India's Role in SAARC

Indias Role in SAARC
1. INTRODUCTION
The South Asian Association for Regional Cooperation (SAARC) is an organisation of South
Asian nations, which was established on 8 December 1985 when the government of Bangladesh ,
Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka formally adopted its charter providing
for the promotion of economic and social progress, cultural development within the South Asia
region and also for friendship and cooperation with other developing countries. It is dedicated to
economic, technological, social, and cultural development emphasising collective self-reliance.
Its seven founding members are Sri Lanka, Bhutan, India, Maldives, Nepal, Pakistan, and
Bangladesh. Afghanistan joined the organization in 2007. Meetings of heads of state are usually
scheduled annually; meetings of foreign secretaries, twice annually. It is headquartered in
Kathmandu, Nepal.
SAARC is a manifestation of the determination of the peoples of South Asia to work together
towards finding solutions to their common problems in a spirit of friendship, trust and
understanding and to create an order based on mutual respect, equity and shared benefits. The
main goal of the Association is to accelerate the process of economic and social development in
member states, through joint action in the agreed areas of cooperation.
MCOM (ACCOUNTANCY) SEM1
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2. EVOLUTION
The idea of regional cooperation in South Asia was first mooted in November 1980. After
consultations, the Foreign Secretaries of the seven countries met for the first time in
Colombo, in April 1981. This was followed, a few months later, by the meeting of the
Committee of the Whole, which identified five broad areas for regional cooperation. The
Foreign Ministers, at their first meeting in New Delhi, in August 1983, formally launched the
Integrated Programme of Action (IPA) through the adoption of the Declaration on South
Asian Regional Cooperation (SARC).
At the First Summit held in Dhaka on 7-8 December 1985, the Charter establishing the South
Asian Association for Regional Cooperation (SAARC) was adopted.
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3.
OBJECTIVES
The objectives of the Association as defined in the Charter are:
to promote the welfare of the people 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 selective self-reliance among the countries of South Asia.
to contribute to mutual trust, understanding and appreciation of one another's problems.
to promote active collaboration and mutual assistance in the economic, social, cultural,
technical and scientific fields.
to strengthen cooperation with other developing countries.
to strengthen cooperation among themselves in international forums on matters of
common interest; and
to cooperate with international and regional organisations with similar aims and purposes.
3. INITIATIVES
- SAPTA
- SAFTA
- SAARC University
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4.
PRINCIPLES
Respect for sovereignty, territorial integrity, political equality and independence of all
members states
Non-interference in the internal matters is one of its objectives
Cooperation for mutual benefit
All decisions to be taken unanimously and need a quorum of all eight members
All bilateral issues to be kept aside and only multilateral(involving many countries)
issues to be discussed without being prejudiced by bilateral issues.
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5.
UNIQUE FEATURES
The oldest ancient living civilizations.
Worlds sleeping giant-started moving.
People of all religions, faiths, ideologies live.
Economic force-common market.
The largest irrigated area.
The second largest railway network.
The largest English speaking area.
The largest labour force: 425m people.
Home of the poorest:
Job openings
Self employment
1750m commerce-the largest single block.
.SAARC As No. 1 in the World

Geo-economic region: 1.6 billion people.
GDP surpasses: $ 2.08T.
Combine average growth in GDP 7%.
Common market: SAPTA.
Commerce: the largest single block.
Evaluating global economies.
6.
MEMBERS OF SAARC
Current members:
Afghanistan
Bangladesh
Bhutan
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India
Maldives
Nepal
Pakistan
Sri Lanka
Observers:
Australia
China
European Union
Japan
Iran
Mauritius
Myanmar
South Korea
United States
Future Membership:
The Peoples Republic of China
The Islamic Republic of Iran
The Russian Federation
Union of Myanmar
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The Republic of South Africa
7.
WORK PACKAGES
1.
India
Business information data networking

HRM
S&T
Social dimension in business development
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2.
Pakistan
3.
Sri Lanka
4.
Telecommunication
Nepal
6.
Women Entrepreneurship
Bangladesh
5.
Trade
Investment
Travel & Tourism Maldives-tourism
Bhutan & Nepal
Energy
8. Administrative setup
Summits held annually, represented by head of the states.
The Council of Ministers comprising Foreign Ministers, meets at least twice a year.
Formulating policy, reviewing progress of regional cooperation, identifying new areas of
cooperation.
The Standing Committee comprising Foreign Secretaries, monitors and coordinates
SAARC programmes of cooperation, approves projects including their financing and
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mobilizes regional and external resources. It meets as often as necessary and reports to
the Council of Ministers.
The Committee on Economic Cooperation consisting of Secretaries of Commerce
oversees regional cooperation in the economic field.

