From UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 2- Issues in the SAARC, India need to move sub-regional grouping to increase the intra-regional trade.
Former Sri Lankan Prime Minister Ranil Wickremesinghe’s push for regional economic integration and for India-Pakistan dialogue should be studied carefully by New Delhi.
What are the issues with SAARC?
- Recent moves by India: India has more or less shut down all conversations on the South Asian Association for Regional Cooperation (SAARC).
- India also walked away from the ASEAN-led Regional Comprehensive Economic Partnership (RCEP).
- Mr Wickremesinghe set out a number of suggestions:
- The original purpose of SAARC-Regional growth: India-Pakistan tensions have brought economic integration within the SAARC region to a “standstill”.
- That the original purpose of the South Asian group was to build a platform where bilateral issues could be set aside in the interest of regional growth.
- Start at the sub-grouping levels: To engender more intra-regional trade, an even smaller sub-grouping of four countries with complementary economies: India, Sri Lanka, Bangladesh and Thailand, can start the process of reducing tariffs and demolishing non-tariff barrier regimes.
- When it comes to the intra-regional share of total trade, SAARC and BIMSTEC languish behind groupings such as ASEAN, EU and MERCOSUR.
- Economic Integration Road Map: The Sri Lankan leader also suggested that with India’s leadership, a more integrated South Asian region would be better equipped to negotiate for better terms with RCEP so as not to be cut out of the “productivity network” in Asia, and envisioned an Economic Integration Road Map to speed up the process.
- Talks with Pakistan off the table: The government has made it clear that talks with Pakistan are strictly off the table, and that a SAARC summit, which has not been held since 2014, is unlikely to be convened anytime soon.
- More reliance on bilateral deals: The government, which has taken a protectionist turn on multilateral trade pacts, is relying more on direct bilateral deals with countries rather than overarching ones that might expose Indian markets to flooding by Chinese goods.
- India’s trade deficit with the neighbours: For any regional sub-grouping in South Asia to flourish, it is India that will have to make the most concessions given the vast trade deficits India’s neighbours have at present, which it may not wish to do.
- The overall projection that India’s global reach will be severely constrained unless it is integrated with its neighbours, and tensions with Pakistan are resolved, cannot be refuted. India needs to be more accommodative for the realisation of its ambitions.