In a Russian perspective of South Asia, its Institute of Oriental Studies comments: "Among territorial sub-regions of the world, South Asia is unique in having a density of population six times more than the average for the planet. Barring tropical Africa, South Asia is still the poorest region as its per capita GNP income is ten times less than the world average."
Viewed in this context, the enthusiasm with which the SAFTA accord has been greeted needs to be tempered with some scepticism.
South Asia and its people lack motivation after fifty years of needless bureaucratic controls and have created internally unequal societies, regional economies that are not complementary and countries that are not "natural" trading partners in the manner of EU or SE Asia.
In view of the fact that the SAFTA accord envisages no measures for cross-border investment by private enterprise, nor links the free trade measures with simultaneous open movement of people and ideas, the only beneficiaries will be the captains of industry, profiteers and bureaucrats in the member countries. Without the introduction of major governance reforms and changes in mindset, free trade will not ameliorate the SAARC common people's problems of unemployment, lack of opportunity and international standard of compensation for their skills.
Although the reversion to normal diplomatic and political relations between India and Pakistan is welcome, it will be useful to speculate on the imperatives behind India's sudden and strong push for free trade and also to analyse whether there are equal benefits for Pakistan in opening up its economy to India.
For example, Pakistan's present items of merchandise export are not likely to find a market in India, which produces similar goods that compete for the same price and quality segments in the international export market.
India, on the other hand, will have the advantage of price and logistics in capturing significant share in Pakistan's import market of industrial raw materials, light engineering goods, consumer goods and agricultural produce, in all of which India has an exportable surplus.
Nor will Pakistan's non-export manufacturing industry be able to expand and create jobs through the opening up of India's one billion person market.
Pakistan's domestic-made consumer products and light capital goods are uncompetitive due to factors of under capitalisation, consequent high costs, poor quality, bad management practices, unscientific market research and lack of vision (one Pakistan official recently made the startling disclosure that the country's home water-cooler manufacturers could raise one billion dollars worth of annual exports to India under a free trade regime); they also suffer from absence of brand identity in an Indian consumer market dominated by international brands.
This is not the case for Indian consumer goods, which already enjoy strong brand awareness among Pakistani consumers, who have been exposed to more than a decade of saturation advertising through satellite TV and which can be expected to quickly establish large volume of sales, at the cost of the domestic industry in Pakistan.
This may explain why many of Pakistan's leading industrialists are lining up to become importers of Indian consumer goods, with the Indian conglomerate Tata prominently set to enter the Pakistan market via a UK-origin tea brand, which is to be imported and distributed by an industrial house notorious for multibillion rupee bank defaults that it is still in the process of settling with the National Accountability Bureau.
Although Article 16 of the SAFTA accord makes a mention of safeguards, the terms stipulated do not provide enough of a safety cushion to protect Pakistani industry once the floodgates are open to Indian imports.
Pakistani officials should remain mindful of the WTO-impacted import of Chinese goods, which have swamped the local market and led to closure and losses in the greater part of Pakistan's footwear, poultry, crockery, garments, durable goods and toy manufacturing industries, with the benefits to consumers of lower prices negated by the ripple effects of the unemployment created by, and the outflow of foreign exchange on, these cheap imports.
Business competition is an unfriendly thing and it should be anticipated that, once it gets its foot on the door, Indian industry too will immediately resort to similar dumping measures, not only to capture market share but also to permanently cripple the domestic manufacturing sources.
There is good reason to worry about the future of Pakistan's manufacturing industry, which has been going through a difficult time for the past few years, shedding jobs instead of creating new ones.
In the first place, it has had restricted access to capital because the new management in Pakistani banks, unable to develop cogent lending strategies that insure against a repetition of the past banker-industrialist collusion, has almost totally abdicated its social responsibility towards development financing.
Second, the phased import tariff reductions have rendered many units uncompetitive.
Third, despite the favourable macro-economic figures, there has been no corresponding increase in investment, whether from overseas or domestic, as evidenced by the State Bank's last quarterly report.
In this backdrop, free trade with India would add to the problems by impacting negatively on the manufacturing sector's most efficient, and highest revenue-generating area, the MNCs.
For self-evident reasons of logistics, production efficiencies and market dynamics, the MNCs would relocate their manufacturing to centralised points in India, using their existing sales and distribution channels to protect and promote their sales in Pakistan.
Such trans-border manufacturing methodology has already reaped immense profits for the MNCs in Europe, the Americas and SE Asia (indeed the protection of trans-border manufacturing is behind the creation of WTO rules), so there is little reason to believe that this logic will not be followed in South Asia as well.
A case in point is the US multi-national Gillette, which has wound up its Pakistan manufacturing but continues to sell over a billion rupees worth of goods that it imports from proximately-located factories, including in India.
