The South Asian Free Trade Agreement (SAFTA) is a regional trade agreement between the eight member countries of the South Asian Association for Regional Cooperation (SAARC), including India and Nepal. The agreement came into effect in 2006 with the aim of promoting trade and investment among the member countries.
Under the SAFTA agreement, India and Nepal have eliminated most of their tariffs on goods traded between them. This has led to an increase in bilateral trade between the two countries and has helped in strengthening their economic ties. The agreement has also provided a framework for addressing trade-related issues and disputes between the two countries.
India and Nepal share a long and complex history, and their economic relations have been shaped by factors such as geography, culture, and politics. In recent years, India has emerged as Nepal`s largest trading partner, accounting for more than two-thirds of Nepal`s total trade.
The SAFTA agreement has provided a boost to Nepal`s economy by increasing its access to the Indian market. Nepal has been able to export more goods to India, including agricultural products, textiles, and handicrafts. At the same time, Nepal has also been able to import more goods from India, including petroleum products, pharmaceuticals, and machinery.
However, there have been some challenges in implementing the SAFTA agreement between India and Nepal. Some sectors, such as agriculture and manufacturing, have been slower to benefit from the agreement. There have also been concerns about non-tariff barriers and the need for greater market access for Nepali products.
Despite these challenges, the SAFTA agreement remains an important framework for promoting trade and investment between India and Nepal. As the two countries continue to expand their economic ties, there will be new opportunities for growth and development in the region.