Ms Swaraj stated that while the South Asian Association for Regional Cooperation (SAARC) countries are doing well individually, they have not been able to unleash their collective strength effectively.
"We have taken some important decisions to integrate our economies through SAFTA and South Asian Trade in Services Agreement. These need to be developed and consolidated further if we are to achieve a South Asian Economic Union," she said in her address at the 37th SAARC Council of Ministers meeting in Pokhara.
Underlining that the South Asian region is hailed today as having the potential to be the front-runner of growth and prosperity and is one of the fastest growing regions of the world, she pointed out that regional integration is lacking.
"The statistics are telling: our region accounts for merely 2 per cent of world trade and 1.7 per cent of world FDI. Our intra-regional trade is less than 6 per cent of our global trade and intra-regional FDI accounts for only 3 per cent of total FDI inflows," she said.
Ms Swaraj said that despite strong growth and huge advances in education, healthcare and rural development, the SAARC region still has the world's largest number of people living below the poverty line.
"We continue to face significant challenges in delivering food security, health, nutrition and education to our peoples. All this goes to show that while we are doing well individually, we have not been able to unleash our collective strength effectively. We must think innovatively and find solutions so that we may harness our economic complementarities and ensure a conducive environment for rapid growth," she said.
Ms Swaraj said connectivity is central to regional development and will determine how "we meet our goals of growth, employment and prosperity".
"As we seek to overcome basic problems of physical connectivity, it is important for us to move forward quickly on pending agreements on rail and motor vehicles. Economic activities, cultural connections and people to people contacts will flow naturally from such connectivity," she said.
The minister asserted that the Indian government has shown its commitment to a 'Neighbourhood First' policy from its very first day in office.
"Our vision of 'sabka saath, sabka vikas' is for the whole SAARC region and together, we can create a viable ecosystem of regional integration, cooperation and socio-economic development," she said adding that together, "we can unlock the latent talent of South Asia".
Ms Swaraj said India is prepared to work within the SAARC community to realise developmental goals.
"Indian Universities remain open for SAARC citizens. We are committed to supporting campus and infrastructure development of the South Asian University that has been established exclusively for the students of the region.
"We have moved forward on unilateral initiatives that we announced at the last Summit for sharing Indian scientific and technological progress with the SAARC community," she said.
Ms Swaraj said these include among others a dedicated satellite for SAARC to support applications in health, education, disaster response, weather forecasting and communications for our people, establishment of a supra-national laboratory to combat diseases like TB and AIDS, creation of a SAARC wide Knowledge Network to interlink our students, academic and research communities, and organisation of the first SAARC Annual Disaster Management Exercise.
"Looking ahead, I am confident of your support for a SAARC Environment and Disaster Management Centre in India. Such a Centre can benefit from domain expertise of a large network of specialised Indian institutions experienced in quick response to various natural disasters," she said.
Ms Swaraj said SAARC is about positive synergy that will allow each of its members to achieve their full potential.
"We must recognise that we have common enemies in poverty, illiteracy, terrorism and environmental degradation. We will need to fight these challenges together since we have a shared history, and a shared destiny. Let us reach for it together," she said.
The minister also paid tribute to Nepalese people's grit and determination in wake of their resolve to rebuild their lives after the devastating earthquake last year.
The SAARC comprises Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, and Sri Lanka.
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