SAARC Summit for Power Grid

No Deal on Road and Rail

A brief meeting between India's Prime Minister Narendra Modi and his Pakistani counterpart on Thursday salvaged a summit of South Asian leaders, with all eight countries clinching a last-minute deal to create a regional electricity grid.

Pakistan, which still refused to sign two other planned pacts to boost cross border road and rail traffic, was increasingly sidelined at the summit.

India and Pakistan have been trying for years to strike a deal to share energy across their heavily militarized border in Punjab, but Pakistan's army has resisted the effort. After Thursday's pact it was not immediately clear if the army was on board.

The pact at the summit's closing ceremony in the Nepali capital, will buttress Modi's ambition for South Asia to become a viable economic counterweight to China, which has made sweeping inroads in the region.

Modi shook hands with Pakistani Prime Minister Nawaz Sharif at Dhulikhel mountain retreat outside Kathmandu and then again before the curtain went down on the conference. Television showed the two men smiling and exchanging a few words.

Except for these brief exchanges, the two leaders had spent most of the summit cold-shouldering each other, however.

Despite a free trade pact in force since 2006, high tariffs and curbs on movement limit trade among South Asian nations to just five percent of their total trade.

The grouping's failure to foster closer ties over the past three decades has left the way open for China to step in, by helping to build ports and roads.

China has observer status at SAARC. Vice Foreign Minister Liu Zhenmin on Wednesday promised $30 billion for road building in South Asia over five years, and suggested increasing trade to $150 billion over the same period.

Modi announced an easier regime for business and medical visas and promised to lower India's trade surplus.