Regional Economic Cooperation: SAARC, ASEAN, BIMSTEC, SCO, BRICS and G20 for RBI Grade B ESI
Last updated: 2026-11-11 · MockMentor
"Regional Economic Co-operation" is part of the Globalization unit of the RBI Grade B Phase 2 Economic and Social Issues (ESI) syllabus. As global trade talks at the WTO have stalled, countries have turned to regional and plurilateral groups for trade, investment, connectivity and finance. India belongs to many of these groups, and its choices, such as staying out of RCEP or pushing BIMSTEC over SAARC, are frequent exam and interview themes.
In one line: regional groups let neighbouring or like-minded countries cut barriers faster than the WTO can, and India uses them to pursue trade, connectivity and a voice for the Global South, while guarding against cheap imports and Chinese influence.
Basic concepts
- Regional economic integration: agreements among countries, usually in the same region, to reduce barriers to trade, investment and movement of people among themselves.
- Regional Trade Agreement (RTA): a reciprocal trade agreement between two or more countries. In WTO language, it includes free trade agreements and customs unions.
- Preferential Trade Agreement (PTA): an agreement giving lower tariffs on a limited list of products.
- Customs union: an FTA whose members also adopt a common external tariff against non-members.
- Trade creation and trade diversion: trade creation is when an RTA shifts purchases to a cheaper partner producer; trade diversion is when it shifts them from a cheaper non-member to a costlier member because of the tariff preference.
- Plurilateral group: a group of some, but not all, countries that cooperate on a set of issues, such as BRICS or the G20.
Why in News?
- India hosted the 18th BRICS summit in New Delhi on 12 and 13 September 2026, as chair for the year, with the theme "Building for Resilience, Innovation, Cooperation and Sustainability".
- Timor-Leste became the 11th member of the Association of Southeast Asian Nations (ASEAN) in October 2025.
- Bangladesh took over the chairmanship of BIMSTEC after the sixth summit in Bangkok in April 2025, which adopted the Bangkok Vision 2030.
- The United States holds the G20 presidency in 2026, after South Africa's presidency in 2025.
Stages of economic integration
| Stage | Features | Example |
|---|---|---|
| Preferential trade area | Lower tariffs on selected goods | Asia-Pacific Trade Agreement (APTA) |
| Free trade area | No tariffs on most trade among members; each keeps its own tariffs for others | SAFTA, ASEAN Free Trade Area |
| Customs union | Free trade among members plus a common external tariff | Southern African Customs Union (SACU), Mercosur (partly) |
| Common market | Customs union plus free movement of labour and capital | European Economic Community before 1993 |
| Economic union | Common market plus common economic policies, often a common currency | European Union, eurozone |
| Political union | Full political integration | A federation such as the United States |
RTAs and the WTO
The WTO's basic rule is non-discrimination (Most Favoured Nation). RTAs are an exception allowed under Article XXIV of GATT (for goods), Article V of GATS (for services) and the Enabling Clause (for agreements among developing countries), provided they cover "substantially all trade" and do not raise barriers against others. Several hundred RTAs are now in force worldwide.
Benefits and risks for developing countries
| Benefits | Risks |
|---|---|
| Larger markets and economies of scale | Trade diversion and loss of tariff revenue |
| Faster liberalisation than the WTO allows | A "spaghetti bowl" of overlapping rules of origin |
| Attraction of investment and entry into regional value chains | Smaller countries may have weak bargaining power |
| Cooperation on connectivity, energy and standards | Rich partners may push rules on labour, environment and intellectual property beyond WTO levels |
South Asian Association for Regional Cooperation (SAARC)
| Feature | Detail |
|---|---|
| Founded | 8 December 1985, Dhaka |
| Members | Eight: Afghanistan (joined 2007), Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka |
| Secretariat | Kathmandu, Nepal |
| Key agreements | SAARC Preferential Trading Arrangement (SAPTA, 1993; in force 1995); South Asian Free Trade Area (SAFTA, signed 2004, in force 2006); SAARC Agreement on Trade in Services (2010) |
| Institutions | SAARC Development Fund (Thimphu), South Asian University (New Delhi), SAARC Disaster Management Centre |
The last SAARC summit was held in Kathmandu in 2014. The 19th summit, to be held in Islamabad in 2016, was called off after India and other members pulled out following the terrorist attack at Uri. Since then, SAARC has been largely inactive at the summit level.
Why SAARC has not delivered
- India-Pakistan hostility, and Pakistan's blocking of connectivity agreements such as the SAARC motor vehicle agreement.
- Intra-regional trade of only about 5% of the region's total trade, among the lowest in the world, against over 20% in ASEAN.
