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Trade among SAARC Countries: With Special Reference to India

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IJIBF Volume 2 ✦ Number 1 ✦ January-June, 2012 ✦ pp. 127-137
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Trade among SAARC Countries:

With Special Reference to India

Vilas B. Khandare* & Someshwar N. Babar**

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

INTRODUCTION
The growth of regional trade blocs has been one of the major developments
in international relations in recent years. Virtually all countries are members
of a bloc, and many belong to more than one. Regional agreements vary
widely, but all have the objective of reducing barriers to trade between
member countries. At their simplest, these agreements merely remove tariffs
on intra-bloc trade in goods, but many go beyond that to cover non-tariff
barriers and to extend liberalization to investment and other policies. At
their deepest, they have the goal of economic union and involve the
construction of shared executive, judicial, and legislative institutions.
Interest in economic analysis of preferential trade liberalization has
increased with the rise of regionalism in recent years. It is argued that trade
liberalization and regional economic integration can help a region increase
intra-regional trade by exploring the size of the market. This may in turn
yield efficiency and bring benefits not only by exploration of economies of
scale but also by dynamic and upward shifts in production function. By
exposure to a regional market, previously shattered domestic firms become
more competitive and gain the confidence to enter into global competition.
Driven towards integration by the pressure of economic interest of the region,
seven South Asian countries- Bangladesh, Bhutan, India, Maldives, Nepal,

* Associate Professor, Department of Economics, Asaramji Bhandwaldar College, Deogaon (R.),

Dist. Aurangabad, Maharashtra State. Dean Faculty of social sciences, Dr. B.A.M. University,
Aurangabad.
** Assistant Professor, Department of Economics, Vinayakrao Patil College, Vaijapur, Dist-
Aurangabad.
128 ✦ Vilas B. Khandare & Someshwar N. Babar
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Pakistan and Sri Lanka- formed the South Asian Association for Regional
Cooperation (SAARC) in 1985.
One of the major objectives of formation of SAARC forum was to
accelerate the process of economic and social development in member States.
Subsequently, trade promotion was also actively pursued as an area of
economic co-operation. The possibility of Intra-SAARC trade expansion has
been investigated using macroeconomic and regional trade link models. It is
generally found that inter-country differences in production and consumption
patterns, investment behavior, tax and non-tax structures leave considerable
scope for further regional trade expansion. At present, intra-SAARC trade is
quite low as compared with that of regional forums such as European Union
(EU) and Association of South East Asian Nations (ASEAN) (Rajeev Jain and
J. B. Singh, 2009).
The South Asian region constitutes about 23 per cent of the world's
population and has 15 per cent of the world's arable land, but only 6.0 per
cent of Purchasing Power Parity (PPP) based global gross domestic product
(GDP) and account for around 2.0 per cent of world goods trade, and around
3.0 per cent of world foreign direct investment. The South Asian region is
extraordinarily diverse in terms of country size, economic and social
development, geography, political systems, languages, and cultures. Three
of the eight countries under South Asian region, viz., Afghanistan, Nepal,
and Bhutan, are landlocked and mountainous; while Sri Lanka is an island
and the Maldives is an archipelago of low-lying coral islands in the central
Indian Ocean.
OBJECTIVE OF THE STUDY
In South Asia, South Asian Association for Regional Cooperation (SAARC)
is an emerging trading bloc. The total trade of the bloc has improved after
the creation of the agreement. Quite apart from the general opening up, the
countries in the region also began to see increased cooperation and trade
among themselves as a key objective. This was reflected partially in the
founding of the SAARC in 1985 by a group of seven South Asian countries,
namely, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.
Later on, Afghanistan also joined as a full member of SAARC on April 3,
2007. The worldwide proliferation of preferential trade arrangements in the
last decade has now led to a change in thinking in the region, especially in
India, which has begun to negotiate a series of preferential trade agreements
of its own. Within the region, this has led to the signing of the South Asian
Free Trade Area (SAFTA) Agreement with the ultimate objective of turning
South Asia into a full-fledged free trade area (FTA) with the internal
liberalization beginning in 2006. Against the background, the aim of the
present study is to examine the trade opportunities and challenges of the
SAARC trading bloc. Thus, the objectives of the study are:
Trade among SAARC Countries: With Special Reference to India ✦ 129
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(a) To examine the emergence of SAARC as a trade bloc