Agriculture and Rural Development Division.
Environment and Science and Technology Division.
Economic, Trade and Finance Division.
Social Affairs Division.
Information and Publications Division.
Energy, Tourism Division.
Human Resource Development, Transport and Treaty Division.
9. INSTITUTIONAL STRUCTURE
Institutions
1. People to people contact
2. Regional
Agricultural infrastructure: Bangladesh
Regional Projects
Japan Special Funds
South Asia Development Fund
Other Funds
3. Funds
4. SAARC Chamber of Commerce & Industry:
Islamabad-1992
Summits
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The highest authority of the Association rests with the Heads of State or Government. During the
period 1985-95, eight meetings of the Heads of State or Government had been held in Dhaka
(1985), Bangalore (1986), Kathmandu (1987), Islamabad (1988), Mal (1990), Colombo (1991),
Dhaka (1993), New Delhi (1995) and Male (1997) respectively.
Council of Ministers
Comprising the Foreign Ministers of member states is responsible for the formulation of policies;
reviewing progress; deciding on new areas of cooperation; establishing additional mechanisms as
deemed necessary; and deciding on other matters of general interest to the Association. The
Council meets twice a year and may also meet in extraordinary session by agreement of member
states. It has held fifteen sessions till November 1995.
Standing Committee
Comprising the Foreign Secretaries of member states is entrusted with the overall monitoring
and coordination of programmes and the modalities of financing; determining inter-sectoral
priorities; mobilising regional and external resources; and identifying new areas of cooperation
based on appropriate studies. It may meet as often as deemed necessary but in practice it meets
twice a year and submits its reports to the Council of Ministers. It has held twenty regular
sessions and two special sessions till November 1995.
Programming Committee
Comprising the senior officials meets prior to the Standing Committee sessions to scrutinize
Secretariat Budget, finalise the Calendar of Activities and take up any other matter assigned to it
by the Standing Committee. This Committee has held fifteen sessions till November 1995.
Technical Committees
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Comprising representatives of member states, formulate programmes and prepare projects in

their respective fields. They are responsible for monitoring the implementation of such activities
and report to the Standing Committee. The chairmanship of each Technical Committee normally
rotates among member countries in alphabetical order, every two years. At present, there are
twelve Technical Committees. However, with the merger of the Technical Committees on
Environment and Meteorology, beginning from 1st January 1996, the number of Technical
Committees will be eleven.
Action Committees
According to the SAARC Charter, there is a provision for Action Committees comprising
member states concerned with implementation of projects involving more than two, but not all
member states. At present, there are no such Action Committees.
Other Meetings
During the first decade of SAARC, several other important meetings took place in specific
contexts. A number of SAARC Ministerial Meetings have been held, to focus attention on
specific areas of common concern and has become an integral part of the consultative structure.
So far Ministerial-level Meetings have been held on
International Economic Issues:-Islamabad (1986),
Children:-New Delhi (1986) & Colombo (1992),
Women in Development:-Shillong (1986) & Islamabad (1990),
Environment:-New Delhi (1992), Women and Family Health:-Kathmandu (1993),
Disabled Persons:-Islamabad (1993),Youth:-Male' (1994), Poverty:-Dhaka (1994) and
Women: Towards the Fourth World Conference on Women in Beijing:-Dhaka (1995).
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So far, six Meetings of Planners have been held, one in 1983 and five annually from 1987 to
1991. These meetings initiated cooperation in important areas such as Trade, Manufacturers and
Services; Basic Needs; Human Resource Development; Data base on socio-economic indicators;
Energy Modelling Techniques; Plan Modelling Techniques and poverty alleviations.
In addition, a high level Committee on Economic Cooperation (CEC) has been established in
1991, for identifying and implementing programmes in the core area of economic and trade
cooperation. A three-tier mechanism was put in place in 1995, to follow-up on the relevant
SAARC decisions on Poverty Eradication. The tiers consist of Meeting of Secretaries in Charge
of Poverty Eradication, Meeting of Finance/Planning Secretaries, and Meeting of
Finance/Planning Ministers.
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10. SAARC SUMMITS

No
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
12th
13th
14th
15th
16th
17th
18th
Date
78 December
1985
1617 November
1986
24 November
1987
2931 December
1988
2123 November
1990
21
December 1991
10-11
April 1993
24
May 1995
1214
May 1997
2931
July 1998
46
January 2002
26
January 2004
1213 November
2005
34
April 2007
13
August 2008
2829
April 2010
10-11
November 2011
2013
Country
Host
Host leader
Bangladesh
Dhaka
Ataur Rahman Khan
India
Bangalore
Rajiv Gandhi
Nepal
Kathmandu
Marich Man Singh Shrestha
Pakistan
Islamabad
Benazir Bhutto
Maldives
Mal
Maumoon Abdul Gayoom
Sri Lanka
Colombo
Dingiri Banda Wijetunge
Bangladesh
Dhaka
Khaleda Zia
India
New Delhi
P. V. Narasimha Rao
Maldives
Mal
Maumoon Abdul Gayoom
Sri Lanka
Colombo
Sirimavo Ratwatte Dias

Bandaranaike
Kathmandu
Sher Bahadur Deuba
Pakistan
Islamabad
Zafarullah Khan Jamali
Bangladesh
Dhaka
Khaleda Zia
India
New Delhi
Manmohan Singh
Sri Lanka
Colombo
Ratnasiri Wickremanayake
Bhutan
Thimphu
Jigme Thinley
Maldives
Addu
Mohamed Nasheed
Kathmandu
Baburam Bhattarai
Nepal
Nepal
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11. SAARC Secretariat

The SAARC Secretariat is based in Kathmandu, Nepal. It coordinates and monitors
implementation of activities, prepares for and services meetings, and serves as a channel of
communication between the Association and its Member States as well as other regional
organisations.
The Secretariat is headed by the Secretary General. Fathimath Dhiyana Saeedfrom Maldives is
the current Secretary General.
The Secretary General is assisted by eight Directors on deputation from the Member States.
The SAARC Secretariat and Member States observe 8 December as the SAARC Charter Day.
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12. INDIAS ROLE IN SAARC

