Blog

INDIA AND SOUTH ASIA

INDIA AND SOUTH ASIA

South Asia is the southern region of Asia, which is defined in both geographical and ethno-cultural terms. The region consists of the countries of Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.

India's vision of regional economic integration in South Asia is based on enhanced intra-regional trade, investment flows and regional transport and communication links in South Asia. South Asian Association for Regional Cooperation (SAARC) and India’s Neighbourhood First Policy are the two vehicles in this process.

India’s Neighbourhood First Policy

• India's Neighbourhood First policy embodies India's vision of building a Vasudhaiva Kutumbakam (the world as one family).
• Development Assistance: The Indian government has allocated INR 62,920 million in its budget for 2022-23 for development assistance to countries in India’s neighbourhood and Africa and Latin America.
• Vaccine Diplomacy: As part of India’s neighbourhood First policy, India, through its vaccine diplomacy (Vaccine Maitri), extended help to many countries of the world especially neighbouring countries during the Covid-19 pandemic.

Challenges regarding Regional Cooperation in South Asia

• Low Inter-Regional Trade: South Asia’s intra-regional trade is the lowest globally, constituting only 5% of the region’s total trade. The current economic integration is just one-third of its potential with an annual estimated gap of 23 billion dollars.
• External Influence in South Asia: Smaller neighboring countries are quite predictable in seeking to balance India's influence through closer relations with external powers, in the past this was the US at the moment it is China.
• Inefficient Management of Global Supply Chain: South Asia’s international trade integration is lower than the global average, and it is way less integrated into global value chains compared to East Asia.

What Role India can Play For the Development of South Asia

• Promoting Sub-Regional Initiatives: India can increase the convening capacity of sub-regional initiatives such as the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation.
• Highlight the Need of Food Security: Regional food security is another area that India could take a major initiative in with an eye to the future and can be an integral facilitator and component to this economic bloc for food security.
• Boosting Regional Trade: India can leverage regional trade, connectivity and investment, and strengthen the South Asian Free Trade Agreement as a game-changer for the region.