(b) To analyse Intra- SAARC trade developments in the South Asian
Countries.
(c) To examine briefly India's trade among SAARC countries, and
(d) To recommend relevant policy suggestions.
To achieve the objectives of the study the secondary data are used. The
secondary data were collected from Director of Trade statistics Year book,
2007, IMF. Annual Report of Ministry of Commerce & Industry (MOCI),
Government of India, Dec. 2007, and from UNCTAO Report, Regional
Cooperation Strategy and Program south Asia 2007-08, ADB.
REVIEW OF LITERATURE
Many studies attempted to shed light on the economic integration in South
Asian region. Mehta and Kumar (2004) argued that signing of SAFTA
agreement was a landmark in the evolution of SAARC since its formation in
1985. SAARC would benefit from regionalism if its cooperation would extend
beyond formal trade. Dhungel (2004) noted that actual progress and
achievement in implementation of SAARC agendas were considered very
insignificant. Jhamb (2006) supported Dhungel's view and argued that it was
primarily due to the tenuous political relations between India and Pakistan
and a general environment of mistrust among member countries. However,
by using a gravity model, Rahman, et al. (2006) showed that elimination of
trade barriers and structural rigidities originating from adverse political
relationship could lead to substantial increase in intra-SAARC trade. Pitigala
(2005) found that the trade structures that evolved among the South Asian
countries might not facilitate a rapid increase in intraregional trade due to
weak trading relations among the SAARC countries. This view was supported
by a study of Baysan, et al. (2006). They argued that the economic cases for
SAFTA were relatively weak. From an economic standpoint, neither a
qualitative argument nor a quantitative assessment that was available to
give one reason in order to feel enthusiastic about the arrangement. Moreover,
compared to the rest of the world, this region was tiny both in terms of
economic size as measured by GDP (and per capita income) and the share in
the world trade. Therefore, trade preferences to the regional partners would
likely be leading to a consequence of trade diversion rather than trade
creation. Similarly, Das (2007) argued that evidence of trade complementarily
in South Asia is mixed, so preferential trading initiative was based on a
weak proposition. Recently, Newfarmer and Pierola (2007) found that the
arrangements of preferential trading in South Asia including SAFTA fell
short of their potential because of product exemptions, special arrangements
for selected products and restrictive rules for point of origin. Therefore,
though upside potentials for SAFTA were great, benefits from this trading
arrangement were uncertain. So, the policy makers will require relentless
determination to make it successful in future.
130 ✦ Vilas B. Khandare & Someshwar N. Babar
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SOUTH ASIAN FREE TRADE AREA