Introduction
SAARC was founded by the Dhaka declaration of 1985 as a regional grouping of seven
South Asian developing countries viz., Bangladesh, Bhutan, India, Maldives, Nepal,
Pakistan and Sri Lanka. After successful establishment of SAARC as an association for
political affairs, all the seven countries literally agreed to form a regional block for
economic activities. That dream came to realize ultimately when SAPTA was founded on
11th day of April 1993. The main aim of the present study is to analyse India's foreign
trade with SAARC countries individually and with the Region (which is consortium of
less developing countries) as a whole under SAPTA agreement and to investigate the
changes before and after the formation of SAPTA. This study on the changes in India's
foreign trade from 1991-92 to 1999-2000 is expected to be useful in evolving suitable
policy prescriptions that would lead to improving the trade with SAARC countries and
thereby improving the country's balance of payments position. India sure does play a
leading role in SAARC not only this but the combined economy of SAARC is the 3rd
largest in the world in the terms of GDP (PPP)
Also, SAARC nations comprise 3% of the world's area and contain 21% (around
1.7 billion) of the world's total population. India makes up over 70% of the area
and population among these eight nations.
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And this, during 2005-10, the average GDP growth rate of SAARC stood at an
impressive 8.8% p.a., but it slowed to 6.5% in 2011 largely because of economic
slowdown in India, which accounts for nearly 80% of SAARC's economy.
India is SAARC's biggest, strongest and advanced member which gives out its
technologies and experts to other SAARC members to train/get their own. SAARC
members also perform excessive trading with each other which benefits all.
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13. OBJECTIVE OF THE STUDY

1.
2.
3.
4.
To understand the profile of SAARC

To enumerate all the summits of SAARC
To find out Indias role in SAARC
To analyse Indias relations with other member nations.
14. PROFILE OF SAARC COUNTRIES (INDIA)

India is an ancient civilization whose roots stretch back to over 5000 years in the course of which
a composite culture emerged making it a land of unity in diversity. India today is the seventh
largest and the second most populous country in the world. It gained independence from the
British on 15th August 1947. India became a Republic on 26 January 1950 when its constitution,
which envisages a parliamentary form of government, came into force.
The President of India is the Head of State but the real executive power vests in the
Council of Ministers, headed by the Prime Minister, which aids and advises the President.
The Parliament consists of two Houses, known as the council of States (Rajya Sabha) and
the House of the People (Lok Sabha). The Council of Ministers is responsible to the
House of the People.
There are eighteen languages recognized by the Indian Constitution of which Hindi,
spoken by about 30% of the people, is the official language. Nearly every major religion
of the world is represented in India. India ranks among the top ten industrial nations of
the world and has an increasingly affiuent middle class. In terms of purchasing power
parity, the Indian economy is the fifth largest in the world". Major exports include
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textiles, tea, marine products, jute and jute products, gems and jewellery chemicals,
engineering goods, computer software. Exports have diversified in recent years with the
biggest growth being in technology and knowledge-based products and services. Imports
consist mainly 52of fertilizer, petrol and petroleum products, newsprint, medicinal and
pharmaceutical products, and organic and inorganic chemicals. The agriculture Sector
continues to be an important sector of the economy as it contributes 27% of the GDP,
provides employment to 65% of the workforce and accounts for 18% share of the total
value of exports.
The total Exports and Imports of India in 2000 is US $44,289 Million and US $49,724
Million respectively, out of which 0.73 percent of Imports and 4.43 percent of Exports
are from SAARC countries.
15. REVEALED COMPARATIVE ADVANTAGE

