SAARC region: Land of untapped opportunities

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Bikky Khosla | 09 Jul, 2013
According to recent official figures released by the government, India's export to the SAARC countries for the April 2012 to January 2013 period stood at $11.53 billion. In 2009-10, 2010-11, 2011-12, exports to these seven region stood at $8.39 billion, $11.65 billion and $13.03 billion, respectively. These figures clearly indicate that our exports to the neighbouring region have continued to stay low despite our geographical proximity and cultural affinity.

Why our trade with these South Asian countries -- Afghanistan, Bangladesh, Bhutan, Nepal, Maldives, Pakistan and Sri Lanka -- has failed to pick up although South Asian Association for Regional Cooperation (SAARC) has crossed so many years since its formation? I think there are several reasons for this: first, disparities in the market size -- for example, small countries like Nepal cannot be a major export destination for India. Second, all these countries compete with each other in a narrow range of products, particularly in textiles, apparel, and other light manufactured goods. Third, each of these countries suffers from poor infrastructure and lack of technology adoption and this acts as a barrier to intra-SAARC trade.

In addition, an improved India-Pakistan relationship is crucial for increasing trade among the member states of SAARC. In recent years, we have seen some improvement in this direction, but it seems we still have a long way to go. Recently, the SAARC Chamber of Commerce & Industry has urged the newly elected Pakistan Prime Minister to speed up the decision to grant the much-awaited Most Favoured Nation (MFN) status to India. I think this confidence building measure should be taken by the Pakistan side as soon as possible. In addition, a better political relationship between the countries is crucial for intra-SAARC trade.

Despite these challenges, however, I think there is still enough scope for Indian exporters to increase their trade with the SAARC region. There is no doubt that these nations have quite a similar export basket and they tend to specialise in broadly similar items for exports, but at the same time it is equally true that India enjoys the best position among them in terms of relatively diversified export structure. In addition, India shares a land border with four members and sea borders with two SAARC countries. So, our exporters should make the best of this geographical proximity and try to dig out new opportunities.

It is a really sorry state of affairs that despite huge scope for India to increase its exports to these South Asian neighbours, till date trade is very low. During April to January 2012-2013, our total exports amounted to around $239.6 billion, but exports to SAARC countries amounted to only $11.53 billion, which is around 4.8 percent of total trade. So, we have a long way to go, and I think India, as the largest economy in the region, should show other countries the way forward.

I'd like your feedback on the challenges and opportunities you face when exporting to the SAARC countries. What can improve the situation?