SAPTA was envisaged primarily as the first step towards the transition to a
South Asian Free Trade Area (SAFTA) leading subsequently towards a
Customs Union, Common Market and Economic Union. In 1995, the Sixteenth
session of the Council of Ministers (New Delhi, 18-19 December 1995) agreed
on the need to strive for the realization of SAFTA and to this end an Inter-
Governmental Expert Group (IGEG) was set up in 1996 to identify the
necessary steps for progressing to a free trade area. The Tenth SAARC Summit
(Colombo, 29-31 July 1998) decided to set up a Committee of Experts (COE)
to draft a comprehensive treaty framework for creating a free trade area
within the region, taking into consideration the asymmetries in development
within the region and bearing in mind the need to fix realistic and achievable
targets.
The SAFTA Agreement was signed on 6 January 2004 during Twelfth
SAARC Summit held in Islamabad, Pakistan. The Agreement entered into
force on 1 January 2006, and the Trade Liberalization Programme commenced
from 1st July 2006. Following the Agreement coming into force the SAFTA
Ministerial Council (SMC) has been established comprising the Commerce
Ministers of the Member States. To assist the SMC, a SAFTA Committee of
Experts (SCOE) has been formed. SCOE is expected to submit its report to
SMC every six months. The SAFTA Agreement states that the "the SMC shall
meet at least once every year or more often as and when considered necessary
by the Contracting States. Each Contracting State shall chair the SMC for a
period of one year on rotational basis in alphabetical order.
As indicated above, the figure of total exports under SAFTA has reached
about US$ 1.3 billion but is still far below the potential. For smooth functioning
of the SAFTA, customs notifications for implementing Trade Liberalization
Programme (TLP) are issued as per the agreed timeline by the Member States.
While reduction in the size of Sensitive Lists is important to increase the
quantum of regional trade, efforts are made to take out those products out
of the Sensitive Lists that are of export interests to the SAARC Member
States for trade within South Asia.
RECENT TRADE PERFORMANCE OF SAARC REGION
The importance of trade as growth facilitator has been recognized in SAARC
countries as well. It is evident from the growing trade openness of SAARC
economies over the years. However, there are wide disparities within the
SAARC region. For instance, Maldives is highly dependent on external sector
with 161 per cent trade openness ratio (Trade-GDP ratio) while Pakistan is
least open country in the SAARC region. Saxena (2005) elaborates that India
has a huge domestic market, hence trade forms a substantially smaller
percentage of GDP, especially when compared with East Asian economies,
that are small and essentially require trade for growth.
Trade among SAARC Countries: With Special Reference to India ✦ 131
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The rest of the countries are fairly open to trade. Despite growing trade-
GDP ratio, the South Asian economies continued to remain least open relative
to other groups of emerging and developing economies. The proportion of
trade in GDP of SAARC region increased markedly from 15.1 per cent during
the 1970s to 51.8 per cent in 2008. For East Asia and Pacifi c, however, it
soared from 20.9 per cent during the 1970s to as much as 88.6 per cent in 2007
but declined to 64 per cent in 2008 on account of the recent global financial
crisis leading to deceleration in trade.
As regards the trend in the share of SAARC region in total world trade,
it witnessed a persistent decline during the 1960s, 1970s and 1980s. However,
there has been a gradual pickup in share in total world exports since 1990s
but still lower than the level of share in 1950. During 2008, share of SAARC
region in total world exports stood at 1.4 per cent (3.7 per cent in 1950).
Similarly, the share of SAARC region in total world imports declined but
picked up in recent years.
The trade analysis of the countries in South Asian region shows that
they witnessed a wide fluctuation in terms of export and import growth
over time. During the 1960s, the average annual growth of exports of goods
and services for Pakistan was at 8.3 per cent followed by India at 5.4 per
cent, Bangladesh at 2.6 per cent and Sri Lanka at 1.3 per cent. During the
same period, import growth was maximum in Bangladesh among the South
Asian countries followed by Pakistan. The export growth was further
accelerated to 10.5 per cent for India in the 1970s followed by Bangladesh at
7.9 per cent. There was also maximum import growth for India in the South
Asian region in the 1970s followed by Pakistan. In the 1980s, Pakistan
recorded export growth as high as 10.7 per cent followed by Sri Lanka at 6.3
per cent, Bangladesh at 6.1 per cent and India at 4.8 per cent. India witnessed
maximum import growth at 7.6 per cent during the 1980s within South Asian
economies followed by Bangladesh at 7.0 per cent. India and Bangladesh
recorded a robust export growth, respectively, at 12.0 percent and 12.6 per
cent in the 1990s. In terms of import growth, India and Maldives had
maximum import growth in the 1990s among the South Asian countries.
During 2000-06, the average export growth was as high as 17.1 per cent for
Bhutan followed by India at 13.5 per cent. Similar trend was followed in
import growth during 2000-06.
As far as direction of trade is concerned, share of exports from South
Asia increased significantly to developing Asia (particularly China), Africa,
Western Hemisphere and Middle-East while that to EU and UK declined
over the years. In 2007, exports from South Asia have been to the extent of
27.4 per cent to developing Asia (7.2per cent to China), followed by EU (23.9
per cent), USA (16.3 percent), middle-east (14.7 per cent). The direction of
import in the region is mainly from developing Asia to the extent of 32.3 per
cent (including China with 11.6 per cent), EU (16.6 per cent) and Middle East
(9.8 per cent). However, import dependence on US, UK and EU seems to
have declined over the recent years.
132 ✦ Vilas B. Khandare & Someshwar N. Babar
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EMERGING TRENDS IN FOREIGN TRADE OF SAARC COUNTRIES

Table 1 shows the SAARC global exports during 2000-2006. The total exports
of SAARC countries increased from US$ 63.5 billion to US$ 161.4 billion. The
growth rate of exports also increased from 3.9% in 2001 to 23.9% in 2006.
Among all the member countries, India is the largest exporter followed by
Pakistan and Bangladesh. The percentage share of India's exports change
the SAARC countries was 67.09 percent in 2000 which increased up to 76.02

