The South Asia Free Trade Area (SAFTA) came into effect from January 1 after years of deliberations and differences among the seven SAARC member states. Consequently, trade links are now possible in a tariff-free environment. The increasing trade is also expected to enhance the free flow of capital within the region, which could help the LDCs attain economic stability. With the new regime in place, the previous level of intra-regional trade of $6 billion is estimated to rise to $14 billion annually. The South Asian region is a growing market, and India is already being globally seen as an economic powerhouse. Unfortunately, the SAARC intra-regional trade still amounts to a minuscule 4 per cent of the total trade volume. There is, therefore, the need to expand trade and exchange technical expertise because more imports and exports may lead to a better political understanding between and among countries, apart from enhancing development and reducing poverty. With the decision to include Afghanistan as the eighth member and China and Japan coming as observers at the last summit, SAARC is set to broaden its horizon of opportunities for collective advancement of the member nations.
If Nepal wants to reap benefits then it needs to review and modify its policies to make them compatible with the fast changing scenario. Nepal must first identify its niche products and make them competitive. For this, it has to expand its range of exportable products and improve them in terms of quality and price competitiveness. This requires development of its industrial base and improvement in the quality of its manpower. Experts must study the technical aspects and emerging trends before giving the final shape to any policy. As it is, Nepal does not provide too many exportable items in large scale. Given Nepal’s deteriorating economic condition, thanks to political instability and the Maoist insurgency, peace restoration needs to receive top-most priority.