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!"
#$!%& 'ts members are (angladesh" (hutan" 'ndia" )aldi*es" +epal"
,akistan and Sri -anka&
The ob.ecti*es of the Association as defined in the Charter are/
To promote the welfare of the peoples of South Asia and to
impro*e their 0ualit1 of life2
To accelerate economic growth" social progress and cultural
de*elopment in the region and to pro*ide all indi*iduals the
opportunit1 to li*e in dignit1 and to reali3e their full potential2
To promote and strengthen collecti*e selfreliance among the
countries of South Asia2
To contribute to mutual trust" understanding and appreciation of
one another4s problems2
To promote acti*e collaboration and mutual assistance in the
economic" social" cultural" technical and scientific fields2
To strengthen cooperation with other de*eloping countries2
To strengthen cooperation among themsel*es in international
forums on matters of common interest2 and
To cooperate with international and regional organisations with
similar aims and purposes
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Decisions at all le*els in SAARC are taken on the basis of unanimit1&
Article 5 (6) of the SAARC Charter e7cludes bilateral and contentious
issues from the ambit of SAARC&
INTRODUCTION
After 'ndia adopted the polic1 of +SR (+ational Self Reliance) in
order to remo*e dependence on foreign aid" 'ndia took the ne7t step
of forming SAARC along with the 8 neighbouring countries&
This step has helped 'ndia de*elop good and cordial relationship with
its neighbouring countries in all aspects i&e& sociall1 politicall1 and
economicall1& After SAARC being formed b1 'ndia along with 8 of its
neighbouring countries" 'ndia has been able to de*elop trade
relations with all the SAARC members&
'ndia had the chairmanship of SAARC during the 1ear #$$8$7&'ndia
hosted the #7th session of the SAARC council of ministers at +ew
Delhi in #$$8&
Recentl1 the #9
th
SAARC summit was held in +ew Delhi
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INDIAS CONTRIBUTION TOWARDS SAARC
'ndia has cooperated acti*el1 in SAARC acti*ities and *igorousl1
promoted trade and other forms of economic" social and technical
cooperation within SAARC&
'ndia also acti*el1 supports peopletopeople initiati*es aimed at
fostering greater mutual understanding and goodwill in the region&
'ndia is the onl1 SAARC member that shares land borders with four
members and sea borders with two& +o other SAARC countr1 shares
a common border with each other&
'n terms of trade" commerce" in*estments etc& 'ndia is a source of
potential in*estments and technolog1" and a ma.or market for
products from all other SAARC members&
:ne of the foremost challenges facing South Asia is the issue of
po*ert1 eradication& At the Twelfth Summit held in 'slamabad in
;anuar1 6<<9" 'ndia offered to contribute =S> #<< million for ,o*ert1
Alle*iation pro.ects in SAARC countries (outside 'ndia)& 'ndia has
additionall1 offered to finance feasibilit1 pro.ects in SAARC countries
in this regard&
'ndia has granted the highest number of tariff concessions to all
SAARC )?)(?RS&
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EFFECTS ON INDO-PAK RELATIONS
SAARC has failed to resol*e disputes between 'ndia and ,akistan
(especiall1 the @ashmir 'ssue)& The progress of SAARC was limited
for some 1ears due to the absence of cordial relationship between
'ndia and ,akistan&
SAARC4S inabilit1 to pla1 a crucial role in integrating South Asia is
often credited to the political and militar1 ri*alr1 between 'ndia and
,akistan&
Aowe*er during ,rime )inister Atal (ihari Ba.pa1eeCs *isit to
'slamabad (for the #6
th
SAARC summit) ,akistan persuaded 'ndia to
resume talks about maintenance of peace and the stalled composite
dialogue" while 'ndia recei*ed assurances that ,akistan would not
allow its territor1 to be a hub for terrorist acti*ities& The composite
dialogue had then started&
At present 'ndiaCs e7port to ,akistan are limited& For e7ample in the
1ear 6<<#6<<6 'ndiaCs total e7ports were >99 billion out of which a
mere >6<9 million went to ,akistan& :n the other hand" 'ndiaCs
e7ports to (angladesh stood at > $D< million and e7ports to Sri -anka
at >886 million&
,akistan has to pa1 hea*1 price for importing goods from other
countries e7cept 'ndia& 'ndiaCs e7ports suffer due to non a*ailabilit1 of
neighbouring market&
Along with 'ndia and ,akistan" other countries of SAARC are likel1 to
get man1 benefits because of impro*ed '+D: E ,A@ relations& 'n the
recent 'ndo,ak dialogue process" there were no winners and losers&
The real winners were the people of South Asia&
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SAARC: A FAILURE FOR INDIA (VICE-VERSA)??
