From Saarc to Bimstec: The failure of regional cooperation in South Asia

Consider this: for an Indian company, it is 15-20% less expensive to trade with Brazil or Germany, than it is to trade with Bangladesh. This is just one example of the sad state of economic cooperation and regional connectivity in the South Asia region.

South Asia is one of the least integrated regions globally in terms of trade and connectivity.  The intraregional trade is barely 5%  of the region's total trade. In comparison, intra-regional trade share is about 60% of the total trade in Europe, 50% in East Asia and the Pacific, 22 %  in Sub-Saharan Africa, 25% in the Association of Southeast Asian Nations (Asean). The average costs of trade within South Asia are 20% higher relative to country pairs in Asean. Given the shared history of the region, this is indeed shocking. 

For decades, efforts to build an integrated economic and political framework have faltered, not only due to historical grievances but also because of India's reluctance to empower regional institutions. And the most promising of them all was the South Asian Association for Regional Cooperation (Saarc). Yet, due to India's reluctance to engage in subregional cooperation in favour of bilateral relations, it has kept undermining the Saarc. 

On 22 March, Indian foreign minister S Jaishankar hinted at the possibility of a revival of Saarc at the Consultative Committee on External Affairs of India. He said that "Saarc is not off the table" and that the regional grouping has been "paused," indicating the possibility of its revival in the future.  

The comment came after a long diplomatic campaign by Bangladesh after 5 August to revive Saarc, which has been de facto dormant since 2014. Since then, India has tried to make the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (Bimstec) the main transgovernmental agency in South Asia, only to fail due to similar reasons. 

Initiated by former Bangladesh president Ziaur Rahman, Saarc was once envisioned as a vehicle for economic collaboration and regional connectivity. But it has been undermined by India's hegemonic approach, the absence of mutual trust, and India's unwillingness to concede influence over its neighbours, which has rendered the organisation ineffective.  

One of the main reasons behind Saarc's dysfunction is deeply tied to India's dominance. From its inception in 1985, the association was hindered by New Delhi's insistence on controlling its agenda. India-Pakistan tensions became the defining obstacle, with India ensuring that Saarc remained paralysed by restricting discussions on political disputes. The rigid prohibition on bilateral issues within Saarc forums, while ostensibly designed to maintain neutrality, effectively guaranteed that underlying conflicts—most notably Kashmir—would continue to block progress. 

India's refusal to engage meaningfully with Pakistan within a regional framework further exacerbated Saarc's stagnation. Trade agreements such as the South Asian Free Trade Area (SAFTA) failed to materialise due to India's protectionist stance, ensuring that intraregional trade remains below 5% of total trade—one of the lowest in the world.

India's role in stalling Saarc summits has been another major impediment. The 2016 summit in Islamabad after the Uri attack was indefinitely postponed after India led a boycott, with Bangladesh, Bhutan, and Afghanistan following suit. This demonstrated India's ability to leverage its regional influence to isolate Pakistan, effectively shutting down Saarc's ability to function. 

Another main issue with Saarc was that all decisions have to be passed unanimously. For this, decisions can be blocked easily. 

The rivalry between India and Pakistan  and their inability to resolve bilateral disputes have paralysed Saarc's ability to make unanimous decisions, as the organisation operates on a consensus-based model, allowing a single member to block agreements. 

For instance, India's refusal to engage with Pakistan after cross-border terrorism events has disrupted Saarc's activities, delaying progress on initiatives like trade liberalisation under the South Asian Free Trade Area (SAFTA). 

The Saarc Secretariat in Kathmandu remains underfunded and lacks enforcement power, a direct consequence of India's reluctance to delegate authority to regional institutions. Unlike the European Union's supranational structures, which facilitate integration, Saarc remains a weak intergovernmental body, primarily because India does not see regionalism as a priority unless it serves its strategic interests.

