INDIA AND SAARC

MINUTE BRIEFING
The South Asian Association for Regional Cooperation (SAARC) was established at the First SAARC Summit in Dhaka on December 7-8, 1985. Its members are Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. The objectives of the Association as defined in the Charter are: To promote the welfare of the peoples of South Asia and to improve their quality of life; To accelerate economic growth, social progress and cultural development in the region and to provide all individuals the opportunity to live in dignity and to realize their full potential; To promote and strengthen collective self-reliance among the countries of South Asia; To contribute to mutual trust, understanding and appreciation of one another's problems;

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and To cooperate with international and regional organisations with similar aims and purposes Decisions at all levels in SAARC are taken on the basis of unanimity. Article X (2) of the SAARC Charter excludes bilateral and contentious issues from the ambit of SAARC. social. To strengthen cooperation among themselves in international forums on matters of common interest. India had the chairmanship of SAARC during the year 1996-97. This step has helped India develop good and cordial relationship with its neighbouring countries in all aspects i. technical and scientific fields. social and technical cooperation within SAARC. India took the next step of forming SAARC along with the 6 neighbouring countries. After SAARC being formed by India along with 6 of its neighbouring countries. INTRODUCTION After India adopted the policy of NSR (National Self Reliance) in order to remove dependence on foreign aid.India hosted the 17th session of the SAARC council of ministers at New Delhi in 1996. India also actively supports people-to-people initiatives aimed at fostering greater mutual understanding and goodwill in the region.To promote active collaboration and mutual assistance in the economic.e. Recently the 14th SAARC summit was held in New Delhi INDIA’S CONTRIBUTION TOWARDS SAARC India has cooperated actively in SAARC activities and vigorously promoted trade and other forms of economic. 2 . India has been able to develop trade relations with all the SAARC members. socially politically and economically. cultural. To strengthen cooperation with other developing countries.

commerce. The composite dialogue had then started. At present India’s export to Pakistan are limited. EFFECTS ON INDO-PAK RELATIONS SAARC has failed to resolve disputes between India and Pakistan (especially the Kashmir Issue). 3 . However during Prime Minister Atal Bihari Vajpayee’s visit to Islamabad (for the 12th SAARC summit) Pakistan persuaded India to resume talks about maintenance of peace and the stalled composite dialogue. while India received assurances that Pakistan would not allow its territory to be a hub for terrorist activities. India is a source of potential investments and technology. India offered to contribute US$ 100 million for Poverty Alleviation projects in SAARC countries (outside India). At the Twelfth Summit held in Islamabad in January 2004. One of the foremost challenges facing South Asia is the issue of poverty eradication. For example in the year 2001-2002 India’s total exports were $44 billion out of which a mere $204 million went to Pakistan. On the other hand. India has additionally offered to finance feasibility projects in SAARC countries in this regard. The progress of SAARC was limited for some years due to the absence of cordial relationship between India and Pakistan. India’s exports to Bangladesh stood at $ 930 million and exports to Sri Lanka at $662 million.India is the only SAARC member that shares land borders with four members and sea borders with two. India has granted the highest number of tariff concessions to all SAARC MEMBERS. SAARC'S inability to play a crucial role in integrating South Asia is often credited to the political and military rivalry between India and Pakistan. investments etc. and a major market for products from all other SAARC members. In terms of trade. No other SAARC country shares a common border with each other.

In the recent Indo-Pak dialogue process. SAARC has yet to become an effective regional organization.Pakistan has to pay heavy price for importing goods from other countries except India. largely because of mutual distrust between India and its neighbours. Thomas Thornton argues that in regional organizations it is difficult for “countries to establish balanced relations when one has a significant advantage in power over the other states. Along with India and Pakistan. military power and international influence. if India does take a prominent role in SAARC. they are reluctant to work with India. Also India's lukewarm support for SAARC stems from the concern that its neighbours might coalesce against it to the detriment of Indian interests. Thus. The reluctance of India and other South Asian countries to turn SAARC into a forum for resolving major regional disputes hampers SAARC’S ability to deal with many of South Asia's economic and political problems CO-OPERATION TROUBLES BETWEEN INDIA AND SAARC MEMBERS SAARC is structured in a way that often makes regional cooperation difficult. Indeed. 4 . There is discontent still between both the countries. it could further fears that India will use SAARC for hegemonic purposes. While the smaller states in South Asia recognize that they will need India’s help to facilitate faster economic growth. India is the most powerful country in terms of its economic might. India’s exports suffer due to non availability of neighbouring market. there were no winners and losers. India’s potential as a regional hegemony gives SAARC a unique dynamic compared to an organization such as ASEAN.” In the case of SAARC. SAARC: A FAILURE FOR INDIA (VICE-VERSA)?? SAARC had failed to resolve conflicts between India and Pakistan. The real winners were the people of South Asia. Pakistan was initially reluctant to join SAARC due to fears of SAARC succumbing to Indian hegemony. fearing that such cooperation will admit Indian dominance in SAARC. other countries of SAARC are likely to get many benefits because of improved INDO – PAK relations.

