Latest available figures indicate that close to 40% of the world’s population suffering from hunger and malnutrition belongs to South Asia. Low agriculture productivity has sustained high levels of poverty in the region. The growth of agriculture will continue to be of paramount importance for eradication of poverty, hunger, livelihood security, and inclusive growth of the regional economies.

The SAFTA Agreement was signed on January 6, 2004 during Twelfth SAARC Summit held in Islamabad, Pakistan. The Agreement entered into force on 1 January, 2006, and the Trade Liberalisation programme commenced on 1, July, 2006. SAFTA was formed in order to increase the level of trade and economic cooperation among the SAARC nations by reducing tariffs and barriers to trade.

This paper analyses the impact of SAFTA Agreement on agricultural trade of India with SAFTA member countries. At the same time, it also looks into trade trends of the SAFTA member countries.

The SAFTA Agreement failed to push regional trade in south Asia. India’s trade with SAFTA member countries declined to 3.4% of its total trade in 2014 from 3.6% in 2005.

The scenario of agricultural trade of India with the regional economies is no different than the overall trade. The agricultural trade of India with SAARC economies, which was 8.0% of total trade in 2005, declined to 7.5% in 2014. However, there have been some changes in composition of agricultural trade after the implementation of SAFTA Agreement.

KEYWORDS: SAFTA, Agricultural trade, Tariff Reduction Programme, Direction of Trade

JEL classification: F15, F53, Q15