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Revealed comparative advantage ratios, developed by Balassa (1965), have been widely used
to study profiles of revealed comparative advantage in various export products
India:
India has revealed comparative advantage in food and live animals, basic manufactures,
miscellaneous manufactured goods, chemicals and related products and animals and
vegetable oils and fats at the l-digit commodity classification. At the next level of
disaggregation (2-digit SITC), it has revealed comparative advantage in 6 out of 10 subcategories of 'food and live animals', including fish, cereals, vegetables and fruits, tea, and
feeding stuff for animals. India's comparative advantage in 'crude materials' is confined to
tobacco and tobacco manufactures, textile fibres, crude fertilizer, ores, and crude animal and
vegetable material. The country lost comparative advantage in tobacco and tobacco
manufactures in 1993 and for a few subsequent years, and gained some advantage in
oilseeds. In the category of 'chemicals and related products', India's comparative advantage
lies in exports of dyes and colouring materials, medicinal and pharmaceutical products,
organic chemicals, and essential oils and perfumes. Revealed comparative advantage is also
indicated in the export of 'basic manufactures' namely textile yarn, fabrics etc, non-metal
mineral manufactures, iron and steel and metal manufactures. Among the miscellaneous
manufactured goods, India has comparative advantage in travel goods, and handbags,
clothing and accessories, footwear and miscellaneous manufactured goods. At the 3-digit
SITC classification, India has comparative advantage in a wide-range of food, beverages and
tobacco products including meat, fish, crustaceans, rice, fruits and nuts, tea and coffee,
spices, feeding stuff for animals, and tobacco and tobacco ~,products The country, however,
acquired comparative advantage in fish only after 1991 and lost its edge in tobacco
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manufactures after 1986. A number of items in the category of 'crude materials' appear in the
revealed comparative advantage profile of India. These items include oilseeds, cotton, stone,
sand and gravel, Iron ore, ores and concentrates of basic metals, and crude animal and
vegetable materials. The country however lost its advantage in cotton after 1993. In some
years, India also enjoyed comparative advantage in petroleum, oils and preparations, and
fixed vegetable oils. The country's comparative advantage in 'chemicals and related products'
lies in nitrogen-function compounds, other organic chemicals, synthetic organic colouring
material, medicinal and pharmaceutical products, perfumery, cosmetic and soaps, and
insecticides and herbicides. In the category of basic and miscellaneous manufactured goods,
India's comparative advantage is indicated in a wide-range of products, prominent among
them being machine tools, household equipment, and steel products, besides leather and
articles of textile and clothing. It is noteworthy that India also enjoys revealed comparative
advantage in transport equipment such as motor vehicles, motor cycles, and cycles.
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Bangladesh
India
Nepal
Pakistan
Sri Lanka
NO.OF COMMODITIES
SHARE IN REGION IMPORTS
1985
18
55
20
39
33
(%)
1985
20.98
6.19
15.85
30.64
27.02
1990
20
69
9
36
43
1995
24
59
11
34
41
2000
22
74
14
38
37
1990
20.37
52.39
15.27
37.24
22.9
1995
21.66
45.64
2.97
36.59
25.17
2000
20.89
54.17
16.24
38.01
23.26
The above analysis provides an assessment of the extent to which exports of South Asian
countries can match the regional import structure. But this analysis focuses only on commodities
in which revealed comparative advantage is indicated, and ignores all other commodities that are
exported by the individual countries
16. TRADE COMPLEMENTARITY

The success of regional integration schemes depends largely on the extent of trade
complementarity in a regional trading bloc. For example, regional trading arrangements are
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likely to succeed in strengthening intra-regional trade if the trade structures of member

countries exhibit strong complementarities.
Trade Complementarity Indices: India

Years
Bangladesh
Nepal
Pakistan
Sri Lanka
1985
0.098
0.080
0.155
0.250
1986
0.082
0.096
0.122
0.257
1987
0.079
0.159
0.099
0.101
1988
0.075
0.138
0.121
0.249
1989
0.123
0.120
0.108
0.255
1990
0.071
0.072
0.099
0.264
1991
0.091
0.072
0.099
0.264
1992
0.098
0.072
0.107
0.198
1993
0.089
0.094
0.099
0.216
1994
0.123
0.111
0.196
1995
0.124
0.141
0.099
1996
0.072
0.091
0.086
1997
0.052
1998
0.075
1999
0.125
0.109
0.171
2000
0.106
0.138
0.188
17. INTRA-REGIONAL TRADE:
AN ANALYSIS
It is further necessary to examine the recent trends in Exports, Imports and the balance
merchandise trade of the SAARC countries. It provides an insight into the Intra-regional
Trade between SAARC countries, Services Trade and also Trade Balance issues. The present
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level of intra-regional trade is low, but it increased significantly in the 1990s. Trade within
the region increased at a faster rate as compared to that of the world
INDIA:
South Asia has become an important trade destination of India. Exports from the country to
region constitutes between 3 to 6 percent of its global exports, whereas import from the
region is relatively lower than exports. India has maintained favourable balance of trade with
the whole of South Asia. The level of positive trade balance is quite significant in case of
Bangladesh and Sri Lanka: and moderate with Nepal and Maldives. However, India's
bilateral trade balance remained adverse with Bhutan. Up to 1994, India had positive trade
balance with Bhutan, but the trend reversed in the subsequent years due to significant rise in
Bhutanese exports to India. The trade surplus with Bangladesh is however subject to
fluctuations and that with Nepal increased by four times between 1995 and 1996, largely due
to its trade and transit treaty with India. In the subsequent years, the magnitude of trade
imbalances with India started receding.
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18. TRADE IMBALANCES OF INDIA AND OTHER

