. Declarations of SAARC Summits ( 1985-1995), SAARC S
Information and Media Division, Kathmandu, 1 997, p. 1 4.
14. Ibid., p.112.

15. Ibid, pp.1 12-1 14.
1 6. The 7th Dinesh Singh Memorial Lecture , " Twelfth SAA

and Beyond" delivered by Yashwant Sinha, New Delhi, 3
2004, Strategic Digest, February 2004, Vol. 34, No. 2, pp. 127-
17. Ibid.
1 8. For details see Mohammed Ayub, "India Matters", The Washington

Quarterly, Winter 2000,pp.30-3 1 ; Suman Sharma, India and SAARC,
New Delhi: Gyan, 200 1 .
19. C. Raja Mohan, " The Twelfth Summit and the Future of SAARC,
biiss journal, Vol, 25, No.4, 2004, p. 334.
20. SAARC Newsletter, September 1997, Vol. VIII, No.9,p.3.

21. National News Agency, Nepal www.rss.com.np. For a
comprehensive background and analysis see O.P.,Goel, ed., India and
SAARC Engagements, Delhi: Isha, 2004, 2 volumes.
22. The Indian Express Bureau ,New Delhi, February 20, 2005.
23. Nadeem Malik, New Dawn for South Asian Trade, Asia Times Online,
January 13,2004.
24. SAARC Newsletter, March and April 1999,Vol.X,No.3and4,p.4.

25. Nadeem, op.cit.

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India and SAARC: An Analysis

Author(s): Romi Jain

The establishment of SAARC in 1985 was a milestone in the

institutionalization of regional cooperation in South Asia, a region betra

as well. SAARC aims at accelerating the process of socio-econ

therefore, kindled hopes amongst South Asian peoples for a better

live up to such expectations. India, the predominant power in the region

by focusing on poverty alleviation, infrastructure development, re

people-to people contact, and by taking appropriate measures in this reg

their attention and energies on regional development delivering wi

frustrated India's sincere but cautious attempts to make SAARC a meani

and productive regional organization.

Historical Background: SAARC Creation

state cooperation for develo

of India, Iraq, Afghanistan a

In fact, India then pursued the goal of evolving a 'multilateral strategic

Moreover, certain factors worked as a constraint on formation of the regional

independent and sovereign nation, India's explosion of nuclear

The initiative for establishing regional cooperation in South Asia cam

1977. President Rahman had also informally discussed the idea

Governments of Bhutan Ind

Factors influencing Rahman's thinking on establishing a regional

common and the value of this heritage."8

for unanimity at all levels

eliminate tension and promot

Finally, at the first Summit h

While articulating India's at

forging a close cooperation with South Asian states in various fields o

India has been consistently endeavouring to make South Asia a prosperous

Chamber of Commerce and

India as Summit Chairman : Outcome

• A South Asian Broadcasting Programme covering both radio and

• Concrete steps should be taken to facilitate tourism in the region, including

• Creation of SAARC Documentation Centre as the repository of reliable

• Aconcerted programme of exchange of scholars should be formulated and

The Summit leaders also emphasized on promoting people-to-people contact

"The Heads of State or Government agreed that co-operation among SAARC

The Second SAARC Summit in India- the Delhi Summit:

Trade Area (SAFTA) as early as possible to allow free movement of goods

The Heads of State or Government also reaffirmed their "resolve to intensify

For eradication of poverty, Summit leaders at New Delhi reaffirmed their

India has treaded cautiously on the path of ushering in regional cooperation

Kandy. Also, S AARC countries agreed on Indian proposal to "initi

It is also felt that sub-regional and trans-regional cooperation

marginalise SAARC. Shoul

India's Focus on TVade and

India has been playing a sig

India has had urged the SAA

hostage to their mutual disputes and differences. In his speech at th

At the SAARC Communication Ministers' conference in Islamabad in

According to India Express Bureau, 20 February, 2005, ASSOCHAM has

SAARC countries with effec

Till now, India's trade exports

The chamber has suggested th

"It is also essential to encou

It is an established fact that I

overall regional trade and weak regional integration. During the p

a good importer in intra-S AARC trade.23

India and SAFTA

3. In the second phase, the