India's trade with SAARC countries during April-August reached the Rs.103.96 billion ($2.29 billion) mark, registering a 17 percent growth as compared to the same period the previous year, said an industry study.
What is significant is that the recent thaw in India-Pakistan relations has resulted in 19 percent growth in bilateral trade during the period under study, said the report that was released Saturday by the PHD Chamber of Commerce and Industry (PHDCCI).
"India's exports to Pakistan have gone up by 10 percent. Significantly, answering the long-standing concerns of Pakistan about the non-tariff barriers faced by their products in India, exports to India have registered a whopping 86 percent growth during this period," the study stated.
"It is indeed significant for India to consolidate its trade relations with SAARC countries to make a success out of South Asia Free Trade Area (SAFTA), which is scheduled to be launched from Jan 1, 2006."
PHDCCI president K. N. Memani said: "What is most important is that other SAARC countries have been able to increase their exports to India since some of them are very keen to enhance their market access to the expanding Indian market."
He hoped Pakistan would accord Most Favoured Nation (MFN) status to India, to boost bilateral trade and also help neighbouring countries like Afghanistan, Iran and CIS countries to access the Indian market.
Citing the country's bilateral trade with Sri Lanka as a role model, Memani said the island country has emerged as India's largest trading partner in SAARC.
With a growth of 64 percent in bilateral trade, which stood at Rs.43.04 billion during April-August 2005-06 fiscal, the island nation has fast outperformed other member countries to proactively engage with India to its own economic advantage, the official said.
The analysis states it is a matter of concern that Bangladesh, which till the last year was India's largest trading partner in the region, is fast losing out to countries like Sri Lanka and Pakistan.
"Ambiguous policies and investment climate in the country has proved to be a major deterrent for Indian companies keen to enhance trading ties with Bangladesh," the report states.
Bangladesh's share has slipped from 41 percent of the official exports from India to the whole of the SAARC region during 2003-04, to 30 percent during the first five months of 2005-06.
Likewise, Bangladesh's exports to India constituted hardly six percent of India's imports from the whole of the SAARC region.
Comparatively Nepal accounted for more than 31 percent of India's import from SAARC countries during April-August 2005-06, while Indian exports to Nepal were 13 percent of its total exports to SAARC member countries.