REGIONAL COUNTRIES
Trade Imbalances between India and some of the regional trade partners has been one of the
most contentious issues in the regional process. It may be noted that India's export and
import baskets are highly diversified as compared to smaller partners of the region.
Moreover, India's scale of the production is high, partly due to its vast domestic market and
partially to meet export requirements at the global level. Therefore, production and export
bases of India, which are larger than other regional trade partners, are effectively used by the
regional countries to overcome their short-term problems concerning production
inadequacies in their respective domestic economies. It may be noted that the Nepalese
economy was entangled with steep inflation following temporary closure of some of the
transit points after the expiry of the Indo-Nepal Trade and Transit Treaty in the 1990s.
Similar situation occurred in other neighbouring countries also. We bring home the point that
the occurrence of trade imbalances is a natural phenomenon where the dependence on the
larger countries is high. The situation is similar in case of South Africa as compared to other
states in the SACU and SADC regions. In the era of interdependent world, the domestic
demand cannot be contained due to lack of production, but basic and essential imports are to
be made either from the neighbouring country or from the rest of the world. In both the cases,
the importing country is likely to have adverse trade balance. During a completely free trade
regime, the production deficient countries are likely to facer chronically trade imbalances.
Attempts should be made to augment exports to trade-surplus country to reverse the trend of
the trade balance. The trade surplus countries should also devise some suitable instruments to
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compensate the trade deficit countries and to support them in augmenting their export
capabilities.
However, the large country like India has its own requirements. It is primarily a trade deficit
country with respect to rest of the world. Considering the level and varieties of import
requirements, the regional partners can take advantage from the large market in India
particularly in commodity trade. Even the demand for certain type of specialized services is
very much required in India.
The regional partners, particularly the trade deficit regional partners should tap such
opportunities.
Indo-Bhutan trade relationship should be taken as a model example for the regional cooperation in South Asia It may be noted that Bhutan was chronically a trade deficit country
with India, where bilateral trade was taking place primarily in goods. The export basket of
the country was not only small but also lacked supply capabilities
Very often, the trade imbalance problem at the regional level remained unresolved because of
political interventions. For a long period, Bangladesh continued to have adverse bilateral
trade balance with India
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19.
India and SAARC: Interlinked Dreams
It may be a pure coincidence, but its a serendipity laden with enormous symbolic significance.
Exactly six months after taking charge of the worlds largest democracy pulling off a diplomatic
masterstroke by inviting leaders of all South Asian countries for his swearing-in ceremony in
New Delhi, Prime Minister Narendra Modi will be in Kathmandu for the 18th SAARC summit,
signalling the pre-eminence of the neighbourhood first template in his evolving foreign policy .
The focus on South Asia was visible from Day 1 of the Modi government and was reinforced by
the prime ministers travels to Bhutan and Nepal and External Affairs Minister Sushma Swarajs
trips to Dhaka, Thimphu, Male and Kathmandu. Its also fitting that Mr Modi returns to a
neighbouring country to galvanise Indias South Asia diplomacy and spur the dream of an
economically and culturally integrated region after engaging dozens of world leaders and
attending a slew of big-ticket multilateral summits, for the destinies of the countries in the region
are intimately intertwined.
INTERLINKED DREAMS
Intertwined Destinies, Interlinked Dreams expressions like these may appear ornate
clichs for sceptics, but in reality it would be an understatement to underscore the
enormous stakes each country has in fructifying immense potential of the region. India,
the largest economy and the most populous country in the region, is an idealist as well as
a realist in its ongoing efforts to revitalise the SAARC as the preeminent forum of
regional cooperation and integration. For the India Story cant be delinked from the state
of South Asia, its choices and its conflicts and its surging hopes and aspirations.
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Why South Asia Matters

Eight nations, vibrant and emerging democracies, growing economies, and home to 1.7
billion people and major religions of the world, South Asia has all the makings of a
regional dynamo itching for its place under the global sun. Twenty-nine years after its
founding and in the run-up to the 30th anniversary in 2015, its time for SAARC to
bridge the gap between grand-sounding declarations and concrete action that can make
South Asia a potent and effective player in the region and the world at large.
However, SAARC has been unfairly derided by sceptics as all talk and no action
grouping; this critique is misplaced as SAARC may have miles to go achieve the required
traction, but in its nearly three-decade journey, it has taken some important steps to
cement the architecture of regional cooperation like the setting up of a South Asian
University, SAARC Development Fund, a SAARC Food Bank to supplement national
efforts in times of crises, and SAARC Disaster Management Centre to bail out each other
in case of calamities and natural disasters. These are all laudable steps, and only
underlines the need to accelerate the pace of implementation of a whole range of ideas
that are waiting to take off.
And this ongoing collective effort to empower the SAARC and make the South Asia
narrative of opportunity resonant will be the overarching scope of the November 26-27
Kathmandu summit - the agenda which India wishes to proactively partner and bring it
to fruition.
Regional economic integration
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Imparting a renewed energy and momentum to regional economic integration will top the
agenda
at
the
Kathmandu
summit,
which
is
appositely
themed:
"Deeper Integration for Peace, Progress and Prosperity. The agreement on South Asian
Free Trade Area (SAFTA) has led to a scaling up of intra-regional exports to about
US$ 22 billion in 2013 from US$ 10 billion in 2006, but experts say this is just the tip of
the iceberg. The best is yet to come, and India is expected to proactively join efforts with
other countries for actualising the vision of a South Asia Economic Union. The economic
union envisages greater trade liberalisation, the development of cross-border trade
infrastructure and the removal of non-tariff barriers, which is hindering the free
movement of goods and services in the region. With the Modi government looking to
make India a manufacturing powerhouse, Prime Minister Modi is expected to push for
creating new cross-border production networks and joint manufacturing projects. India
should also be pushing for proactive implementation of the SAARC agreement on
services as the long-range goal of creating a seamless economic space in the region can
only be achieved by free movement of not just goods, but through the liberalisation of
services
and
the
free
movement
of
professionals.
Intensifying energy cooperation will be another key priority. In this context, the SAARC
summit is expected to seal a pact on energy-sharing, a defining agreement that could pave
the way for opening new pathways of economic cooperation among countries of the
region.
Only Connect
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Connectivity is the reigning theme of the Kathmandu summit. And Indias focus, too, will
be on weaving the region together in a web of rail, road and air links. One can expect
SAARC countries to sign a pact for the regulation of passenger and cargo vehicular
traffic and finalise modalities for stepping up trans-regional rail networks. The wish list
of connectivity projects is a long one, and there are many ideas on the table, which
includes, among others, a container service that connects Bangladesh and Nepal to India
through the India-Pakistan Peshawar route.
Cultural Synergies
Connectivity cant be just physical; in the end, its forging connections of mind and heart
tat matters. India is, therefore, expected to unveil new initiatives and highlight the need
for promoting and deepening people-to-people, educational and cultural linkages.
Harnessing cultural and spiritual energies of the region will complement the larger
project of regional integration. South Asia is the cradle of four important religions of the
world - Hinduism, Buddhism, Sikhism and Jainism - and its multicultural mosaic
includes nearly half a billion Muslims who live across countries in the region. Some of
Sikhism's holiest shrines are in Pakistan. Except for Lumbini in Nepal, the birthplace of
Lord Buddha, Buddhism's most important shrines are located in India, and Buddhism
links India, Sri Lanka, Nepal and Bhutan.
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Besides religion, one can see a literary alchemy binding the region. Nobel-winning sagepoet Rabindranath Tagore is equally popular in India and Bangladesh. Couplets penned
by Urdu poets like Mirza Ghalib and Iqbal are recited with equal fervour in both India
and Pakistan, and across the region.
Moving into Higher Orbit

