Q.Write a short note on the role and the limitations of SAARC as a forum for facilitating economic cooperation among the South Asian countries.

SAARC was established in 1985 to promote regional cooperation in South Asia, with economic collaboration as one of its central objectives. The South Asian Preferential Trading Arrangement (SAPTA) signed in 1993 aimed to reduce tariffs and promote intra-regional trade, which was later upgraded to the South Asian Free Trade Area (SAFTA) in 2004. SAARC has also initiated projects in areas like energy cooperation, poverty alleviation, and infrastructure development to foster economic integration among member states.

However, SAARC's effectiveness has been severely constrained by persistent political tensions, particularly between India and Pakistan, which have repeatedly stalled summits and cooperative initiatives. Intra-regional trade within SAARC remains among the lowest globally—less than 5% of total trade—due to high tariff and non-tariff barriers, poor connectivity, and overlapping memberships in other regional forums. The consensus-based decision-making process has often led to paralysis, as bilateral disputes prevent collective prog …

The South Asian Association for Regional Cooperation was established in 1984 with the Dhaka Declaration, bringing together seven nations—India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan, and the Maldives—with Afghanistan joining later in 2007. The association emerged from a recognition that South Asia, home to nearly a quarter of humanity, needed a collective voice and a framework for addressing shared challenges. Economic cooperation was central to this vision, premised on the idea that regional integration could lift millions out of poverty and accelerate development across member states.

Role in Economic Cooperation

SAARC has created several institutional mechanisms aimed at fostering economic ties. The most significant initiative was the South Asian Free Trade Area (SAFTA), which came into force in 2006. SAFTA aimed to reduce tariffs progressively and eliminate barriers to intra-regional trade, creating a common market that could rival other regional blocs. The association also established the SAARC Development Fund to finance infrastructure and social projects, and promoted cooperation in sectors like agriculture, energy, telecommunications, and transport.

Beyond formal agreements, SAARC summits have served as a diplomatic space where leaders could discuss economic priorities, from food security to climate resilience. The forum has facilitated technical cooperation, knowledge sharing, and capacity building through various regional centers and programs. It has also helped smaller member states like Nepal, Bhutan, and the Maldives articulate their development concerns on a regional stage.

Fundamental Limitations

The promise of SAARC has remained largely unfulfilled, and the reasons are both structural and political. Intra-regional trade within SAARC remains among the lowest of any regional grouping globally—hovering around 5 percent of total trade, compared to over 25 percent in ASEAN. This reflects not just economic complementarities but deeper obstacles.

The principle of unanimity in decision-making means any single member can veto proposals, and contentious bilateral issues—particularly between India and Pakistan—have paralyzed the organization. The 2016 SAARC summit, scheduled for Islamabad, was postponed indefinitely after India and several other members withdrew following a terrorist attack in Uri. No summit has been held since, effectively freezing the forum.

Economic cooperation has also been hampered by:

• Asymmetry: India's economy dwarfs those of other members, creating fears of domination rather than partnership. Smaller states worry about being overwhelmed by Indian goods and capital.
• Lack of connectivity: Poor physical infrastructure—roads, railways, energy grids—limits trade even where tariffs have been reduced. Cross-border movement remains cumbersome. …