Context
• Border disputes among South Asian nations significantly hamper trade and economic cooperation, preventing the region from achieving its full potential.
• Economic instability fuels unrest, while security threats disrupt trade and investment. No country can achieve lasting security without economic prosperity, and vice versa.
• The South Asian region is one of the least economically integrated regions in the world. Intraregional trade of South Asia (South Asian Free Trade Area or SAFTA) accounts for barely 5% to 7% of its total international trade, which is the lowest when compared to other trading blocs.
• In contrast, intraregional trade accounts for approximately 45% of total international trade within the European Union (EU), 22% within the Association of Southeast Asian Nations (ASEAN), and around 25% within North American Free Trade Agreement (NAFTA).
South Asian Association for Regional Cooperation (SAARC)
• Origins of SAARC: Regional cooperation in South Asia was first discussed at the Asian Relations Conference (1947), the Baguio Conference (1950), and the Colombo Powers Conference (1954).
• The SAARC concept took shape in 1980 when Bangladesh's President Zia - Ur - Rahman proposed regional cooperation to promote peace and stability.
• SAARC was officially established on 8th December 1985, in Dhaka, Bangladesh, with 7 founding members: Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.
• Afghanistan joined as the 8th member in 2007.
• Headquarter - Kathmandu, Nepal
• SAARC's agenda includes the South Asian Free Trade Area (SAFTA), established in 2004 and effective from 2006, aimed at reducing tariffs and promoting free trade in South Asia.
UPSC / PCM - 2026 / NEW REGULAR BATCH STARTS ON SEP-5, 2025 