- Long sensitive lists that exclude many products from SAFTA tariff cuts.
- Poor transport links and high non-tariff barriers.
- Fear among smaller members of India's dominance.
Association of Southeast Asian Nations (ASEAN)
| Feature | Detail |
|---|---|
| Founded | 8 August 1967, by the Bangkok Declaration; 8 August is ASEAN Day |
| Members | Eleven: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam and Timor-Leste (2025) |
| Secretariat | Jakarta, Indonesia |
| Motto | "One Vision, One Identity, One Community" |
| Principles | Respect for sovereignty, non-interference in internal affairs, peaceful settlement of disputes and decisions by consensus |
| Chair in 2026 | The Philippines |
ASEAN set up the ASEAN Economic Community in 2015, with the goal of a single market and production base. It is at the centre of the Regional Comprehensive Economic Partnership (RCEP), which came into force in 2022 with China, Japan, South Korea, Australia and New Zealand; India left the RCEP talks in 2019.
India and ASEAN
India's Look East Policy (1991) became the Act East Policy in 2014. India became a sectoral dialogue partner of ASEAN in 1992, a full dialogue partner in 1996 and a summit-level partner in 2002, and the relationship was raised to a Comprehensive Strategic Partnership in 2022. The ASEAN-India Trade in Goods Agreement has been in force since 2010 and is under review, because India's trade deficit with ASEAN has widened. Projects such as the India-Myanmar-Thailand Trilateral Highway and the Kaladan Multi-Modal Transit Transport Project aim to link India's north-east with South-East Asia.
Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC)
| Feature | Detail |
|---|---|
| Founded | 6 June 1997, by the Bangkok Declaration (as BIST-EC, with Bangladesh, India, Sri Lanka and Thailand) |
| Members | Seven: Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka, Thailand |
| Secretariat | Dhaka (since 2014) |
| Charter | Adopted at the fifth summit in Colombo (2022), giving BIMSTEC a legal personality |
| Sectors | Reorganised into seven pillars, with India leading security (including counter-terrorism, disaster management and energy) |
| Sixth summit | Bangkok, 4 April 2025: adopted the Bangkok Vision 2030 and a maritime transport cooperation agreement |
BIMSTEC links South Asia and South-East Asia, includes no Pakistan, and covers about a fifth of the world's population. India sees it as a practical alternative to SAARC and a part of its Neighbourhood First and Act East policies. Its weaknesses include slow progress on its free trade agreement (under negotiation since 2004), limited funding and long gaps between summits.
Bangladesh-China-India-Myanmar (BCIM) Economic Corridor
BCIM grew out of the "Kunming Initiative" of 1999 to link Kolkata with Kunming in China through Bangladesh and Myanmar. It made little progress. China later listed it under its Belt and Road Initiative (BRI), which India opposes because the China-Pakistan Economic Corridor (CPEC), another BRI project, passes through Pakistan-occupied Kashmir. India has also been wary of the strategic implications of opening its north-east to China.
Shanghai Cooperation Organisation (SCO)
| Feature | Detail |
|---|---|
| Origin | The "Shanghai Five" (1996): China, Russia, Kazakhstan, Kyrgyzstan and Tajikistan; became the SCO in 2001 with Uzbekistan |
| Members | Ten: China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, India and Pakistan (both 2017), Iran (2023) and Belarus (2024) |
| Secretariat | Beijing; the Regional Anti-Terrorist Structure (RATS) is in Tashkent |
| Focus | Security, counter-terrorism, connectivity, energy and trade in Eurasia |
Importance for India
- Security: cooperation against terrorism, extremism and separatism through RATS.
- Energy: access to the oil and gas of Central Asia and Russia.
- Connectivity and trade: links with Central Asia through the Chabahar port in Iran and the International North-South Transport Corridor.
- Geopolitics: a platform to engage both Russia and China, and the Central Asian states.
Challenges for India
- Dominance of China and Russia, and the presence of Pakistan.
- India's opposition to the BRI, which most other members support; India has stayed out of SCO statements endorsing it.
- Differences over terrorism and over the definition of the group's purpose.
BRICS
| Feature | Detail |
|---|---|
| Origin | The term "BRIC" was coined by economist Jim O'Neill in 2001; the first summit was held in Yekaterinburg, Russia, in 2009; South Africa joined in 2010 |
| Members | Ten: Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates (2024), and Indonesia (2025); a category of partner countries was created in 2024 |
| Secretariat | None; the chair rotates every year (India in 2026) |
| Weight | About half of the world's population and over a third of world GDP in PPP terms |
Institutions
- New Development Bank (NDB): agreed at the Fortaleza summit (2014), operational from 2015 in Shanghai, with equal capital shares of the five founders. It funds infrastructure and sustainable development, and has admitted new members such as Bangladesh, the UAE, Egypt and Algeria.
