SAFTA comes into force on Jan 1, 2006

The government on Wednesday said that the South Asia Free Trade Area Agreement that envisages phased tariff liberalisation will come into force from January 1, 2006.

"In two years, non-Least Developed Contracting States (India, Pakistan and Sri Lanka) will bring down tariffs to 20 per cent, while Least Developed Contracting States (Bhutan, Bangladesh, Maldives and Nepal) will bring them down to 30 per cent," Minister of State for Commerce and Industry E V K S Elangovan on Wednesday informed the Rajya Sabha.

Non-LDCS will then bring down tariffs from 20 per cent to 0-5 per cent in five years, while LDCS will do so in eight years. "Moreover, non-LDCS will reduce their tariffs for LDC products to 0-5 cent in three years," he said in a written reply.

SAFTA is expected to be fully operationalised by 2016. He said a Committee of Experts on SAFTA, consisting of delegates from all SAARC nations, is currently negotiating on the four outstanding issues -- rules of origin, sensitive list, mechanism for compensation of revenue loss for LDCS and technical assistance to LDCS.

"On the Indicative Sensitive Lists circulated by all SAARC countries, India has been holding bilateral discussions with each SAARC country, including Bangladesh and Pakistan," the minister said.

Elangovan said the existing bilateral trade agreement with Nepal and Bhutan would continue to be in force even after implementation of SAFTA.