By Preety Bhogal
South Asia is a regional bloc that holds immense trade potential but the achievement in intra-regional economic integration has been insignificant so far. The scope of regional cooperation among the South Asian economies is still limited. The 18th SAARC Summit held in Kathmandu, Nepal in November 2014, marked the dominion of the “alliance with neighborhood first” tenet in the evolving foreign policy of India. However, in terms of the India trade with the region, the reality is far from the popular belief.
The relationship between India and other South Asian Association for Regional Cooperation (SAARC) member states rejects the gravity theory of international trade, which emphasizes on the role of geographical proximity in augmenting bilateral trade among countries. Despite the nearness, India has a prolonged history of poor trade with the other SAARC nations. In 2013-2014, India’s trade with SAARC members was 2.6 percent of India’s total trade with the rest of the world. Compared to this, India’s trade with countries further away in terms of distance namely the United States (US) and countries in the European Union (EU) was much larger.
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