The Hindu Business Line : SAFTA holds promise if full benefits accrue: India Inc

WITH the South Asian Free Trade Agreement (SAFTA) becoming effective from January 1, 2006, there would be a major boost in the intra-regional trade and development, according to the Confederation of Indian Industry (CII).

The chamber is of the view that the $ 7 billion intra-SAARC trade could grow substantially over the next few years if the full benefits of SAFTA accrued to the seven countries.

Further, to ensure greater benefits of tariff reductions across the sub-continent there is need to focus on improving physical connectivity among countries and build on their competencies. The chamber also feels that the decision by developing countries in SAFTA-India, Pakistan and Sri Lanka - to open up markets faster for the least developed countries (LDCs) in the region can go a long way in improving market access for the LDCs.

According to the Associated Chambers of Commerce and Industry of India, the implementation of the agreement will increase India's trade with SAARC to Rs 50,000 crore by 2010 and to Rs 1,00,000 crore by 2015 from its current level of less than Rs 25,000 crore.

The chamber said that the future projections for trade could be achieved provided existing trade competitiveness among SAARC countries is turned into trade complementarities. For this to happen, there should be convergence of political will of all the member countries in the region.

It, however, added that that trade complementarities can be created by way of setting up joint ventures in the SAARC region in which the interests of each partner would be equally protected.

The chamber is of the view that major areas of economic cooperation among the SAARC countries can be textiles, rubber, leather, jute, tea blending and harnessing of natural resources for energy generation.

The PHD Chamber of Commerce and Industry too felt the need to remove all non-tariff barriers in SAARC countries. The step would lead to channelisation of informal trade to formal trade routes, it said.