New Delhi, January 16:

Analysts see the South Asian Free Trade Area (SAFTA) agreement among India, Pakistan, Sri Lanka, Bangladesh, Nepal, Bhutan and Maldives, effective from the beginning of this year, as having the potential to pave the path to prosperity in one of the most economically underdeveloped parts of the world.

The seven countries of SAARC account for nearly one-fifth of the world’s population that resides in barely three per cent of the planet’s geographical area. At the SAARC summit at Dhaka, the member countries signed four protocol documents that eliminated most of the legal and administrative hurdles that had stood in the way of implementing the SAFTA agreement.

India’s commerce minister Kamal Nath said New Delhi would cut customs duties by five per cent for goods imported from Pakistan, Sri Lanka, Bang-ladesh, Maldives and Nepal with the launch of the SAFTA agreement from January 1. Under the new pact, SAARC member will cut customs tariffs to levels between zero and five per cent over the next seven to twelve years. Whereas the more developed countries like India, Pakistan and Sri Lanka will cut their tariffs to these levels by 2013, the LDCs, Bang-ladesh, Nepal, Maldives and Bhutan, would reduce customs rates by 2018.