Table 1
SAARC's Global Exports
(US $ billion)
Year
Countries 2000 2001 2002 2003 2004 2005 2006
Afghanistan 0.1 0.1 0.1 0.2 0.2 0.2 0.3
Bangladesh 5.6 5.7 5.4 6.2 7.6 8.5 12.7
Bhutan 0.1 0.1 0.1 0.1 0.2 0.3 -
India 42.6 45.2 50.5 61.1 75.4 97.9 122.7
Maldives 0.1 0.1 0.1 0.1 0.1 0.1 0.2
Nepal 0.7 0.8 0.6 0.6 0.7 0.8 0.8
Pakistan 8.9 9.2 9.9 11.9 13.3 16 17.2
Sri Lanka 5.5 4.7 4.7 5.1 5.8 6.4 7.5
Total 63.5 66.0 71.4 85.4 103.2 130.3 161.4
(3.9) (8.2) (19.6) (20.8) (26.3) (23.9)
Note: Values in parentheses show percentage growth.
Source: Direction of Trade Statistics Year Book 2007, IMF.

Table 2
SAARC's Global Imports
(US $ billion)
Year
Countries 2000 2001 2002 2003 2004 2005 2006
Afghanistan 0.6 0.6 1 1.6 2 3 3.8
Bangladesh 9 9 7.8 9.8 11.6 13.9 17.8
Bhutan 0.2 0.2 0.2 0.2 0.4 0.4 -
India 50.3 59 58.9 74 99.8 134.7 185
Maldives 0.4 0.4 0.4 0.5 0.6 0.7 0.9
Nepal 1.6 1.6 1.4 1.6 1.8 2 2.4
Pakistan 10.7 10.2 11.2 13 17.8 25.4 33.8
Sri Lanka 6.7 5.7 6 6.7 8 8.9 11.6
Total 79.5 86.7 87.1 107.4 142.0 189.90 255.3
(9.1) (0.46) (23.3) (32.2) (33.01) (35.2)
Note: Values in parentheses show percentage growth.
Source: Direction of Trade Statistics Year Book 2007, IMF.
Trade among SAARC Countries: With Special Reference to India ✦ 133
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

per cent in 2006. The total global imports of SAARC countries also increased
from US$ 79.5 billion in 2000 to US$ 255.3 billion in 2006, registering more
than a three-fold rise during the period (Table No. 2). India is the largest
importer in the SAARC region followed by Pakistan and Bangladesh. Thus,
data on exports and imports reveal that SAARC as a trade bloc experienced
trade deficit of US$ 93.9 billion with the world in 2006. The percentage share
of India's imports in global imports of SAARC countries was 63.27 per cent
in 2002, which also increased up to 72.46 per cent in 2006. India's exports is
more than imports of total global exports- export of SAARC countries during
2000-2006.
TRENDS IN INTRA-SAARC TRADE
Table 3 presents the trend in intra-SAARC exports during 2000- 2006. The
total intra SAARC exports increased from US$ 2.8 billion in 2000 to US$ 10.8
billion in 2006, registering nearly a four-fold rise during the period. Exports
among the SAARC countries are dominated by India, followed by Pakistan
and Sri Lanka. The growth rate of intra SAARC exports increased from 8.8
percent in 2001 to 27.1 per cent in 2006. In 2006 the percentage share of
India's exports in total intra SAARC exports was 62.57 percent followed by
Pakistan and Sri Lanka 7.45 per cent.

Table 3
Intra- SAARC Exports
(US $ billion)
Year
Countries 2000 2001 2002 2003 2004 2005 2006
Afghanistan 60.3 49 44.4 64.1 87.4 102.1 125.3
Bangladesh 93.6 97.7 78.4 112.5 126.5 187.3 228.5
Bhutan 24.5 27.1 33.3 50.8 57.1 95.4 117
India 4822 2082 2601 3918 4416 5273 6789
Maldives 13.8 17 14.1 15.7 15.6 17.2 21.2
Nepal 222.9 243.8 279 265.3 302.2 343.7 568.8
Pakistan 404 407 452 751 959 1797 2191
Sri Lanka 189.9 157.8 256.8 350.6 507.9 655.5 808.6
Total 2831 3081.3 3759.0 5527.9 6471.7 8471.1 10849.5
(8.8) (22.0) (47.1) (17.1) (30.9) (27.1)
Note: Values in parentheses show percentage growth.
Source: Direction of Trade Statistics Year Book 2007, IMF.

