SEA has called on the government to fill a gap in the South Asian regional free trade pact, which has been used to circumvent tariffs through imports of palm oil and soybeans diverted by Nepal and Bangladesh. South Asia`s lack of regional connectivity, despite the benefits of proximity, has a long history of mistrust, conflict and political upheaval. In addition, India`s presence as a “big brother” in the region has been careful for its smaller neighbors to take the initiative. In the future, policies should focus on removing barriers and improving connectivity in all fields, so as to build trust and balance China`s growing relations with its neighbors India. The potential and benefits of trade must be realized by the countries of the region in order to ensure reciprocal economic benefits. The following recommendations are based on the extensive literature on trade and regional integration in South Asia. The idea of trade liberalization among SAARC countries was first discussed by Sri Lanka at the sixth summit of the South Asian Association for Regional Cooperation (SAARC) held in Colombo in December 1991. This policy letter analyzes trade data on India`s and China`s trade with Afghanistan, Bangladesh, Bhutan, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka, collectively referred to as “South Asia” or N8. Improving cross-border infrastructure, such as integrated control bodies (ICPs), road, air and rail links, is essential to facilitate trade in the region. Improved infrastructure will enable better connectivity, strengthening production networks and value chains in the region. Over the past decade, several measures have been taken to modernize infrastructure, including the modernization of land customs stations in PCC, the development of rail networks such as the Agartala-Akhaura rail link (Bangladesh) and the Jogbani-Biratnagar railway line (Nepal) or the opening of the second border checkpoint between India and Myanmar (Zokhawthar-Rikhawdar). Such improvements in cross-border infrastructure connectivity are the best incentives to increase intra-regional trade.
Improved intra-regional trade is needed to improve connectivity in the South Asian region. Such an initiative, facilitated by the movement of goods, services, people and knowledge, would allow access to new markets and attract foreign direct investment (FDI) in different sectors. The resulting economic growth would also play a key role in bridging the trust gap in the region and increase the opportunity costs of conflict.  The SAARC Preferential Trade Agreement (SAPTA) reflects the desire of Member States to promote and maintain economic trade and cooperation within the SAARC region by exchanging tariff concessions. Despite the growth in trade, India`s trade with its neighborlines remained between 1.7% and 3.8% of its world trade. Between 1988 and 1996, the country`s share of trade doubled due to an increase in the volume of trade and the value of trade. This could be attributed to economic liberalization in Bangladesh, India, Nepal, Pakistan and Sri Lanka in the 1990s.  India`s trade with its neighbourhood was between 1.7% and 3.8% of its world trade.  Anderson and A.
Ayres, Economics of Influence: China and India in South Asia, Expert Letter from the Council on Foreign Relations, www.cfr.org/expert-brief/economics-influence-china-and-india-south-asia. The South Asian Free Trade Area (SAFTA) is an agreement reached on 6 January 2004 at the 12th SAARC Summit in Islamabad, Pakistan. It has created a free trade area of 1.6 billion people in Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka, in order to reduce tariffs on all traded goods to zero by 2016. . .