India has said that all South Asian economies need to speedily work towards a free trade area within the region with a defined time-line, preferably 2020, as the first step towards achieving the joint vision of a South Asian Economic Union.

“I am confident that consensus can be achieved for a defined time-line for 100 per cent tariff liberalisation with special and differential treatment for Least Developed Countries (LDCs) and vulnerable economies,” Commerce & Industry Minister Nirmala Sitharaman said at the South Asia Economic Conclave organised by the Commerce Ministry and industry body CII on Tuesday.

While India has already allowed duty-free access to goods from LDC countries of South Asia as part of the South Asia Free Trade Agreement (SAFTA), it is ready to go to 100 per cent for non-LDCs, too, as per the Safta roadmap agreed by India with Pakistan in November 2012, Sitharaman said.

2020 target

At least four of the eight SAARC countries — which include India, Pakistan, Sri Lanka, Maldives, Nepal, Bhutan, Bangladesh and Afghanistan — are looking at a free trade area by 2020. India is willing to take asymmetric responsibility towards achieving the goal, she added.

Bangladesh Commerce Minister Tofail Ahmed pointed out that while India had extended duty free access to its markets for all products except tobacco and liquor, it faced access problems for items such as jute.

India needs to invest more in the South Asian region for better regional integration, said Maldives Finance Minister Abdulla Jihad.

Sitharaman admitted that a very small part of India’s outward investments (less than 5 per cent) was directed towards South Asia, and there was a need for more investment flows to happen in the region.

Bhutan emphasised on the need for freer movement of goods. “The road to regional prosperity lay in facilitating seamless movement of goods, capital and people across the entire region,” said Lyonpo Norbu Wangchuk, Minister of Economic Affairs, Bhutan.

While the motor vehicle agreement signed between India, Nepal, Bangladesh and Bhutan was the first step towards a better arrangement for movement of vehicles in the region, it could not be a substitute for a SAARC motor vehicle act, which could cut down transportation costs and time substantially, Sitharaman said.

On the issue of setting up a South Asia Development Bank for financing infrastructure projects in the region, Sitharaman said that the fiscal constraints of South Asian countries are an impediment in raising enough equity capital for the bank. Members must evolve a road-map for a special purpose vehicle (for the bank), even if it is modest, she said.

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