Not merely a goodwill gesture of invitations to its leaders to attend the swearing-in ceremony on May 26, more good news awaits India's South Asian neighbours from the incoming Narendra Modi government, which is looking to economically integrate the region's 1.6 billion people.
The commerce ministry is putting together a plan to deepen trade and investment ties with the South Asian Association for Regional Cooperation (Saarc) countries. Noting that security concerns — mainly between India, Bangladesh and Pakistan — have been holding back the economic integration of the region, a senior official involved in the formulation of the new strategy told FE that the core of this plan is “free movement of goods, people and voice (by allowing easier usage of SIM cards of member countries in each other's territory)”.
The aim is to ensure that the next Saarc summit in Nepal, likely in October-November, is a landmark one by inking pacts on game-changing proposals including a Saarc visa system similar to the European Union's Schengen visa as well as a South Asian Development Bank. The member countries include Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.
Currently, India runs a huge $15-billion trade surplus with other Saarc countries, with exports worth $17.5 billion and imports of just $2.5 billion. The idea is to correct this skewed trading system in a way that Indian businesses can source more from other Saarc countries and build better value chains.
For this, India has to invest more in the region by taking advantage of the arbitrage in wage and electricity rates, the sources said.
For better people-to-people ties, the proposal is to set up a Saarc visa regime envisaging liberal multi-entry visas like the European Union's Schengen visa system to ensure that all citizens of the Saarc member countries can move freely in South Asia.
Currently, there is a Saarc Visa Exemption Scheme, in which some categories of people(including higher court judges, businesspersons, parliamentarians, journalists, senior officials and sportsmen) are given a Special Travel document that exempts them from visas within the region. This arrangement will now be reworked to promote tourism (including medical tourism) and trade within the region.
The other measure being considered is a South Asian Development Bank with an initial corpus of $5-10 billion. This will be used for ensuring better connectivity by building railway lines, roads, waterways, ports and customs stations to resolve all the transit issues. In the pipeline is better connectivity between the Chittagong port (in Bangladesh) to Haldia and Vishakhapatnam ports in India to avoid the current routing of goods through Colombo and Singapore ports.
Also, plans are afoot to exploit the potential of wind power in Sri Lanka, estimated at 20,000 MW, by linking this to a bigger grid to be exported to India and exported back when there is a fall in wind power generation there.
Besides, on the cards is a Cabinet note to increase the usage of the interest subvention for project exports through EXIM Bank of India for Saarc countries. This is linked to the Buyer’s Credit Scheme and is being implemented through EXIM Bank, ECGC and the National Export Insurance Account. It is aimed at providing long term concessional credit through EXIM Bank, as co-financing in infrastructure sectors.
On the trade front, India already has a granted duty-free-quota-free access to all least developed countries in Saarc (barring Pakistan and Sri Lanka) to the Indian market. Efforts are also on to expedite the completion of negotiations for a Saarc Agreement on Trade in Services.