- Contingent Reserve Arrangement (CRA): a pool of US$100 billion that members can draw on during balance of payments pressure, with China committing the largest share.
Areas of cooperation
- Economic: trade and payments in local currencies, the BRICS Cross-Border Payments Initiative, and cooperation on customs, taxation and agriculture.
- Political: reform of the UN Security Council, the IMF and the World Bank; counter-terrorism.
- People-to-people: education, culture, sport and think tanks.
India's view
India values BRICS as a voice for the Global South and for reform of global institutions, but opposes making it an anti-Western bloc or creating a common BRICS currency. As chair in 2026, it focused on resilience, innovation, technology and sustainable development.
G20
| Feature | Detail |
|---|---|
| Origin | A forum of finance ministers and central bank governors from 1999 after the Asian financial crisis; leaders' summits since 2008 after the global financial crisis |
| Members | 19 countries, the European Union and, since 2023, the African Union |
| Weight | About 85% of world GDP, 75% of world trade and two-thirds of the world's population |
| Structure | No permanent secretariat; a rotating presidency supported by a "troika" of the past, current and next presidents; a Finance Track and a Sherpa Track |
India's G20 presidency (2023)
India hosted the New Delhi summit in September 2023 under the theme "Vasudhaiva Kutumbakam: One Earth, One Family, One Future". Its outcomes included the admission of the African Union as a permanent member, the launch of the Global Biofuels Alliance, the G20 framework on digital public infrastructure, high-level principles on lifestyles for sustainable development, and a push for reform of multilateral development banks. The India-Middle East-Europe Economic Corridor (IMEC) was announced on its sidelines.
South Africa held the presidency in 2025, and the United States holds it in 2026.
Other groups and corridors
| Group | What it is | India's role |
|---|---|---|
| Indo-Pacific Economic Framework for Prosperity (IPEF) | US-led framework (2022) with four pillars: trade, supply chains, clean economy and fair economy | India joined the supply chain, clean economy and fair economy pillars, not the trade pillar |
| India-Middle East-Europe Economic Corridor (IMEC) | A rail and shipping corridor linking India to Europe through the UAE, Saudi Arabia, Jordan and Israel | Founding partner |
| International North-South Transport Corridor (INSTC) | A multi-modal route from India to Russia through Iran and the Caspian Sea | Founding member (2000) |
| Indian Ocean Rim Association (IORA) | 23 countries on the Indian Ocean rim | India chairs it for 2025 to 2027 |
| Mekong-Ganga Cooperation | India and five Mekong countries | Cultural, tourism and connectivity cooperation |
| BBIN | Bangladesh, Bhutan, India and Nepal sub-regional cooperation | The BBIN Motor Vehicles Agreement, awaiting ratification by Bhutan |
| Asia-Pacific Economic Cooperation (APEC) | 21 Pacific Rim economies | India is not a member and has sought to join |
India and regional cooperation: an assessment
India has moved its focus from SAARC to BIMSTEC and to bilateral FTAs, partly because of Pakistan and partly because of the poor results of SAFTA. It has joined groups that give it a voice in shaping rules (G20, BRICS, SCO) while staying out of agreements it considers harmful, such as RCEP and the IPEF trade pillar. It uses connectivity projects (INSTC, IMEC, Chabahar, Kaladan) to reach markets that its neighbours' disputes would otherwise cut off.
The criticism is that India's caution has kept it out of Asia's main production networks, which run through RCEP and China. The response is that India's newer agreements, with the UAE, Australia, EFTA, the UK, Oman, New Zealand and the EU, are deeper and better protected.
Way forward
- Revive regional trade in South Asia through BIMSTEC and BBIN, and finish the BIMSTEC FTA.
- Use the review of the ASEAN-India agreement to fix rules of origin and gain better access for services.
- Build connectivity corridors with clear financing and security.
- Use BRICS and the G20 to push reform of the IMF, World Bank and WTO, without turning BRICS into a bloc.
- Prepare Indian industry to compete within FTAs through lower input costs and quality standards.
Possible exam and interview questions
- Explain the stages of regional economic integration. What are the benefits and risks of regional trade agreements for developing countries? (420 words)
- "BIMSTEC is a more practical vehicle for regional cooperation than SAARC." Critically examine. (620 words)
- Discuss the role of BRICS and its institutions in the global economy. What are India's interests in BRICS?
- What were the main achievements of India's G20 presidency in 2023?
- Interview: Was India right to stay out of RCEP?
Related reading: export-import policy, international economic institutions, and international economic issues.
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