SAARC had failed to resol*e conflicts between 'ndia and ,akistan&
There is discontent still between both the countries&
SAARC has 1et to become an effecti*e regional organi3ation" largel1
because of mutual distrust between 'ndia and its neighbours&
Also 'ndia4s lukewarm support for SAARC stems from the concern
that its neighbours might coalesce against it to the detriment of 'ndian
interests&
The reluctance of 'ndia and other South Asian countries to turn
SAARC into a forum for resol*ing ma.or regional disputes hampers
SAARCCS abilit1 to deal with man1 of South Asia4s economic and
political problems
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CO-OPERATION TROUBLES BETWEEN INDIA AND SAARC
MEMBERS
SAARC is structured in a wa1 that often makes regional cooperation
difficult& Thomas Thornton argues that in regional organi3ations it is
difficult for Fcountries to establish balanced relations when one has a
significant ad*antage in power o*er the other states&G 'n the case of
SAARC" 'ndia is the most powerful countr1 in terms of its economic
might" militar1 power and international influence& Thus" 'ndiaCs
potential as a regional hegemon1 gi*es SAARC a uni0ue d1namic
compared to an organi3ation such as AS?A+& ,akistan was initiall1
reluctant to .oin SAARC due to fears of SAARC succumbing to 'ndian
hegemon1& 'ndeed" if 'ndia does take a prominent role in SAARC" it
could further fears that 'ndia will use SAARC for hegemonic
purposes& Hhile the smaller states in South Asia recogni3e that the1
will need 'ndiaCs help to facilitate faster economic growth" the1 are
reluctant to work with 'ndia" fearing that such cooperation will admit
'ndian dominance in SAARC&
Aside from a few o*ertures to its neighbours" 'ndia has done little to
alla1 the fears of other South Asian states& The core of these fears is
likel1 deri*ed from the displa1s of 'ndiaCs power b1 +ew Delhi in the
past& Reali3ing its considerable ad*antage in militar1 and economic
power" 'ndia has consistentl1 acted in an Farrogant and
uncompromisingG manner with its neighbours& (angladesh is afraid of
'ndia e7ploiting its geographical position to redirect water flows *ital to
(angladeshi agricultural production& +epal and (hutan are still
worried about 'ndiaCs control o*er their world trade and transit links as
their geographical position will alwa1s make them dependent on
'ndia& These disputes between 'ndia and its neighbuors ha*e directl1
affected SAARC&
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+amel1" disputes between South Asian states ha*e undermined
SAARC efforts to promote regional trade& These disagreements make
consensus building and cooperation among SAARC states
complicated& Attempting to promote regional cooperation while doing
little to resol*e regional conflicts makes SAARCCS mission looks
nearl1 impossible& )oreo*er" SAARC has no institutional
mechanisms or punishments capable of pre*enting or full1 resol*ing
a dispute& Two e7amples illustrate how conflicts in South Asia ha*e
pro*en detrimental to SAARC&
The first in*ol*es 'ndian inter*ention in Sri -anka from #$!8#$$<&
The 'ndian militar1 inter*ention to put down an insurgenc1 b1 The
-iberation Tigers of Tamil ? ?lam made 'ndoSri -ankan relations
tense during these four 1ears& Subse0uentl1" the apprehension
between 'ndia and Sri -anka was considered a primar1 reason
behind Sri -ankaCs FlukewarmG support for SAARC into economic and
social spheres of its member states until relations impro*ed with
'ndia&
A second" more prominent e7ample of a conflict derailing SAARC
progress is the 'ndo,akistani conflict& ,akistan has demanded a
resolution to its dispute with 'ndia o*er the @ashmir Balle1 before
discussing trade relations with +ew Delhi& ,akistan has enforced this
polic1 b1 *iolating HT: regulation for failing to confer )ost Fa*ored
+ation ()F+) status on 'ndia&
'ndia has recentl1 attempted to impro*e its relationship with the rest
of South Asia& =nder the Iu.ral Doctrine established b1 former 'ndian
,rime )inister '&@ Iu.ral" 'ndia signed a D<1ear water sharing treat1
with (angladesh and a trade and transit treat1 with +epal& 'ndia also
.oined a sub regional group within SAARC comprising of (angladesh"
(hutan" +epal and 'ndia& Despite political impediments to trade" *alue