The trend in intra-SAARC imports is presented in Table 4. The table

shows that total imports increased from US$ 3.0 billion in 2000 to US$ 9.6
billion in 2006, depicting a three-fold rise. The intra- SAARC imports are
dominated by Sri Lanka, followed by India and the Afghanistan. The growth
rate of intra-SAARC imports increased from 13.0% in 2001 to US$ 11.6% in
134 ✦ Vilas B. Khandare & Someshwar N. Babar
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

2006. Sri Lanka reached the highest percentage share of imports in total intra
SAARC imports was 25.48 percent followed by India 18.34 per cent and than
Afghanistan 17.5 per cent.
Table 4
Intra SAARC Imports
(US $ billion)
Year
Countries 2000 2001 2002 2003 2004 2005 2006
Afghanistan 169.5 196.9 307.9 590.2 684.8 1333 1648.6
Bangladesh 1058.9 1299.1 1221.1 1612.2 1887.4 2121.9 1036.5
Bhutan 3.9 4.5 32.4 79.4 88.6 99.3 122.1
India 473 533 544 664 891 1297 1763
Maldives 89.6 93.2 103 114.2 136.5 129.3 159.9
Nepal 163.1 179.2 355.8 659 793.8 921.6 1486.3
Pakistan 291 321 259 345 599 765 945
Sri Lanka 707.3 712.5 933.1 1175.7 1574.8 1981.3 2448.7
Total 2956.2 3339.3 3756.2 5239.6 6655.9 8648.4 9610.1
(13.0) (12.5) (39.5) (27.0) (29.9) (11.6)
Note: Values in parentheses show percentage growth.
Source: Direction of Trade Statistics Year Book 2007, IMF.

INDIA'S EXPORTS TO SAARC COUNTRIES

Table 5 presents recent trends in India's exports to SAARC countries. India's
total exports to the region increased from US$ 2790.40 million in 2002-03 to
US$ 6467.07 million in 2006- 07. Amongst the SAARC members, Sri Lanka

Table 5
Trends in India's Exports to SAARC Countries
(US $ million)
Year
Countries 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08*
Afghanistan 60.89 145.57 165.37 142.65 181.57 175.7
Bangladesh 1178.32 1741.94 1630.45 1664.12 1627.48 1600.2
Bhutan 39.12 89.55 84.55 99.15 58.64 62.7
Maldives 31.65 42.37 47.59 67.57 68.56 61.4
Nepal 351.05 669.81 742.83 859.84 930.82 914.1
Pakistan 206.57 287.13 520.84 689.13 1347.41 1320.9
Sri Lanka 922.8 1320.1 1412.6 2024.37 2252.59 1917
Total 2790.4 4296.47 4604.23 5546.83 6467.07 6052.10
(53.97) (7.16) (20.47) (16.6) (12.2)
Note: Values in parentheses show growth in percentage.
*April-Dec-2007.
Source: Ministry of Commerce & Industry (MOCI), Government of India.
Trade among SAARC Countries: With Special Reference to India ✦ 135
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has the largest market, accounting for 35percent of India's total exports in
the SAARC region during 2006-07, followed by Bangladesh (25 percent),
Pakistan (21 percent) and Nepal (14 percent).
An analysis of the trend in India's exports to the SAARC region during
the period 2002-03 to 2006-07 would reveal that, while exports to all the
SAARC members have registered a rise, India's imports to Pakistan,
Afghanistan and Nepal have exhibited distinct buoyancy. While India's
exports to Pakistan registered a six-fold rise during the five-year period,
exports to Afghanistan and to Nepal also rose three-fold and two and half-
fold, respectively, during the period.
INDIA'S IMPORTS FROM SAARC COUNTRIES
Table No. 6 indicates the India's imports from SAARC countries during 2002-
03 to 2007-08 India's imports from the SAARC region have also risen from
US$ 531.5 mn in 2002-03 to US$ 1506 million in 2006-07, depicting almost a
three-fold rise during the period. Sri Lanka is again the leading partner,
accounting for 31 percent of India's total imports from the region during
2006-07, followed by Pakistan (21 percent), Nepal (20 percent), Bangladesh
(15 percent) and Bhutan (9 percent). The robust rise in India's total imports
from the SAARC during the period 2002-03 to 2006-07 has been underpinned
by the sharp increase in imports from Pakistan, Sri Lanka, Bhutan and
Bangladesh. In the case of Pakistan, India's imports from the country increased
seven-fold during the period, followed by Sri Lanka (five-fold rise), Bhutan
(four and half - fold rise) and Bangladesh (three and half - fold rise). India
generally maintains a positive trade balance with the other SAARC member
countries with the surplus having risen from US$2.3 billion in 2002-03 to US$
5.0 billion in 2006-07.
Table 6
Trends in India's Imports from SAARC Countries
(US $ million)
Year
Countries 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08*
Afghanistan 18.49 40.54 46.99 58.41 34.48 74.1
Bangladesh 62.17 77.68 59.35 127.01 228.15 193.1
Bhutan 32.22 52.41 70.97 88.76 141.34 154.1
Maldives 0.33 0.37 0.61 1.98 3.05 2.8
Nepal 282.32 286.24 345.69 379.79 305.81 312.1
Pakistan 44.94 57.69 94.94 179.53 322.97 212
Sri Lanka 91 194.87 378.24 577.62 470.2 330.7
Total 531.47 709.80 996.79 1413.10 1506.00 1278.90
(33.55) (40.43) (41.76) (6.60) (28.7)
Note: Values in parentheses show growth in percentage.
*April-Dec-2007.
Source: Ministry of Commerce & Industry (MOCI), Government of India.
136 ✦ Vilas B. Khandare & Someshwar N. Babar
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

