The South Asia Free Trade Agreement (SAFTA) was signed during the 12th SAARC Summit held at Islamabad in January 2004 and came into force from 1st January 2006.

All member countries of SAARC namely India, Pakistan, Sri Lanka, Bangladesh, Nepal, Bhutan, Maldives and Afghanistan have agreed to implement SAFTA.

Pakistan has implemented SAFTA. However, in its Notification for SAFTA tariff reductions (as amended vide Order S.R.O. No 280(I)/2012 dated 20.3.2012) Pakistan has moved from ‘Positive List’ to ‘Negative List’ comprising of 1209 tariff lines, for import of goods from India. India maintains that this constitutes a derogation of SAFTA, since no reservations are permitted under Article 23 of the SAFTA Agreement.