SAFTA — South Asian Free Trade Area
SAARC's regional preferential trade arrangement · effective 1 January 2006 · 8 member states
Overview
The South Asian Free Trade Area (SAFTA) is the regional trade arrangement under the South Asian Association for Regional Cooperation (SAARC). The agreement was signed at the 12th SAARC Summit in Islamabad on 6 January 2004 and entered into force on 1 January 2006, replacing the earlier SAARC Preferential Trading Arrangement (SAPTA) of 1995. SAFTA aims to progressively eliminate tariffs on substantially all intra-regional trade among the eight member states: India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan, Maldives, and Afghanistan (the latter joining as the eighth member in 2007).
Tariff liberalisation schedule
SAFTA differentiates between Non-Least-Developed Contracting States (NLDCs: India, Pakistan, Sri Lanka) and Least-Developed Contracting States (LDCs: Afghanistan, Bangladesh, Bhutan, Maldives, Nepal). NLDCs were required to bring their tariffs down to 0–5% by 2013 for imports from LDCs and by 2016 for imports from other NLDCs. LDCs had until 2016 to reduce tariffs for NLDC imports. Each member maintains a Sensitive List of products excluded from tariff concessions, which has been progressively reduced through successive Trade Negotiating Committee rounds.
India trade utilisation
India operates the SAFTA preferences through DGFT and CBIC. Indian exporters can claim SAFTA preferential rates on shipments to SAARC partners by furnishing a SAFTA Certificate of Origin issued by EIA (Export Inspection Agency) or other authorised agencies. The Certificate is governed by the SAFTA Rules of Origin (2004) which mandate a minimum 40% domestic value content (30% for LDCs) plus a change-in-tariff-heading test at HS 4-digit level. India's largest SAFTA trade flows are with Bangladesh (textiles, machinery, vehicles), Sri Lanka (textiles, vehicles, refined petroleum), and Nepal (vehicles, machinery, pharmaceuticals).