Regarding Pakistan, some peak tariff rates will be reduced to single digit level at 8% in next year.

India has already given market access to least developed countries (LDCs) by substantially lowering its tariff and the LDCs in South Asia also stand to benefit.

The Union Minister for Commerce and Industry and Textiles, Anand Sharma, while addressing the first meeting of the South Asia Forum (SAF), organized by FICCI in association with theMinistry of External Affairs and the SAARC Secretariat on Thursdaya said : “By next month-end, India will reduce its negative list of imports by 20 per cent to further facilitate imports from SAARC countries. Regarding Pakistan some peak tariff rate will be reduced to 8% in the next year.”

SAF is a body set up by public-private partnership in the region.

The time was ripe for the South Asian political and business leaders to seriously engage in efforts to integrate the region by facilitating flow of trade and investment, lowering trade barriers, seamless connectivity, flow of ideas, people-to-people contacts and constructive business linkages, he said.

Sharma informed that India was strengthening its land customs stations and integrated check posts along its borders with Pakistan and Nepal.

In response to a query that India has imposed non-tariff barriers (NTBs), he said many of these allegations were perceived and not actual. He urged the South Asian countries to export value added products to India as it is a big market.

Sharma said that the global economic crisis had still not run its course, the recovery in the US was not accompanied by growth of jobs, the Euro zone crisis continues to haunt the EU; commodity prices are on the rise and there are serious concerns over the flow of investment from the rich nations to the poor and needy under-developed countries.

It was, therefore, imperative for SAARC member nations to tap intra-regional trade and investments by giving greater market access and facilitate free flow of investment through lowering of tariff and non-tariff barriers.

He regretted poor air connectivity in the region. Air flight from New Delhi to Male and Dhaka was costlier than the air flight from New Delhi to Bangkok. He urged the private sector in South Asian countries to enter the aviation industry in a big way and make flight rates more competitive.

India, on its part, needs to do a lot more in the South Asian regions. It’s (official) trade with the SAARC countries was a mere $ 14 billion and investment in the region was inadequate. Of the $ 100 billion global investment by India, only 10% was located in South Asia. The need of the hour was to cooperate and collaborate more closely, especially through people-to-people and business contacts, Sharma said.

Earlier the Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia while inaugurating the SAF said the integration of South Asian economies was kickstarted today with the formation of the Forum. He called an end to barriers to free flow of trade and investment in the region. This, he said, could be accomplished through sustained pressure on political and business leadership to propagate that the benefits of such integration would far outweigh costs.

He said, “a range of tariff and non-tariff barriers, that have been erected in our region in the early years of our respective independence prevented businesses from developing value in the neighbourhood.” This, he said, could be attributed to the comparatively higher cost of doing business in the region and huge bottlenecks in regional infrastructure such as roads, ports and railways.

“We need to recommend measures to mitigate, if not eliminate, mobility constraints for lagging and landlocked regions and reduce the high transaction cost due to poor connectivity,” he said.

He said that regional integration provides opportunities to make progress in areas that would otherwise be outside the ambit of cooperative activity. These include trade facilitation across regions, reduced political risk premia and the value of a peace dividend. Such gains, he said, add to sustained growth and eventually better economic cooperation can lead to better political relations in a region, thereby reducing conflict and associated socio-economic costs.

He said that intra-South Asian cooperation actually declined in the first two decades of Independence of the South Asian nations. Even after national governments adjusted their economic development models to make their systems more outward-oriented, all indices of intra-regional economic cooperation in South Asia are significantly lower than in other regions.

Ahluwalia cautioned the delegates that the world was moving towards a regime of high energy prices and it was imperative to create a seamless energy market in the South Asian region. The South Asian Forum, he said, needs to focus on a discussion on the opportunities for cooperation in the production, storage and distribution of energy. He advised the delegates to look for commercially viable solutions to generate energy in high potential areas for the benefit of the meeting the high demand from areas with low potential.

He underlined the need for investing in capacity building of the young people in the region through education so as to provide them with productive jobs. “If we fail provide for this democratic bulge, the implications on the stability of our societies will be significant. The instability that could be generated will be hard to capture within national boundaries,” Mr. Ahluwalia said.