Regional Cooperation in South Asia: Challenges and Opportunities

South Asia is home to nearly a quarter of humanity, yet it remains one of the least integrated regions on the planet. Countries here share rivers, languages, history, and a common set of problems like poverty, climate vulnerability, and uneven development. Logically, they should be natural partners. In practice, regional cooperation has moved at a frustratingly slow pace. Understanding why this happens, and what alternatives are emerging, tells us a great deal about how politics, geography, and economics interact in this part of the world.

What regional cooperation means in South Asia 🔗

Regional cooperation refers to neighbouring states working together on shared concerns through formal institutions, agreements, and joint projects. The aim is to pool resources, reduce conflict, and achieve goals that no single country could reach alone. In an era where military regionalism of earlier centuries has been replaced by economic regionalism, cooperation among neighbours has become almost unavoidable for development.

South Asia has strong reasons to cooperate. Himalayan river systems, monsoons, cyclones, and earthquakes do not respect borders. Cross-border migration, diaspora communities, and deep cultural ties create a societal basis for working together. Proximity should reduce trade and logistics costs. Yet the region has consistently underperformed on this front, and the main reason lies in its politics rather than its potential.

The birth of SAARC 🔗

The most ambitious attempt at institutionalising cooperation is the South Asian Association for Regional Cooperation (SAARC). The idea originated in the late 1970s when the then President of Bangladesh, Zia-ur-Rehman, proposed regional cooperation during visits to neighbouring countries. The organisation was formally established in 1985 with its secretariat in Kathmandu, Nepal.

SAARC originally had seven members: Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. Afghanistan joined as the eighth member at the 14th SAARC Summit in 2007. The grouping set out to promote economic growth, social progress, and cultural exchange across a region with extraordinary diversity in size, religion, population, and wealth.

The dual motive behind its formation 🔗

It is worth noting that SAARC was built on a complex political foundation. The explicit goal was to strengthen regional cooperation. But for the smaller states, there was also an implicit motive: to collectively manage the influence of India, which dominates the region in size and power. India, in turn, was wary of any “gang-up” tendency among its neighbours. These two motives sat uneasily together from the very start, and this underlying tension has shaped the organisation’s trajectory ever since.

Why cooperation has stalled 🔗

Despite its promising launch, SAARC has delivered far less than expected. No SAARC summit has been held since 2014, which raises serious questions about whether the organisation can still function as intended. Several interlocking factors explain this stagnation.

The India-Pakistan rivalry 🔗

The single biggest obstacle is the long-standing conflict between India and Pakistan. Their territorial disputes, nuclear rivalry, and deep mutual distrust have repeatedly paralysed the organisation. SAARC works on the principle of consensus, which means that disagreement between any two members, especially its two largest, can freeze the entire agenda.

The breaking point came in 2016. Following the Uri attack, India decided to boycott the 19th SAARC summit that was scheduled to be held in Islamabad. Other members followed, the summit was cancelled, and the organisation has been in limbo ever since. Cross-border terrorism remains a serious irritant that India refuses to separate from the cooperation agenda.

The asymmetry of power 🔗

A second structural problem is the sheer dominance of one member. India accounts for roughly 75% of the region’s GDP, 70% of its landmass, and 75% of its population. This creates a permanent dilemma. Smaller neighbours depend on India economically but simultaneously resent that dependence, sometimes turning the “India factor” into a domestic election issue. This asymmetry makes equal partnership difficult and breeds suspicion.

Economic disparities and weak infrastructure 🔗

The economic landscape is highly uneven. Some economies grow rapidly while others lag far behind, making it hard to design policies that benefit everyone equally. Poor cross-border infrastructure, bureaucratic red tape, and regulatory complexity add further friction. There are, for instance, no direct flights between some regional capitals, a striking sign of how fragmented the region remains.

The China factor 🔗

The growing presence of China in South Asia has added a new layer of complexity. Through infrastructure investment and strategic partnerships across the region, China’s influence reshapes how member states calculate their interests, sometimes pulling them in different directions and complicating any unified regional approach.

The cost of weak integration 🔗

The clearest evidence of failure is trade. South Asia has the lowest level of intra-regional trade of any region in the world. Intra-regional trade accounts for only about 5 to 7% of total trade, compared with roughly 22% in ASEAN and around 45% in the European Union.

