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SAARC should focus on infrastructure, trade: CII


New Delhi : The Confederation of Indian Industry (CII) has urged the leaders of the South Asian Association for Regional Cooperation (SAARC) to create infrastructural linkages and remove trade bottlenecks to spur economic growth within the region.

Leaders of SAARC countries — India, Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka — are scheduled to meet in the Maldives for the regional summit Nov 10-11.

According to CII director general Chandrajit Banerjee, SAARC countries should focus on greeter inter-regional integration and the implementation of the South Asian Free Trade Area (SAFTA).

“With proper implementation of SAFTA, south Asian nations can leverage regional dynamics for economic growth through dedicated efforts to facilitate trade and economic cooperation,” he said.

The industry body said that Pakistan’s decision to grant India most favoured nation (MFN) status is a step in the right direction.

“Pakistan’s decision…can transform the trading environment of the region as a whole,” Banerjee said.

CII pointed that India’s demographic dividend and growing middle class are incentives for south Asian countries to further integrate and remove trade bottlenecks.

India’s trade with SAARC countries has gone up from $6.9 billion in 2005-06 to $15 billion in 2010-11.

The industry body recommended furthering of economic cooperation in areas such as services, electricity and logistical connectivity.

“The services component of SAFTA should be made a priority, bringing many more services under its ambit. Improved FDI (foreign direct investment) regime would help south Asian firms to provide services directly to other south Asian countries,” the CII said in a statement

“This could be in the form of direct investment in hospitals, schools, transport services,” it added.

The industry body also urged SAARC leaders to consider integration of electricity grids across the region to reduce costs and enhance competitiveness.

“The vast hydro-electric potential of Nepal, Bhutan, Afghanistan and India could be tapped. Natural gas reserves in Bangladesh and Pakistan could also be included,” the statement said.

The recommendations also seek the development of logistical hubs to facilitate cross-border movement of goods and reduce costs.

Currently, intra-regional trade in south Asia stands at around 5 percent, compared to over 50 percent in east Asia and about 20 percent in Latin America.