NEW DELHI, Nov 17: Indian Prime Minister Manmohan Singh on Thursday said creation of a free trade area in South Asia would more than double the size of the market in the region within two years.

Addressing business leaders from Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka, Mr Singh tried to reassure smaller neighbours that South Asian Free Trade Area (Safta) would be beneficial.

“The need for implementing Safta cannot be over emphasised,” Mr Singh said.

“It is expected that with the free flow of trade in the Saarc (South Asian Association for Regional Cooperation) region, the current level of intra-regional trade will rise from six billion to 14 billion dollars annually within two years of Safta’s existence,” Mr Singh said.

Saarc countries trade mostly with the world’s developed markets – the United States and the European Union – rather than among themselves.

At their regional summit in Islamabad in January 2004, leaders of the seven member states had agreed to usher in Safta by January 2006, paving the way for the world’s biggest free trade area and in turn raising living standards in South Asia.

However, differences persisted among members at their last meeting in Dhaka, Bangladesh, this month, with negotiations stumbling over a sensitive list of products, rules of origin and a compensation mechanism.

At the end of their two-day meeting on Sunday, the leaders of South Asian states however directed officials to iron out all differences during talks in Kathmandu on Nov 30 and Dec 1.

On Thursday, Mr Singh pointed out that a free trade agreement concluded with Sri Lanka in 1998 had resulted in a ‘win-win’ situation for both the countries and could be a model for similar agreements in the region.

He said even two decades after its formation, Saarc had not succeeded in exploiting the immense economic potential of the region.

Intra-regional exports stood at a five percent of Saarc’s combined total, compared with 55.2 per cent for the European Union, he noted.—APP