SAARC did try to fix this. It established the South Asian Preferential Trade Arrangement (SAPTA) and later the South Asian Free Trade Area (SAFTA), which came into effect in 2006. But these initiatives never took off. Long “sensitive lists” of excluded products, non-tariff barriers, customs delays, and weak dispute resolution meant that trading with neighbours never became truly free.

The lost opportunity is enormous. The World Bank estimates that actual trade is only about one third of its potential. Strikingly, it can be roughly 20% costlier for an Indian firm to trade with Pakistan than with Brazil, a country 22 times farther away. The barriers here are manufactured by politics, not imposed by nature.

Searching for alternatives 🔗

With SAARC effectively frozen, the region has not abandoned cooperation altogether. Instead, countries are exploring routes that bypass the gridlock. These take two main forms: sub-regional groupings and bilateral engagement.

BIMSTEC as a workaround 🔗

The most prominent alternative is the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). It brings together five South Asian members along with Myanmar and Thailand from Southeast Asia. Its great political advantage is obvious: it links South Asia with Southeast Asia while excluding Pakistan, sidestepping the rivalry that strangles SAARC.

India has clearly signalled this shift. In 2016, it invited BIMSTEC leaders to the BRICS summit in Goa, and in 2019, BIMSTEC leaders, rather than SAARC leaders, were invited to the prime ministerial swearing-in ceremony. BIMSTEC also connects neatly to India’s Act East Policy, linking its North-Eastern states with Southeast Asian markets. That said, it remains more promise than achievement. Myanmar’s instability and uneven engagement from some members mean its potential is still largely unrealised.

The BBIN model of pragmatism 🔗

An even narrower grouping is BBIN, comprising Bangladesh, Bhutan, India, and Nepal. The BBIN Motor Vehicles Agreement was signed in June 2015 to allow seamless movement of cargo and passenger vehicles. Although Bhutan’s parliament has not ratified it, the remaining three countries have moved ahead. BBIN captures a clear logic: when broad multilateral groupings stall, work with willing partners on specific, concrete projects like connectivity and grid sharing.

Bilateral engagement and the Neighbourhood First policy 🔗

Alongside these groupings, India has leaned heavily on bilateral relationships through its Neighbourhood First policy, launched in 2014. This approach gives priority to immediate neighbours through development partnership, connectivity, energy cooperation, and people-to-people ties, often dealing with each country one-on-one rather than through SAARC’s collective framework.

There is a tension here, though. India also pursues trans-regional and global partnerships through forums like BRICS and the QUAD, alongside its Act East and broader Indo-Pacific engagement. As India’s diplomatic energy spreads across these wider platforms, critics worry that the focus on the immediate neighbourhood can get diluted, even as that neighbourhood remains central to India’s security and stability.

Why this still matters 🔗

It would be easy to dismiss regional cooperation in South Asia as a failed experiment. That would be a mistake. The challenges the region faces, including climate change, poverty, public health crises, and disaster management, are inherently cross-border. No country can solve them alone. Effective cooperation is not a luxury but a necessity for shared economic and social development.

The experience of ASEAN shows that economic integration is achievable even among countries with a history of rivalry. The fundamental question for South Asia is whether its members can eventually learn to keep trade and functional cooperation insulated from political disputes. For now, sub-regional and bilateral pragmatism offers a workable path forward, keeping the spirit of regionalism alive even when its flagship institution lies dormant.

What do you think? Should South Asia invest its energy in reviving SAARC, or is the future of cooperation better served by flexible groupings like BIMSTEC and BBIN that route around political deadlock? And can economic interdependence ever build enough trust to soften the region’s deepest political rivalries?

References

1. https://ebooks.inflibnet.ac.in/psp06/chapter/208/
2. https://www.adb.org/publications/next-steps-south-asian-economic-union-study-rei-phase-2
3. https://geographyworlds.com/blog/saarc-south-asia-guide/
4. https://anantamias.com/india-south-asia-neighbourhood-first/
5. https://pwonlyias.com/editorial-analysis/south-asia-economic-integration/
6. https://www.worldbank.org/en/news/feature/2018/10/09/realizing-the-promise-of-regional-trade-in-south-asia
7. https://www.researchgate.net/publication/395702623_India_and_the_BIMSTEC-_regionalism_multilateral_frameworks_and_a_changing_global_order
8. https://clarityupsc.com/international-relations-upsc-notes/saarc-regional-cooperation-challenges-bimstec-alternative-future