With such a confluence of literary, cultural and religious affinities, and reinforced by a
common impulse for regional economic integration and development, its clearly time for
South Asia. In an imaginative initiative, Prime Minister Modi has called for jointly
developing a SAARC satellite that could become a powerful symbol of regional
solidarity and a realistic vehicle of providing the much-needed data for averting natural
disasters and meteorological data to optimise agriculture potential of individual
economies and the region. Initiatives like these show that the SAARC grouping, if it
wants to, is ready to move into a different orbit, literally as well as metaphorically. Its
time to raise the sights, dream big and prove that even the sky is not the limit for regional
integration. Leaders should seize this SAARC moment of a potential South Asian
renaissance, and unleash collective prosperity for the 1.7 billion people of the region.
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20. SAARC Summit 2014

Can India resolve conflicts in SAARC?
The focal theme of the 18th SAARC Summit being hosted by Nepal in Kathmandu from
Nov 26-27, 2014 is Deeper Integration for Peace and Prosperity.
This summit can take a hard look at infusing vigour and vitality into economic
diplomacy, though it is commencing after a three-year gap. In its 29-year old history, the
South Asian Association for Regional Cooperation (SAARC) has been criticised for its
failure to achieve tangible success, unlike other regional groupings. Thus the Kathmandu
summit offers an opportunity to build on earlier initiatives that can potentially alter the
current scenario of disheartening cooperation.
Since its inception in 1985, SAARC is working for development and economic welfare of
the region. Over the years, the agenda of SAARC has expanded considerably, exhibiting
the intent and capability to work collectively on issues of agriculture and rural
development; health and population; women empowerment, youth and children;
environment
and
forestry;
human
resource
development;
information
and
communications technology and energy security amongst others. The region is one of the
least economically integrated in the world and that is why many member countries have
become frustrated with the slow progress of SAARC and are looking for alternatives.
Page 31
Apart from lack of trust, there are a number of constraining factors as well as other
challenging issues in the SAARC framework. Some of these include: its inability to
tackle inter-state conflicts that have often made it hostage to bilateral conflicts and the
nationalistic interests of member countries and an India-centric strategic perception that
exists both among Indias neighbours as well as among other countries. Moreover,
SAARC follows the principle that all decisions have to be made unanimously and that no
bilateral and contentious issue can be on the SAARC agenda. This clearly exhibits a
weaker inter-state relationship toward equitable participation in policy making for South
Asian people.
Apart from historical conflicts between member countries, there is also disagreement
among them on the need for a South Asian conflict resolution mechanism to deal with
bilateral disputes. India, Nepal and Sri Lanka are not in favour of conflict resolution
mechanism as a domain of the SAARC.
At the same time many South Asian countries are not dependent on SAARC to achieve
their economic objectives. They give priority to bilateral agreements because of their own
self-interests instead of regional economic cooperation. Such a trend diminishes
SAARCs importance and future prospects to member countries. Despite these obstacles,
SAARC can still play an important communicative role in South Asia. It can serve as a
forum for South Asian leaders to discuss geo-economic issues for South Asia on a regular
basis.
Page 32
Deeper integration, in addition to the creation of a free trade area, entails liberalisation of
services, investment, elimination of non-tariff barriers, and in general, going beyond
traditional market access issues. There are overlapping trade agreements and unilateral
policy announcements among member countries that undermine the regional agreement.
There is need to focus on this factor which could facilitate trade and financial
connectivity in South Asia. An aspect that has drawn relatively less attention but is of
critical importance is the lack of financial connectivity in the region.
With a dominant economy and the largest country in the region, India should attempt to
become the engine of economic development for the region. Greater Indian participation
in SAARC activities is important to reduce two major suspicions: first, smaller countries
want to use SAARC to gang up against India, and second, that their economy will suffer
from Indian exports and marketing strategies.
Indian Prime Minister Narendra Modi invited all the heads of South Asian countries to
his oath-taking ceremony on May 26, 2014 at New Delhi. The move can also be viewed
as a strategic change in Indias geo-economic dependence on the cooperation and support
of its neighbours. Thus, there is reason to be optimistic about the future of SAARC.
Therefore, the role of India is pivotal in encouraging the South Asian countries to come
together to resolve the above issues along with food, water and energy security. India can
effectively stimulate the working potential of organizations like SAARC Food Bank,
SAARC Seed Bank, and SAARC Energy Centre.
Page 33
Furthermore, elimination of intra-regional non-tariff trade barriers such as recognising the

