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Business News/ Politics / Policy/  India must do more to integrate South Asia’s $2.5 trillion common market
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India must do more to integrate South Asia’s $2.5 trillion common market

Regional cooperation among South Asian countries can help tap shared resources, despite the security and religious faultlines, say speakers at the WEF summit

Cooperation among South Asian nations is hampered by the historical circumstances under which they were born, speakers said at the WEF summit. Photo: Ramesh Pathania/MintPremium
Cooperation among South Asian nations is hampered by the historical circumstances under which they were born, speakers said at the WEF summit. Photo: Ramesh Pathania/Mint

New Delhi: South Asia is the fastest-growing region economically in the world, but regional cooperation remains more an opportunity than a reality. That turned out to be the refrain at a session of the India Economic Summit at the World Economic Forum (WEF) on Thursday.

‘How can trade facilitation reforms reduce trade costs and drive economic growth in South Asia?’ was the theme of the session.

Cooperation among South Asian nations is hampered by the historical circumstances under which they were born, speakers said.

“A series of groups with vested interests continues to benefit from the political economy of conflict and the status quo," said Malik Samarawickrama, Sri Lankan minister for development strategies and international trade. The minister added that “most countries are too preoccupied with internal consolidation to invest political capital in regional integration."

He urged India and Pakistan, the two largest economies in the region, to find a way of working together as a prerequisite for wider economic cooperation across South Asia.

The regional community is fragmented along security and religious lines, said A.H.M. Mustafa Kamal, minister for planning of Bangladesh, but cricket is the one “common religion", he joked. On a more serious note, the minister highlighted the urgency of exploiting shared resources.

North-east India, Bhutan and Nepal, for example, have the potential to create 80,000 MW of hydroelectric power—“but have we ever tried?"

South Asia has an economic value of around $2.5 trillion. The sheer size of this market is useful in global bargaining, said Richard Rekhy, chief executive officer and managing partner, KPMG, India. “Imagine what can be done" if the region connected through Bangladesh to south-east Asia, a market of similar size, he said.

The density of accountants in Sri Lanka and India could turn the region into the world’s accounting powerhouse. Natural resources, including gas and hydroelectricity, transport and textiles are all vital areas for regional cooperation.

“You can be nice to your neighbours if you’re happy in your own house first," observed Siraj Azmat Chaudhry, chairman of Cargill India.

However, there remain many domestic challenges to a common regional market. For example, ease of doing business in India. Global companies do not yet view South Asia as one market, while India is viewed state by state. India’s recent success in pushing through the Goods and Services Tax (GST) has begun to unify its internal markets and provides a springboard for India to play a pivotal role in regional cooperation.

“India is to blame," said Samir Saran, vice-president of Observer Research Foundation (ORF). “We have not done enough as the largest market in the region to promote regional connectivity."

For too long, India had been looking to the West rather than the East—“we feared getting our feet wet". As the existing global order of free trade stumbles, south Asia needs to create its own trading arrangements. “Regional integration is no longer an option; it is a compulsion," underlined Saran.

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Published: 06 Oct 2016, 04:12 PM IST
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