With Saarc's decline, India sought to shift focus towards Bimstec, a grouping that excludes Pakistan and includes Bangladesh, Bhutan, Nepal, Sri Lanka, Myanmar, and Thailand. New Delhi has attempted to portray Bimstec as a more functional alternative, aligning it with its 'Act East' and 'Neighbourhood First' policies. 

However, Bimstec has largely replicated Saarc's structural weaknesses, particularly in its failure to foster economic integration. The Bimstec Free Trade Agreement, proposed in 2004, remains unimplemented, in large part due to India's reluctance to open its markets fully to smaller neighbours. 

While Asean has successfully developed deep economic linkages, Bimstec members continue to prioritise bilateral agreements over regional frameworks, reflecting India's preference for controlling trade negotiations on a case-by-case basis rather than institutionalising regional interdependence.

Infrastructure and connectivity projects, which are often cited as Bimstec's strengths, have also been stymied by India's geopolitical considerations. The Motor Vehicle Agreement, aimed at improving cross-border transport, remains largely unfulfilled due to India's bureaucratic inertia and concerns over security. The Kaladan Multimodal Transit Transport Project, intended to link India's northeast with Myanmar's ports, has been delayed for years. India's dominant role in these projects ensures that they serve its own strategic interests rather than fostering equal regional integration. 

The broader geopolitical landscape further complicates Bimstec's progress. India has sought to position Bimstec as a counterweight to China's Belt and Road Initiative (BRI), but its own limited investments have left smaller members seeking alternatives. 

Most Bimstec states, except for India and Bhutan, are already participants in BRI, highlighting a divergence in strategic priorities within the organisation. India's increasing wariness of China's influence in Nepal, Myanmar, and Bangladesh has translated into a cautious, often obstructive approach to regional initiatives, preventing Bimstec from developing into a cohesive bloc.

Institutional weaknesses that plagued Saarc persist in Bimstec, largely due to India's reluctance to strengthen them. The Bimstec Secretariat in Dhaka, just like the one of Saarc, remains underfunded and lacks decision-making authority. The adoption of the Bimstec Charter in 2022 was a symbolic step, but without India's willingness to empower regional institutions, it remains ineffective. Decision-making continues to be consensus-based, allowing India to stall progress when it suits its interests. 

Unlike Asean, where smaller states wield influence through collective bargaining, Bimstec remains heavily skewed in favour of India, fostering resentment among smaller members. And India's dominant foreign policy effectively blocked countries like Bangladesh, Nepal, or Bhutan from pursuing their independent strategic objectives.  

Security cooperation within Bimstec has also yielded little substantive progress. India-led initiatives, such as joint military exercises like MILEX-2018, have been marred by divisions. Nepal's refusal to participate showed the limits of India's leadership. Nepal and Thailand sent only a few observers to the exercise. 

Counterterrorism cooperation remains superficial, as member states prefer to pursue independent security arrangements rather than align under India's framework. Maritime security in the Bay of Bengal, another priority for Bimstec, remains largely rhetorical, with India hesitant to share leadership with smaller states.

The internal asymmetries within Bimstec further reinforce India's dominance. As the largest economy in the grouping, India wields disproportionate influence, often sidelining smaller members in decision-making. Unlike Asean, where economic and political diversity is balanced by institutional mechanisms, Bimstec remains an India-centric initiative. This imbalance has made smaller countries wary of engaging too deeply, fearing economic dependency and political subordination.

In response to the comment of Mr Jaishankar, former Bangladesh ambassador to the US, M Humayun Kabir, said, "I would say it is a positive indication. We need to see how much progress occurs at the policy level. I am not very hopeful yet, but I look at it in a positive way." 

Saarc was undermined by India's insistence on controlling the regional agenda, while Bimstec has been constrained by its reluctance to cede space to collective leadership. By prioritising its own interests over regional integration, India has ensured that both organisations remain ineffective, making South Asia one of the least integrated regions in the world.