mutual standards and certifications is essential for sustainable economic development and
greater cooperation in the region.
India should also increase aid and technical assistance, particularly through the Indian
Technical & Economic Cooperation Programme (ITEC) and Line of Credit (LOC) to its
member countries.
India should also increase cooperation in knowledge transfer, research and development
with neighbouring countries. Joint research projects for agricultural development
particularly in input can lead to reduction in food insecurity.
India can also transfer and share technologies which are essential for promoting
economic growth through industrialization in the region. This will also make India to
reduce carbon emission and represent India one step ahead with positive collaborative
approach in the region.
This is the right time that India must actively work for a region-wide acceptance of the
vision of a South Asian community based on peaceful coexistence, economic
cooperation, religious tolerance and cultural understanding. In such a scenario, it would
be useful for India to consider several unilateral measures that would push the concept of
SAARC into a more realistic mould.
Page 34
21. SAARC FUTURE HINGES ON INDIA'S INTERESTS

The 18th SAARC summit may not have been spectacular, but Indias leadership role in
pushing for greater connectivity and trade has potential to induce fresh dynamism into the
regional organization
The 18th SAARC Summit concluded in Kathmandu on November 27 with a tame joint
declaration titled Deeper Integration for Peace and Prosperity. The 36-point declaration covered
a whole gamut of issues ranging from poverty alleviation, education, healthcare, migration,
youth and women welfare and combating terror to media, telecom, tourism, governance and
blue economy.
Cynics advocating winding down of SAARC as a useless talk-shop unworthy of serious
diplomatic investment for a country like India, which could better deal with neighbours and serve
its strategic interests through bilateral and sub-regional engagements would look at the
jamboree at the Dhulikhel resort as an impotent exercise for an otherwise hyperactive Prime
Minister like Modi, who seems to be in a hurry to wipe out the image of India during the last
decade as a country unsure of itself. However, is it right to be so dismissive about the process?
Let us take stock of the ground reality as it presents itself.
Shadow of face-off between India, Pak

The Kathmandu Summit took place after a gap of three years, largely delayed due to
political shifts and turns within Nepal. Finally the dates were announced in August this
year, a few days before the cancellation of talks between India and Pakistan, two
important SAARC member countries. This development cast its shadow on the summit
meeting.
Page 35
The developments that took place between these two countries in the intervening period
were far from encouraging. The pessimists held SAARC meeting this time was doomed,
while optimists hoped it would provide an opportunity for leaders of India and Pakistan
to reestablish contact. Closer to the date, it seemed improbable that the two leaders would
even have an informal meeting at the sidelines. It also surfaced that Pakistan would veto
the proposals for intra-SAARC surface connectivity and energy cooperation, primarily
because they were backed by India.
Pakistani refusal to use cars supplied by India for transporting dignitaries during the
conferences was splashed in the media as yet another proof of Pakistani obduracy on the
issue of regional cooperation. That the summit was taking place on November 26,
anniversary of Mumbai attacks, was another issue Pakistan might have had reasons to be
cautious about.
Then there were also talks of Nepal and Pakistan pushing for Chinas membership of
SAARC which raised the decibels of cantankerous analysts in Indian news channels.
Nepals disinclination to arrange for the Indian Prime Ministers proposed visit and
public address in a few places in the Terai region was yet another dampener. All in all, the
expectations from the summit were never so low.
Leader-speak at the summit

Amid such negative vibes, the summit took off in the most unambitious manner possible.
While the leaders pledged their support to the process of regional engagement and
emphasised on result-oriented endeavour, they raised specific issues relating to their own
experience.
Page 36
Sri Lankan President Rajapaksa talked about the need to join hands to fight external
threats. Bhutanese PM Tobgay harped on harnessing collective resources to reduce
high levels of poverty in the region. Abdulla Yameen, President of Maldives, echoed the
sentiments of his fellow countrymen when he argued passionately about the need to shed
complacency on the issue of climate change and exhibit a stronger commitment to deal
with the issue. Nepalese PM Sushil Koirala also talked about climate justice
mechanism and the need to intervene collectively in critical areas as agriculture, health,
sanitation, education, women empowerment.
Bangladeshi PM Sheikh Hasina stressed on multimodal physical connectivity between
the territories and communities of SAARC member states for ensuring overall peace,
progress and stability across the South Asia. Afghan President Ashraf Ghani expressed
his concerns about states embracing and sponsoring non-state actors and held that such
strategies were counterproductive and had blowback effects. Nawaz Sharif, PM of
Pakistan, emphasised on the need for collective action to fight common challenges like
poverty, illiteracy, disease, malnourishment, and unemployment.
Modis call for seamless connectivity