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of goods smuggled from 'ndia to ,akistan *ia a third part1 generall1
totals 6%<%<< million per 1ear& 'f trade between the states was
opened" ,akistan would recei*e cheaper imports due to lower
transport costs and the absence of pa1ments to a middleman& This
implies that there is potential for lucrati*e trade between 'ndia and
,akistan& )oreo*er" if these two states" arguabl1 the largest powers
in SAARC" pushed for economic cooperation" it is likel1 that other
states will follow their lead& Therefore" it is not surprising that the
'ndo,akistani dispute o*er @ashmir is considered a primar1 cause of
SAARCCS impotence&
Due to these conflicts" the desire for South Asian states to trade with
one another has been limited& (1 s0uelching trade between South
Asian states" the disagreements between 'ndia and its neighbors
ha*e limited the effecti*eness of SAARC trading initiati*es& The South
Asian ,referential Trading Agreement (SA,TA) signed in December
#$$% had SAARC countries reduce tariffs in certain economic areas
to promote intra regional trade& The proposal was initiall1 met with
enthusiasm as 'ndia agreed to reduce tariffs in #<8 of the 668 fields
recommended b1 SAARC and ,akistan agreed to concessions in D%
fields& This statistic emphasi3es a trend in SAARCJ 'ndia seems
gung ho about intra regional cooperation& 'n #$$%" when SA,TA was
being implemented" onl1 D percent of all South Asian trade was
conducted in the region&

Si7 1ears later" the impro*ements seen in regional trade ha*e been
marginal& 'ndiaCs trade within South Asia accounts for onl1 9 percent
of its total global trade and ,akistanCs trade in the region accounts for
merel1 D percent of its o*erall trade&
Compared to other countries with similar pro7imities and income
le*els" intra regional trade among SAARC states is relati*el1 small&
)uch of the trade that is conducted in South Asia is also considered
s1mbolic and generall1 does not in*ol*e goods *ital to the economies
of the South Asian states&
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)oreo*er" some states still ha*e high tariff and nontariff barriers to
trade" indicating that the spirit of free trade does not seem ali*e in
SAARC& Aowe*er" SAARC is tr1ing to remed1 this problem&
SAARC hopes that the establishment of a South Asian Free Trade
Area (SAFTA) b1 ;anuar1 #" 6<<8 will stimulate trade in the region&
Aowe*er" the agreement to establish this free trade 3one will take #<
1ears of gradual tariff reduction&
For a proposal that has alread1 been dela1ed" it will take some
genuine political cooperation for the tariff reduction process to run
smoothl1& ;udging from the e7perience of AS?A+" an organi3ation
with a better track record in producing economic coordination among
member states than SAARC" creating a free trade 3one could
become difficult& The AS?A+ free trade agreement (AFTA) has been
critici3ed for not producing substantial economic interdependence
among the region& This lack of success results from distrust and
protectionism among its member states& 'f SAFTA is implemented" its
success will depend on the resolution of conflicts between South
Asian statesJsomething which seems unlikel1 in the future&
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CONCLUSION
'ndia needs to pla1 a ma.or role in SAARC
'ndia being an important member of the group should initiate steps to
ensure that the nations go be1ond the rhetoric and make the Summit
meaningful in the future& Creation of ?7port ,romotion Kones and
Special ?conomic Kones in each SAARC member countr1 as pointed
out b1 industr1 bodies will enhance in*estments between them and
will thus encourage intraSAARC in*estments
The 'ndian go*ernment has to understand that the e7portimport
communit1 needs easier mo*ement of goods" ser*ices" and people
within the member nations&
'ndia should also maintain peace and take proper and appropriate
steps to resol*e disputes and sol*e issues amongst the SAARC
members especiall1 with ,akistan&
According to Former ,rime )inister Atal (ihari Ba.pa1ee" FCountries
in the SAARC region ha*e to make a bold transition from mistrust to
trust" from discord to concord and from tension to peaceG&

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