Give duty-free market to smaller SAARC members, Assocham tells government

from Domain B

India, the largest member of the South Asian Association for Regional Co-operation (SAARC), should give duty-free market access to its smaller and less-developed neighbours like Bangladesh, Maldives, Bhutan and Nepal, while Pakistan needs to implement the South Asia Free Trade Area (SAFTA) agreement, industry body Assocham said, ahead of the upcoming SAARC summit in New Delhi on April 3-4.

The summit meeting would ratify the South Asia Free Trade Agreement (SAFTA) and consider measures for relaxing visa policy among member countries. Other major issues on the agenda include fighting terrorism and improving connectivity among member states. "Indian industry would fully support the government if it comes out with any package for our smaller neighbours since the size of our industry and economy is large enough to accommodate the requirements of these countries," Assocham president Venugopal N Dhoot said.

India has extended a commitment to review non-tariff barriers, if any, and give better access to its market as part of the South Asian Free Trade Agreement (SAFTA). "Our economy, which is expected to reach a size of a trillion dollar by March 2008, should share the fruits of growth with the smaller members of the SAARC," Dhoot said.

"Pakistan's reluctance to grant Most Favoured Nation (MFN) status to India, even under the recently ratified SAFTA, is another issue that warrants an immediate solution," he said. The SAARC region accounted for a mere 2.5 per cent of India's total foreign trade in April-October 2006. Therefore, the opening up of India's market under the trade agreement is not likely to have a major impact on the domestic market, Assocham said.

Imports from the SAARC countries amounted to only less than a billion dollar, contributing just 0.82 per cent to the total imports of 104 billion dollars. Other proposals expected to be ratified at the summit include the establishment of regional food bank and a South Asian University, while a joint declaration would formalise entry of Afghanistan as the eighth member of SAARC.

The member countries have already exercised and agreed on the three major issues in the ministerial and secretary level talks earlier and a meeting of the state heads would formalise them during the summit meeting.

Once the deal is finalised, the food bank will start initially with a reserve of 241,580 tonne of food grain, which would be gradually increased. According to the proposal, India will contribute 153,200 tonne, Pakistan and Bangladesh 40,000 tonne each, Sri Lanka and Nepal 4,000 tonnes each, Maldives 200 tonne and Bhutan 180 tonne of food grain.

Connectivity includes physical connectivity in terms of concrete infrastructure projects, economic connectivity through freer movement of goods and trade, and connectivity of ideas and people through increased people to people contact rather than a mere inter-governmental process.

Modalities for bringing into operations a SAARC poverty alleviation programme by wrapping up the proposed $100 million 'SAARC development fund' would also be considered. Under the proposed telemedicine network project, hospitals in SAARC countries would be connected to the super-speciality hospitals in India. Five observers - China, Japan, Korea, USA and the European Union - will also attend the summit.