Prime Minister Modi started by saying that he dreamt for India the future I wish for our
entire region and held in a poetic vein that it was not enough for countries to stay near
each other as geography has ordained. There was a need for countries living in close
proximity to stay together (not only paas paas but also saath saath).
Expressing his desire to take every possible step to boost regional integration, Modi
referred to Indias efforts to build special economic relationships with each of the
SAARC member countries, including Pakistan. Announcing Indias launching of a
Page 37
SAARC satellite by 2016, Modi held that only through seamless connectivity, regional
integration can become a reality and his priority was building infrastructure in the entire
SAARC region.
Cloud of despair
Unfortunately, Modis enthusiasm about strengthening SAARC, seconded by all membercountries except perhaps Pakistan, could not defuse the overall consternation in the forum
about the stiffness displayed by both Modi and Nawaz Sharif towards each other during
the first day. The images of Modi and Nawaz refusing to even acknowledge each others
presence dominated the TV screens leading to speculation that the 18th summit would be
a victim of India-Pakistan differences.
That Modi held bilateral discussions on the sidelines with leaders of all countries except
Pakistan was underlined by the media and projected as an indication that India and
Pakistan were drifting away from each other, which might pose a grave challenge to
smooth functioning of SAARC in future.
Three agreements
The three agreements that were opened up for discussion were (i) SAARC Motor Vehicle
Agreement for the Regulation of Passenger and Cargo Vehicular Traffic, (ii) SAARC
Regional Railway Agreement, and (iii) SAARC Framework Agreement on Energy
Cooperation (Electricity).
It was widely reported that Pakistan was the only country having its reservations about
the agreements on surface transport and communication. The reason for Pakistans
hesitation was that its internal processes were not ready for such agreements. It was
Page 38
believed that Pakistans reservations were basically aimed at stalling Indian access to
Afghanistan through Pakistan. Indian interest in connectivity might have alerted the
security establishment in Pakistan about the obligations that would ensue from the first
two agreements to allow India surface links through Pakistan, which it has been resisting
resolutely for years now.
However, on the issue of energy cooperation, Pakistan seemed amenable to persuasion
and it was regarded as the only agreement that could be signed during the summit
meeting.
Retreat politics revives hope

Against such a tense environment, the relaxed environment at Dhulikhel on November
28 succeeded in dissipating the clouds of despair and bringing in some cheer to the
SAARC delegates at last. Reports of Pakistan agreeing to sign the agreement on energy
cooperation and buying three months time to finalise processes to sign other two
agreements gradually poured in.
The summit ended with signing of the energy cooperation agreement by the foreign
ministers and as present SAARC chair Sushil Koirala indicated, the SAARC leaders
agreed to accord approval to the connectivity pacts within three months, which will boost
intra-regional trade and people-to-people contact.
The most talked about outcome of the retreat interaction was the handshake between
Modi and Nawaz Sharif and exchange of courtesies between the two. Even if nobody
had any clue about what transpired between them in a short verbal exchange on
camera, both leaders appeared quite relaxed and refreshed, which was welcomed by
the media in both India and Pakistan. The SAARC leaders clapped and cheered the
handshake and there was a visible sense of relief all around.
Page 39
Prospects
As the 18th summit demonstrated, SAARC may not have been as successful a regional
organisation as ASEAN and the EU, however, it still has a useful role to play in bringing
the states of the region together and evolving consensus on issues of common concern. A
region consisting states with shared history and culture, but also divided by historical
legacies and political differences, is in dire need of a supra-state body like SAARC to
provide a common platform where the leaders can meet regularly and build bridges with
one another.
Moreover, the achievements of SAARC may not have been that spectacular, but that does
not mean that the organisation will continue to operate below its potential for ever. Indias
proactive participation in recent years and its leadership role in pushing for greater
connectivity and trade have induced fresh dynamism into the organisation and if India
can sustain its interest, SAARC will prove all cynics wrong soon.
Page 40
22. CONCLUSION
SAARCs prime objectives include: promoting the welfare of the people of South Asia,
accelerating the Economic growth, social progress; providing dignified livelihood to all
individuals and on a larger scale promoting the self-reliance amongst the South Asian nations
and building trust and appreciation for other countries problem.
In the way of achieving these objectives, poverty has been major hindrance. India offered a
contribution of US $ 100 million at the twelfth Summit held at Islamabad in 2004.
Indias disputes and military rivalry with Pakistan is believed to be the cause of
ineffectiveness of SAARC in integrating South Asian countries. If Indo-Pak relations
improve, many SAARC nations could benefit from it by improved trade relations and
creation of better export markets. SAARC has failed to work towards regional co-operation
mainly because India has been reluctant to solve major regional disputes which have given
rise to economic and political problems in South Asia.
Since India has an unbeatable economic, military strength and international influence
compared to all 6 members of SAARC, the disparity of power brings in the reluctance from
smaller states to work with India. They have fear of dominance from India if they co-operate
in order to facilitate faster economic growth.
Page 41
India has also heightened the fears of fears of South Asian nations by acting in a dominating
and arrogant way. Its dispute with neighboring Bangladesh due to redirection of water flows
impacting Bangladeshs agricultural production has kept Bangladesh afraid of its powers.
India must come to the front and initiate measures to encourage nations to prove their mettle
and make the SAARC summit a meaningful affair. Appropriate measures should be taken
with the intent of maintaining peace and resolving disputes amongst the SAARC member
countries. Special Economic Zones and Export Promotion Zones should be created in all
member countries to make trading easier and smooth the relations between the South Asian
nations.
23. WEBLIOGRAPHY
Page 42
http://www.saarc-sec.org/
www.managementstudy.com
http://en.wikipedia.org/wiki/South_Asian_Association_for_Regional_Cooperation
www.mbastudymaterial.com
www.managementstudyguide.com
www.scribd.com
www.saarcchamber.org/
www.saarc-sic.org/
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