In recognition of the fact that our geographical proximity, cultural and religious affinity and economic synergies can be used to our mutual benefit, the seven countries of South Asia, viz. India, Nepal, Pakistan, Bangladesh, Sri Lanka, Bhutan and Maldives have organised themselves into an association called The South Asian Association for Regional Cooperation (SAARC).
The SAARC countries celebrated the completion of the first decade of their existence on 7th December 1995. The major achievement in the first decade was the operationalisation of the SAARC Agreement for Preferential Trading Arrangement (SAPTA).
As a result, concessions have been exchanged between the members. India is the major participating economy in the region and has given deeper cuts (upto 50%) in the MFN tariff rates on imports of maximum number of commodities (106) from the countries in the region, followed by Pakistan 10 to 20% in 35 commodities, Bangladesh 10% in 12 commodities and Bhutan 15% in 11 commodities.
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The completion of the second round of SAPTA negotiations has resulted in the exchange of tariff concessions on 1972 lines. Out of this, India has offered concessions on 911 Tariff lines and received concessions on 456 tariff lines at the six-digit level.
The third Round of SAPTA negotiations has also been completed to further deepen and enlarge the exchange of tariff concessions and removal of non- tariff barriers.
The ultimate objective, as mandated by the leaders of the SAARC member-countries is to establish a Free Trade Area in the region (SAFTA) by 2001 A.D. Special bodies have been constituted by the SAARC administration for the timely achievement of this objective.
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Steps have been taken to facilitate the movement of the trading community within the region by improving the visa procedures. Customs procedures are also being simplified through regular interaction of the participating members.
Harmonisation of standards of export manufactures and their quality control are also under active consideration of the SAARC forum. Steps are being taken to create a congenial environment for the promotion and protection of intra- regional investment.
India has liberalised the procedures for promoting Indian investments in the SAARC region by raising the ceiling for approvals under the fast track channel from US $4 million to US $8 million and then to US $ 15 million. For investments in rupees in Nepal, this ceiling is Rs 60 crores.
In addition to the meetings of SAARC bodies constituted in the SAARC Charter, the Commerce Ministers of SAARC member-states also hold meetings in order to monitor the progress of SAARC intra-regional trade and other economic activities.
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The first meeting of the SAARC Commerce Ministers was held in New Delhi in January 1996. The second meeting was held in Islamabad on April 29-30, 1998. The third meeting of the SAARC Commerce Ministers was held at Dhaka during February 2-3, 1999.
With a view to display the potential for the exchange of commodities within the region, the first SAARC trade fair was held in New Delhi in January 1996 and the second SAARC trade fair was held in Colombo between 8-15 September, 1998.
At the 10th SAARC Summit held at Colombo during July 21-31, 1998, India opened its market for entry of about 2000 products from the SAARC member countries which are restricted for imports for the reasons of balance of payment.