The free trade prospects are, of course, more alluring for India, which has a great deal to gain and nothing to lose by opening up its economy to Pakistan.
The example of one commodity will help to place this in perspective - India is the world's largest producer of tea, Pakistan is the world's second largest importer of tea, but, until very recently, the two countries had no mutual trade in this commodity.
Also, Pakistan's import of consumer goods and industrial materials imports are equal to almost 30% of India's non-textile and non-jewellery exports.
These are high economic stakes, presenting Indian companies with a great opportunity to capture export business at outlays that may well be lower than their existing domestic marketing costs.
Such an opportunity is especially true for India's agricultural sector, which has been recording bumper harvests ( with consequent price declines) and waits impatiently while next-door Pakistan imports costly wheat, lentils, spices and cereals from other countries.
Perhaps the strongest imperative behind India's push for a market in South Asian would appear to be its inability to keep up with the Chinese economic juggernaut, a factor that has upset the plans and calculations of India and its Western backers, for whom a democratic, free-market Indian economic powerhouse is an integral part of their geo-strategy for Asia.
Instead, India's domestic industrial production has stagnated, and although the reasons for this are many, comparisons with China will illustrate how far behind India has fallen in the race for Asian economic supremacy.
In 1985, both India and China exported the same value of manufactured goods, but by 1998 India's export of manufactured equalled only 15% of China.
In the same period, the share of capital goods as a percentage of total manufacturing output fell by 50% for India but rose almost 30% for China; and in the year 2002 China expanded its international trade by $200 billion, a figure that was equal to one and a half times India's entire global trade for that year. Nor is the trend likely to be reversed.
China's economic progress, judged by its production and consumption of key industrial raw materials such as steel, iron ore, aluminium, cement and electricity, dwarfs that of India, which has yet to show spectacular results from its much-hyped Information Technology base, with hi-tech goods contributing only 5% towards its exports and IT-enabled services income still languishing in single-digit billion figures.
"China will become a Great Power, while India may become a Great Society," says Lord Desai of the London School of Economics Center for Study of Global Governance.
Against the fall in manufacture of capital goods, India's economy has grown on the back of its agricultural and consumer goods manufacturing sectors, with success in the latter attributable to the multi-nationals that have set up shop there since the early 1990s.
Thus, at a time when India's indigenous brand names are unable to penetrate Asian and African markets due to the flood of Chinese merchandise, they are also losing market share and production volumes at home to the multi-nationals.
Their capacity-utilisation problem is compounded by the fact that India's domestic consumption may have peaked for the present, considering that further development will necessitate extending the benefits of economic growth to the four hundred million "untouchables" and minorities.
This will require Indians, particularly the governing class, to change their 4000-year old mindset of caste distinction and discrimination, a feat that even such great egalitarians as Nehru and M.K. Gandhi were unable to accomplish.
Consequently, the adjacent SAARC population of over 350 million in Pakistan, Bangladesh and Sri Lanka represents a market with demand that can feed the under-utilized manufacturing capacity and agricultural surplus of Indian industry and farming, whose managers look to their government to create, as the US Government does for its MNCs, captive customers for their products.
The difference, of course, is that while US companies also invest and create jobs in target markets and America pro-actively takes up cheap immigrant labour from these countries, such a culture does not prevail in the restrictive and protected South Asian manufacturing environment.
Therefore, for Pakistan free trade with India would be akin to letting in a Trojan Horse, it would be a one-way flow of Indian goods, financed by cheap consumer credit extended by Pakistani Banks, resulting in the creation of jobs in India at the cost of job losses at home.
For Pakistan, a balanced trade regime is possible if India lifts its silence in regard to the purchase of electricity and the trans-Pakistan pipelines for natural gas and oil from Iran and Central Asia.
These projects are interesting for Pakistan because, apart from the income generated and jobs created, they would provide leverage against India's ability to create disruptions, whether in Pakistan's economy through capture of undue influence, or in Pakistan's polity through phased violations of the Indus Waters Treaty.
There is good reason not to underestimate the importance to India of these energy projects.
The International Energy Agency has warned that India needs "urgent action" to prevent a power catastrophe, estimating that India needs to spend 2.5% of GDP on new power generation projects over the next twenty years simply to maintain power consumption at acceptable levels for economic growth.
Consequently, if India is indeed serious in establishing a free trade regime that also carries benefits for its neighbours, it can demonstrate its goodwill by discussing these energy sector projects with Pakistan.
And for Pakistan it will be prudent to link the issue of free trade with India's energy requirements rather than with the Kashmir issue.
It ought not to be forgotten that the Kashmir dispute stands on its own, its resolution carries benefits for both India and Pakistan, irrespective of whether the adversaries ever decide to establish free trade with each other.
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