TURKISH CENTER  for ASIA PACIFIC STUDIES

Business Environment, Economy, and the Flow of FDI in South Asia: Issues and Prospects

 

Dr. Bama Dev Sigdel

Non-Resident Distinguished Fellow, Turkish Center for Asia Pacific Studies, Ankara, Turkey

 
APAC Report · November 2025

Executive Summary

South Asia has made significant economic progress, particularly since the 1980s. Economic reforms and a commitment to globalization have fueled growth across individual South Asian countries. Alongside government initiatives, the private sector has played a critical role in the region’s economic transformation. South Asia offers a vast market of 1.5 billion people, creating immense opportunities for trade and investment both within and beyond the region. Regional forums such as SAARC and BIMSTEC have further opened avenues for trade and investment. However, challenges such as inadequate transit infrastructure, non-tariff barriers, and limited intra-regional investment continue to hinder private-sector-led growth (ADB/FICCI, 2010).

The South Asian region comprises eight countries with diverse economies, cultures, ethnicities, and political systems: Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, and Sri Lanka (Shahid & Ahmed, 2021). It also boasts the world’s largest working-age population and a quarter of the global middle-class consumer base, concentrated primarily in urban areas (Dutta, 2023). This socio-economic diversity presents significant opportunities for trade, investment, and economic cooperation. South Asia, particularly India, as its largest economy, is playing an increasingly prominent role in the global economy (De, 2014).

Keywords: South Asia, FDI, Foreign Trade, and Development