CONCLUSION
The growth of regional trade blocs has been one of the major developments
in international relations in recent years. Virtually all countries are members
of a bloc, and many belong to more than one. Regional agreements vary
widely, but all have the objective of reducing barriers to trade between
member countries. The aim of the present study is to examine the trade
opportunities and challenges of the SAARC trading bloc. The proportion of
trade in GDP of SAARC region increased markedly from 15.1 per cent during
the 1970s to 51.8 per cent in 2008. For East Asia and Pacifi c, however, it
soared from 20.9 per cent during the 1970s to as much as 88.6 per cent in 2007
but declined to 64 per cent in 2008 on account of the recent global financial
crisis leading to deceleration in trade. As far as direction of trade is concerned,
share of exports from South Asia increased signifi cantly to developing Asia
(particularlyChina), Africa, Western Hemisphere and Middle-East while that
to EU and UK declined over the years. In 2007, exports from South Asia
have been to the extent of 27.4 per cent to developing Asia (7.2per cent to
China), followed by EU (23.9 per cent), USA (16.3 percent), middle-east (14.7
per cent). The direction of import in the region is mainly from developing
Asia to the extent of 32.3 per cent (including China with 11.6 per cent), EU
(16.6 per cent) and Middle East (9.8 per cent). However, import dependence
on US, UK and EU seems to have declined over the recent years. The
percentage share of India's imports in global imports of SAARC countries
was 63.27 per cent in 2002, which also increased up to 72.46 per cent in 2006.
India's exports is more than imports of total global exports- export of SAARC
countries during 2000-2006. The growth rate of intra SAARC exports increased
from 8.8 percent in 2001 to 27.1 per cent in 2006. In 2006 the percentage share
of India's exports in total intra SAARC exports was 62.57 percent followed
by Pakistan and Sri Lanka 7.45 per cent. The growth rate of intra-SAARC
imports increased from 13.0% in 2001 to US$ 11.6% in 2006. Sri Lanka reached
the highest percentage share of imports in total intra SAARC imports was
25.48 percent followed by India 18.34 per cent and than Afghanistan 17.5 per
cent. Amongst the SAARC members, Sri Lanka has the largest market,
accounting for 35percent of India's total exports in the SAARC region during
2006-07, followed by Bangladesh (25 percent), Pakistan (21 percent) and Nepal
(14 percent). the India's imports from SAARC countries during 2002-03 to
2007-08 India's imports from the SAARC region have also risen from US$
531.5 mn in 2002-03 to US$ 1506 million in 2006-07, depicting almost a three-
fold rise during the period. Sri Lanka is again the leading partner, accounting
for 31 percent of India's total imports from the region during 2006-07, followed
by Pakistan (21 percent), Nepal (20 percent), Bangladesh (15 percent) and
Bhutan (9 percent). India generally maintains a positive trade balance with
the other SAARC member countries with the surplus having risen from
US$2.3 billion in 2002-03 to US$ 5.0 billion in 2006-07.
 Trade among SAARC Countries: With Special Reference to India ✦ 137
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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