♤ SAFTA was operationalised from 2006 onwards & has the following features:

o Member states will reduce tariff barriers in a time bound manner. Maximum tariff will be in the range of 0-5%.

o Non LDC’s of SAARC (India, Pakistan, Srilanka) had a timeframe of 7 years to reduce tariffs, while the LDC’s were provided a time frame of 10 years. As per SAFTA, South Asia was to become a free trade zone by 2016.

o Instead of positive list, concept of sensitive list was introduced (sensitive list would include items which would not be subjected to time bound commitment with regard to tariff reduction). However, it was agreed upon that sensitive list would be revised regularly with the objective of bringing reductions.

o A dispute resolution mechanism for tariff and non-tariff barriers related disputes was agreed upon.

o A compensation clause was introduced- under SAFTA a compensation clause would be introduced to make up for the loss of revenue of LDC’s as they maybe adversely impacted initially by FTA. They are to be compensated with a development aid for a limited period.

7.5.1. Steps to Strengthen SAFTA

At SAARC summit 2011- India has announced the removal of 46 textile items from India’s

negative list

(a) India has also removed all the 25 items on sensitive list for Least Developed Countries

(LDC’s) of SAARC.

(b) Steps have been taken to revive border hats at Meghalaya & Tripura border b/w India & Bangladesh.