Towards 'Make in South Asia': Evolving Regional Values Chains

Abstract: One of the most important ways in which several of the common developmental challenges in South Asia could be addressed is by focusing on manufacturing. In the new context, manufacturing becomes key to creating Regional Value Chains (RVCs) in South Asia along with its potential to serve as the engine of growth. For this to happen, the paper presents the theoretical canvass emphasising the need to adopt an integrated approach towards trade in goods, trade in services and investment in a regional framework. In this context, rules of origin within the realm of trade in goods can serve as important instruments for ensuring manufacturing and local value addition besides achieving developmental outcomes like employment generation in all factors of production. Insights from the status of the manufacturing sector in India, followed by an analysis of trade in manufactured products, are further used to empirically identify product-country-wise possibilities for creating RVCs. To address some of the constraints to these processes the paper makes some policy-suggestions towards the Make in South Asia initiative.