South Asian free trade area and its impact on exports of SAARC LDCs to India

Abstract

The paper analyses the role of South Asian Free Trade Area (SAFTA) in promoting the export expansion of the Least Developed Countries (LDCs) of SAARC to India. Using the concept of revealed comparative advantage, the paper proceeds to determine the export structure of the LDCs which exhibit trade in similar product groups by the concerned countries and that these product groups form an insignificant share of India’s total imports from the world. Moreover, most of these product groups can be produced efficiently by India as well. The export expansion of LDCs under SAFTA on the basis of such product groups is further constrained by the inclusion of some of these products in India’s list of sensitive items prepared for the LDCs. Accordingly, the paper proceeds to identify certain measures for increasing the exports of LDCs to India. Revamping India’s list of sensitive items in respect of certain product groups, promoting intraindustry trade and realising the importance of joint ventures could be suggestive means for enhancing the exports of LDCs to India under SAFTA