Discuss the ways and means to realise greater economic co-operation among the Member States of South Asia. (2022, 10 Marks)
Intra-regional trade is barely 5% of South Asia’s total; the World Bank’s A Glass Half Full (2018) valued it at US$23 billion against a potential of at least US$67 billion. Since SAFTA cut tariffs without moving trade, the means must target the real frictions (rules, logistics, people and politics) and be sequenced by whose consent each one needs.
Trade rules beyond tariffs
- Prune sensitive lists on a fixed timetable: almost 35% of the value of intra-regional trade still falls under them.
- Bring para-tariffs into the schedule: Bangladesh’s regulatory duty covers 45% of tariff lines and Sri Lanka’s port levy about 84%, all outside SAFTA.
- Rules of origin with cumulation, so regional inputs count and value chains can form, as they did in Southeast Asia.
- Give the services agreement (SATIS, in force 2012) real schedules; health, education, tourism and IT are where complementarity lies.
Connectivity and facilitation
- Land ports with laboratories, warehousing and single-window clearance, plus mutual recognition of standards. Trading with Brazil is about a fifth cheaper for an Indian firm than trading with a neighbour.
- Transit: operationalise the BBIN Motor Vehicles Agreement (2015), which Bhutan never ratified, and conclude the BIMSTEC free trade framework pending since 2004.
- Energy: Bhutanese hydropower and Nepali power sold to Bangladesh across India (November 2024) make electricity the strongest complementarity.
- Payments: local-currency settlement, swap lines and UPI links.
People and capital
- Multi-entry business visas and a managed labour-mobility framework for already porous borders.
- Investment over preferences: Indian firms sourcing from and investing in neighbours’ production create export interests there and offset India’s surpluses.
The political economy
- Insulate commerce from quarrels: Pakistan suspended trade in August 2019 and again on 24 April 2025, India barred all imports from Pakistan on 2 May 2025, and India’s April–May 2025 curbs on Bangladeshi transhipment and land-port entry showed access to be revocable. Predictable, rule-based access matters more than new preferences.
- Asymmetric responsibility: India, with about four-fifths of regional output, should turn the Gujral Doctrine’s non-reciprocity (a 25-line sensitive list for least developed members since 2011) into active importing.
- Variable geometry: proceed with willing partners, as in the India–Maldives FTA talks (2026), the August 2026 agreement with Sri Lanka to resume ETCA negotiations, and the Dhaka–New Delhi talks of 24 August 2026 on reopening border haats and land ports.
Conclusion
David Mitrany’s functionalism holds that shared technical tasks build the trust politics lacks; the World Bank study adds that trade and trust reinforce each other. The workable sequence, close to C. Raja Mohan’s April 2025 call for unilateral Indian openings, is Indian action first, sub-regional deals next, region-wide reform last.