The core of these fears is likely derived from the displays of India’s power by New Delhi in the past. Attempting to promote regional cooperation while doing little to resolve regional conflicts makes SAARC’S mission looks nearly impossible. SAARC has no institutional mechanisms or punishments capable of preventing or fully resolving a dispute. more prominent example of a conflict derailing SAARC progress is the Indo-Pakistani conflict. Namely. Two examples illustrate how conflicts in South Asia have proven detrimental to SAARC. the apprehension between India and Sri Lanka was considered a primary reason behind Sri Lanka’s “lukewarm” support for SAARC into economic and social spheres of its member states until relations improved with India.Aside from a few overtures to its neighbours. Pakistan has enforced this policy by violating WTO regulation for failing to confer Most Favored Nation (MFN) status on India. Pakistan has demanded a resolution to its dispute with India over the Kashmir Valley before discussing trade relations with New Delhi. Bangladesh is afraid of India exploiting its geographical position to redirect water flows vital to Bangladeshi agricultural production. The first involves Indian intervention in Sri Lanka from 1986-1990. A second. Nepal and Bhutan are still worried about India’s control over their world trade and transit links as their geographical position will always make them dependent on India. disputes between South Asian states have undermined SAARC efforts to promote regional trade. Realizing its considerable advantage in military and economic power. The Indian military intervention to put down an insurgency by The Liberation Tigers of Tamil E Elam made Indo-Sri Lankan relations tense during these four years. These disagreements make consensus building and cooperation among SAARC states complicated. India has done little to allay the fears of other South Asian states. 5 . Subsequently. India has consistently acted in an “arrogant and uncompromising” manner with its neighbours. Moreover. These disputes between India and its neighbuors have directly affected SAARC.

The proposal was initially met with enthusiasm as India agreed to reduce tariffs in 106 of the 226 fields recommended by SAARC and Pakistan agreed to concessions in 35 fields. Compared to other countries with similar proximities and income levels. Much of the trade that is conducted in South Asia is also considered symbolic and generally does not involve goods vital to the economies of the South Asian states. arguably the largest powers in SAARC. This implies that there is potential for lucrative trade between India and Pakistan. Despite political impediments to trade. Therefore. it is not surprising that the IndoPakistani dispute over Kashmir is considered a primary cause of SAARC’S impotence. pushed for economic cooperation. Pakistan would receive cheaper imports due to lower transport costs and the absence of payments to a middleman. Bhutan. This statistic emphasizes a trend in SAARC— India seems gung ho about intra regional cooperation. By squelching trade between South Asian states. the improvements seen in regional trade have been marginal.K Gujral. India also joined a sub regional group within SAARC comprising of Bangladesh. Due to these conflicts. Nepal and India. In 1995. value of goods smuggled from India to Pakistan via a third party generally totals 250-500 million per year. The South Asian Preferential Trading Agreement (SAPTA) signed in December 1995 had SAARC countries reduce tariffs in certain economic areas to promote intra regional trade. 6 .India has recently attempted to improve its relationship with the rest of South Asia. when SAPTA was being implemented. intra regional trade among SAARC states is relatively small. India’s trade within South Asia accounts for only 4 percent of its total global trade and Pakistan’s trade in the region accounts for merely 3 percent of its overall trade. the disagreements between India and its neighbors have limited the effectiveness of SAARC trading initiatives. it is likely that other states will follow their lead. only 3 percent of all South Asian trade was conducted in the region. if these two states. India signed a 30-year water sharing treaty with Bangladesh and a trade and transit treaty with Nepal. If trade between the states was opened. Under the Gujral Doctrine established by former Indian Prime Minister I. the desire for South Asian states to trade with one another has been limited. Six years later. Moreover.

CONCLUSION India needs to play a major role in SAARC India being an important member of the group should initiate steps to ensure that the nations go beyond the rhetoric and make the Summit meaningful in the future. SAARC hopes that the establishment of a South Asian Free Trade Area (SAFTA) by January 1. However. According to Former Prime Minister Atal Bihari Vajpayee. an organization with a better track record in producing economic coordination among member states than SAARC. This lack of success results from distrust and protectionism among its member states. it will take some genuine political cooperation for the tariff reduction process to run smoothly. indicating that the spirit of free trade does not seem alive in SAARC. India should also maintain peace and take proper and appropriate steps to resolve disputes and solve issues amongst the SAARC members especially with Pakistan. some states still have high tariff and non-tariff barriers to trade. the agreement to establish this free trade zone will take 10 years of gradual tariff reduction. The ASEAN free trade agreement (AFTA) has been criticized for not producing substantial economic interdependence among the region. its success will depend on the resolution of conflicts between South Asian states—something which seems unlikely in the future. “Countries in the SAARC region have to make a bold transition from mistrust to trust. Creation of Export Promotion Zones and Special Economic Zones in each SAARC member country as pointed out by industry bodies will enhance investments between them and will thus encourage intraSAARC investments The Indian government has to understand that the export-import community needs easier movement of goods. However. and people within the member nations. For a proposal that has already been delayed. from discord to concord and from tension to peace”. services. If SAFTA is implemented. creating a free trade zone could become difficult. Judging from the experience of ASEAN. 2006 will stimulate trade in the region. 7 .Moreover. SAARC is trying to remedy this problem.

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