The landmark South Asian Free Trade Area (SAFTA) agreement, which holds the promise of boosting international commerce and trade in one of the world's poorest regions, officially came into effect yesterday.
The free-trade pact is considered to be by far the most important decision taken by the seven-member South Asian Association for Regional Cooperation (SAARC) during its 20-year existence.
Nearly 23 percent of the world's population lives in the SAARC region which is just three percent of the world's area.
SAARC nations including India, Pakistan, Sri Lanka, Bangladesh, Maldives, Nepal and Bhutan initially agreed to the trading arrangement at their annual summit held in Islamabad in 2004.
At the summit in Dhaka last year, the members signed four protocols to eliminate legal and administrative hurdles for the implementation of the trade agreement.
According to the agreement which became officially operational yesterday, SAARC member countries India, Pakistan and Sri Lanka will reduce their customs and excise duties to between 0 to 5 percent by 2013, while the least developed members of the organization, Bangladesh, Maldives, Nepal and Bhutan will have until 2008 to do so, the PTI news agency reported.
India, the largest and most-developed economy in the whole of the south Asia region, will be required under the terms of the agreement to provide concessions to the least developed countries including a mechanism for compensation of revenue loss due to reduction in duties as well as technical assistance.
In the last 20 years, the SAARC has not been always been able to achieve its objectives including accelerating economic and social development, to benefit people in the region.
The launch of the SAFTA offers new hope for the millions of poor in the region as it could hugely increase trade between member countries.