KARACHI, March 6: India’s mounting trade barriers that restrict access to the goods and commodities of its small neighbouring states to the biggest South Asian market, are turning Saarc’s future bleak.

Unable to face competition, the Indian industry is seeking protection that is increasingly being extended by its government through imposition of quota and tariff on imports from Saarc member- countries.

As a signatory to the Saarc declaration of 1995, India along with other members of the trading bloc, were expected to enter into “preferential trading arrangements.”

Saarc members have preferred bilateral deals to acting as a trading bloc. Now, India is taking measures to curb imports from Bangladesh, Sri Lanka and Nepal while seeking a captive market in these countries for its low quality merchandise.

Besides, at least three Saarc members complain that India has gone back on bilateral understanding/agreements that would have given their commodities free access to Indian market despite massive trade surpluses. These states suffer from huge imbalance in their trade with India.

The 1996 treaty renewed on Saturday and effective from Wednesday has subjected four Nepali products to quota restrictions and requirement of value-addition of 25 per cent. Indians describe these as “sensitive items which are as follows: vegetable oil, acrylic yarn, copper products and zinc oxide. Furthermore, the Indian budget had levied a four per cent customs duties on these products.

Under the 1996 treaty, these items enjoyed duty-free access to Indian market. India accounts for 40 per cent of Nepal’s trade that is estimated at $956 million. In 2000-2001, India’s trade surplus with the kingdom was Rs19.35 billion against Rs18.43 billion a year earlier.

Similarly, India has not honoured its promise to Bangladesh to allow duty free access to 191 items despite the fact that Dhaka has a cumulative deficit of $7.42 billion in its trade with her big neighbour. The promise was made by no less a person than Prime Minister Atal Behari Vajpayee on a non-reciprocal basis in 1999. Items included tea, jute, dry cells, electric cables, transformers and ceramics. In fiscal 2000-2001, Indian exports to Bangladesh amounted to $817.36 million against imports of a mere $65 million dollars.

While Dhaka is seeking speedy implementation of the Indian promise, New Delhi is linking the issue with the supply of natural gas by Bangladesh to India. BD says it would supply gas to India if it has surplus after meeting its domestic needs. The fate of the free access of 191 products is still hanging in the balance.

In December 1998, India and Sri Lanka signed a Free Trade Agreement (FTA), initialled by Prime Minister Atal Behari Vajpayee and President Chandrika Kumaratunga. The deal was meant to dismantle trade barriers but it encountered new obstacles after signing of the agreement.

“We have facilitated the entry of Indian goods under the FTA, but on the Indian side, the obstacles have not been removed,” Kumaratunga told a Indian newspaper about a year ago. She then estimated that trade balance remained 13 to one in favour of India.

Indians say that Sri Lanka has no real commodities that she wants except tea and garments. Both items have been brought under quotas and placed under sensitive administrative restrictions impeding their free transport to India.

New Delhi made a U-turn on Sri Lanka’s two main exports, tea and garments as FTA was scheduled to go into effect in March 1999.

Similar problems were encountered by Sri Lankan footwear manufacturers and confectioners whose cargoes were sent back by Indian customs.

New Delhi withdrew promised tariff concessions and later agreed to allow 11.25 million kilos of Sri Lankan tea last year under a partial concession.

India’s exports to Saarc region in 2000-2001 amounted to less than four per cent and import from the region was nominal when compared to its export earnings.