Context: According to a Brookings India study, most South Asian nations are now largely dependent on China for imports despite geographical proximity to India.

More on the news:

  • As India-China border tensions continue to fester, a hegemonic China, as part of its global expansionism, is chipping away at India’s interests in South Asia.
  • Several foreign policy experts argue that India’s strategic dealing with China has to begin with South Asia by reinvigorating SAARC, which has been inactive since 2014.

China’s contemporary relations with India’s neighbors

  • China’s proximity to Pakistan has been strengthened by the China–Pakistan Economic Corridor (CPEC) project.
  • Nepal is also moving closer to China for ideational and material reasons. 
  • China is wooing Bangladesh by offering tariff exemption to 97% of Bangladeshi products
  • China has also intensified its ties with Sri Lanka through massive investments. 

Present status of SAARC

  • Strained India-Pakistan relations
    • Due to India’s increasing animosity with Pakistan, India’s political interest in SAARC dipped significantly.
    • India has been trying hard to isolate Pakistan internationally for its role in promoting terrorism in India.
  • India’s focus on other groupings
    • India started investing in other regional instruments, such as BIMSTEC, as an alternative to SAARC. 
    • However, BIMSTEC cannot replace SAARC for reasons such as 
      • Lack of a common identity and history among all BIMSTEC members. 
      • Also, BIMSTEC’s focus is on the Bay of Bengal region, thus making it an inappropriate forum to engage all South Asian nations.
  • Least integrated region:
    • South Asia is one of the least integrated regions in the world with intra-regional trade fluctuating at barely 5% of total South Asian trade.
    • Lack of political will and trust deficit: Currently, according to the World Bank, trade-in South Asia stands at only $23 billion of an estimated value of $67 billion.
    • On the other hand,  in the ASEAN region, intra-regional trade comprises nearly 25%.

Challenges for India

  • Dents in India’s soft power of being a liberal and secular democracy
    • There have been allegations of an unrelenting top-dressing of anti-Pakistan rhetoric and Islamophobia on the Indian soil.
    • There’s also a recurrent use of the ‘Bangladeshi migrant’ rhetoric.
    • This divisive domestic politics may fuel an anti-India sentiment in India’s neighborhood.
  • Unclear economic vision of India
    • It’s unclear what the slogans of atma nirbharta (self-reliance) and ‘vocal for local’ mean. 
    • The Prime Minister of India is stating that India needs to cut down its dependence on imports, thus signaling a return to the economic philosophy of import substitution. 
    • If this marks sliding back to protectionism, one is unsure if India will be interested in deepening South Asian economic integration.

Infusing life in SAARC through the process of South Asian economic integration

  • India should take the lead: India should take the lead and work with its neighbors to slash the tariff and non-tariff barriers. 
  • Resuscitate the negotiations on a SAARC investment treaty
    • These negotiations have been pending since 2007.
    • According to the UN Conference on Trade and Development, intra-ASEAN investments constitute around 19% of the total investments in the region. 
    • The SAARC region can likewise benefit from higher intra-SAARC investment flows.
  • Deeper regional economic integration will create greater interdependence with India acquiring the central role, which, in turn, would serve India’s strategic interests too.

About South Asian Association for Regional Cooperation (SAARC) 

  • The signing of the SAARC Charter in Dhaka established the SAARC in 1985. 
  • Its secretariat is in Kathmandu, Nepal. 
  • Objectives: The SAARC seeks to promote the welfare of the peoples of South Asia, strengthen collective self-reliance, promote active collaboration and mutual assistance in various fields, and cooperate with international and regional organizations.
  • Eight states―Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. 
  • Six observers—China, Japan, European Union, Republic of Korea, United States, Iran


The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC)

  • It is a regional organization comprising seven Member States lying in the littoral and adjacent areas of the Bay of Bengal constituting a contiguous regional unity. 
  • This sub-regional organization came into being on 6 June 1997 through the Bangkok Declaration.
  • It constitutes seven Member States: five deriving from South Asia, including Bangladesh, Bhutan, India, Nepal, Sri Lanka, and two from Southeast Asia, including Myanmar and Thailand. 
  • Initially, the economic bloc was formed with four Member States with the acronym ‘BIST-EC’ (Bangladesh, India, Sri Lanka, and Thailand Economic Cooperation). 
  • Following the inclusion of Myanmar on 22 December 1997 during a special Ministerial Meeting in Bangkok, the Group was renamed ‘BIMST-EC’ (Bangladesh, India, Myanmar, Sri Lanka, and Thailand Economic Cooperation).
  • With the admission of Nepal and Bhutan at the 6th Ministerial Meeting (February 2004, Thailand), the name of the grouping was changed to ‘Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation’ (BIMSTEC).


Image Source: TH