The third ministerial meeting of the South Asian Association for Regional Cooperation Free Trade Agreement (SAFTA) hosted by India commenced on March 3, 2008 in New Delhi. Although SAARC - The South Asian Association for Regional Co-operation, comprising India, Nepal, Bhutan, Bangladesh, Sri Lanka, Maldives, Afghanistan and Pakistan, hasn’t had the desired impact that NAFTA (North Atlantic Free Trade Agreement) has made, changes are clearly in the pipeline.

Business Line spoke to the Minister of State for Commerce, Jairam Ramesh, on a range of issues that have hobbled this grouping from achieving tangible gains. Ramesh had visited Bangladesh, Sri Lanka and Pakistan and is due to visit Nepal, Bhutan, Pakistan and Afghanistan before end-June 2008.

“India’s globalisation is incomplete without closer engagement in South Asia. India cannot do bypass surgery on South Asia-this notion in India that we can be a global player and couple our economy with the American economy bypassing our own neighbours - we can’t couple with America and decouple from South Asia - is not possible. We need to understand that the foundation of our globalisation rests on closer regional cooperation in goods, services and, most importantly, in investments,” Ramesh said.

On investment, we still don’t allow FDI from Pakistan. I have written to the Prime Minister that just as we have removed the ban on FDI from Bangladesh, we must now remove the ban on Pakistan. It does not make sense to talk about a draft SAARC Framework Agreement on Investment Promotion if India imposes barriers on investment. SAFTA has progressed but the more important issue to address is investment. Pakistan and Bangladesh are worried that because of SAFTA if they open up trade, it will work to their detriment.

By aggressively pushing Indian companies into these countries and making investments there and using these countries to buy back from them is the next big thing we can do.
It is not just Indian companies going into these countries for investment. Sri Lankan companies are now investing in India. Brandix Apparel in Visakhapatnam, a Sri Lankan joint venture, is planning to invest $1 billion over the next seven years. MAS, another textile company from Sri Lanka, is planning to invest about $200 to $250 million in the next two to three years. A large number of Bangladeshi firms in pharmaceuticals and textiles want to invest in India and I am sure that Pakistan companies too would be willing to do the same.

We have an ambitious Rs 950-crore proposal to build infrastructure in 14 land customs stations in the border areas with Bangladesh, Pakistan, Nepal, Myanmar and China to create modern facilities of our international trade at these LCS. We have a number of proposals to open up more LCS in the North-East to improve connectivity with China, Bangladesh, Myanmar and we are pursuing them diplomatically.

We intend to establish a Land Ports Authority. A Bill to this effect is to be introduced in the current session of Parliament to manage all the land ports efficiently through infrastructure improvements. We need to improve rail links in South Asia. We need a multi-modal transport initiative to improve connectivity among neighbours to bring about closer integration.

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