Business Possibilities in SAARC Aayush Arora Ashay Jain Eshita Singh Luke Noronha Utkarsh Kapur Study Group 1

Introduction SAARC – South Asian Association for Regional Cooperation SAARC is an economic and political organization SAARC was established on 8 December 1985 Headquarter - Nepal SAARC provides a platform to South Asia people to work together Objective of SAARC – to promote economic and social development in member states

Objectives To promote welfare of people To promote economic, social and cultural development To understand and appreciate one another’s problems To become self-reliance To strengthen cooperation with other developing countries

SAARC Countries India 5. Bangladesh Nepal 6. Maldives Pakistan 7. Bhutan Sri Lanka 8. Afghanistan

Integrated Program of Action (IPA) 1. Agriculture 6. Transport 2. Postal Services 7. Rural Development 3. Science and Technology 8.Telecommunications 4. Sports, Arts and Culture 9. Meteorology 5. Health and Population activities

Reasons for formation of SAARC This region is poor and over populated Predominance of agriculture Central location of Asia All countries have some cultural background and history

Major activities

SAARC Preferential Trading Arrangement (SAPTA) SAPTA was signed on 11 April 1993 To promote mutual trade and economic development within SAARC region Basic principles: Mutuality of advantages of trade reforms Preferential measures in favor of Least Developed States

South Asian Free Trade Area (SAFTA) It creates free trade area in the region Zero customs duty on trade of all the products Promotes fair competition in the free trade area Equitable benefits to all Replace SAPTA, which was limited in its scope 

Advantages of SAARC Economic welfare among participating nations Comparative and absolute advantages due to increased cooperation among nations Negligible transportation costs Use of Bangladesh’s port, by other landlocked countries, to exploit unutilized resources

Trends in SAARC Nations

GDP ( Current US $) Afghanistan (In billions) Bangladesh Bhutan India Maldives Nepal Sri Lanka Pakistan 2012 20.53 133.35 1.82 2.50 19.20 68.40 224.3 2013 20.04 149.99 1.79 1.86 2.70 19.30 74.30 231.2 2014 20.05 172.88 1.95 2.04 3.09 19.80 80.02 244.3 2015 19.33 195.07 2.05 2.09 3.43 21.10 82.30 271.05 SOURCE: World Bank data (http://data.worldbank.org/?locations=8S-LK-PK)

Population Afghanistan Bangladesh Bhutan India (in billion) Maldives Nepal Sri Lanka Pakistan 2012 29726803 155,257,387 753711 1.264 385000 27500515 20424000 177392252 2013 30682500 157,157,394 754637 1.279 393000 27834981 20579000 181192646 2014 31627506 159,077,513 765088 1.295 401000 28174724 20771000 185044286 2015 32526526 160,995,642 774830 1.311 409163 28513700 20966000 188924874 SOURCE: World Bank data (http://data.worldbank.org/?locations=8S-LK-PK)

Gross Enrollment Ratio Afghanistan Bangladesh Bhutan India Maldives Nepal Sri Lanka Pakistan 2012 108.377 - 110.976 109.758 142.642 100.096 91.415 2013 110.065 104.843 110.585 138.517 100.649 89.815 2014 111.744 102.132 135.234 101.27 93.563 2015 135.434 SOURCE: World Bank data (http://data.worldbank.org/?locations=8S-LK-PK

Life Expectancy (in years) Afghanistan Bangladesh Bhutan India Maldives Nepal Sri Lanka Pakistan 2012 59.68 70.86 68.732 67.29 76.462 68.823 74.531 65.717 2013 60.028 71.245 69.103 67.66 76.630 69.222 74.654 65.964 2014 60.375 71.626 69.471 68.014 76.773 69.605 74.795 66.183 2015 - SOURCE: World Bank data (http://data.worldbank.org/?locations=8S-LK-PK

Gross National Income (in US $) Afghanistan Bangladesh Bhutan India Maldives Nepal Sri Lanka Pakistan 2012 700 950 2320 1480 5960 690 3360 1260 2013 1010 2330 1520 6000 730 3490 1360 2014 660 1080 2370 1560 6480 740 3650 1400 2015 610 1190 2380 1600 6950 3800 1440 SOURCE: World Bank data (http://data.worldbank.org/?locations=8S-LK-PK

Run-Through of clipping Delegates of SAARC nations during the 'Buyer and Seller Meet’, stated to strengthen trade ties with India “Promotion of bilateral trade with the participating SAARC countries” “Afghanistan has a trade deficit of 90 per cent where import is far more than exporting potential”   

Cont. “Afghanistan expects expertise and technology from India” “Afghanistan has become more inclined toward to the economic oriented system than political one” “Bhutan import edible products to heavy machinery from India lieu of Hydel Power” “India is biggest business partner with Bhutan and Bhutan always look upon investing on their basic infrastructure”

Run-Through of clipping Provision for business visas for 3 to 5 years for SAARC businessmen Move has been taken in order to boost regional trade among SAARC Nations Special visas to SAARC businessmen has been issued in order to invite SAARC nations to invest in India Move will improve Political relations and also the two-way trade and investments in SAARC countries

India’s bilateral trade with SAARC nations

India’s bilateral trade with SAARC’s other nations (in US $)

India’s exports to SAARC

India’s imports from SAARC

Trends of India’s total trade with SAARC

Future of SAARC India does not wants to elevate China’s observer SAARC has the potential to emerge as an active centre of power in the world as SAARC comprises 3% of the world’s area, 21% of the world’s population and around 9% of the global economy SAARC’s future lies in the initiatives taken by India

Cont. Pakistan creating a greater South Asia economic alliance SAARC can emerge as an attractive market for developed countries like Asia, Europe and America

Reasons for slow growth Low level of trade between two largest partners - India and Pakistan Lack of ‘political will’ to make SAARC a dynamic group The difference in power between India and other SAARC countries

Cont. Economic interests are dealt bilaterally instead of multilateral agreements Constant conflicts between two largest partners- India and Pakistan

Way Forward….. Irritants between two largest partners - India and Pakistan should be removed South Asian countries should abolish Non-Tariff Barriers Expansion in travel by citizens of SAARC will encourage trade and investment

Cont. Expansion in travel will strengthen cross-cultural ties among SAARC nations People to people contact will influence ‘political will’