Regional Trading Arrangements among SAARC Countries and India's Imports?†

Abstract

In spite of political skirmishes between two major members of SAARC, economic cooperation among the member states has been under way since the conclusion of the South Asian Preferential Trading Arrangement on 2-4 May 1995 at the 8th SAARC Summit in Delhi. So far, SAARC member countries have concluded three rounds of preferential trading arrangements under the auspices of SAPTA. The basic object of this article is to examine whether SAPTA is successful in increasing India's intra-regional trade. With the help of the gravity model, it shows that the increase in India's imports from the member countries is miniscule, even though India has offered concessions for the largest number of items among all SAARC countries. This study examines the hollowness of SAPTA and suggests suitable measures to make SAPTA more effective. It strongly recommends duty-free trade among the SAARC members under the auspices of SAFTA at an early date.