The first day of the two-day Saarc Standing Committee Meeting in New Delhi, comprising foreign secretaries, included discussions to operationalise the Saarc Development Fund (SDF) and a regional transport network ahead of the Saarc leaders' summit to be held in the Indian capital on April 3 and 4.

"We discussed taking Safta to the next level by including trade in services into the agreement. Currently the agreement only includes trade in goods. We are holding discussions about improving on it," said Indian Foreign Secretary Shivshankar Menon to reporters at a post-meeting press conference in New Delhi.

A committee of experts on Safta (South Asian Free Trade Agreement) had already discussed free trade in services in October, which included services like IT and telecommunication, banking and financial services and engineering services.

The overwhelming majority has implemented the Safta agreement and the outstanding problems, regarding Pakistan's reluctance to implement Safta over concerns regarding India, would be solved soon, Menon said when asked to explain the reasons for Safta being 'ineffective'.

Currently intra-Saarc trade constitutes only 5.6% of the total trade conducted by Saarc countries.

Menon said the Standing Committee unanimously decided to recommend granting Iran observer status in Saarc. This is the first summit to be attended by the five new Saarc observers: US, European Union, China, Japan and South Korea.

The committee also decided to recommend the creation of Saarc Food Bank to respond to food crises stemming from natural or other disasters.

The Indian foreign secretary also said that an inter-governmental body is fleshing out effective operational structures of a $300 million South Asian Development Fund. He said this is necessary to go from 'declaration' to 'implementation' by the Saarc countries.

Bangladesh acting Foreign Secretary Touhid Hossain stressed greater cooperation in the social sectors, particularly health, social development and national disaster management.

Dhaka also pressed the committee to have South Asian University campuses in all other Saarc countries, and not to have the university based solely in Delhi, Touhid said at a briefing for Bangladeshi reporters at Bangladesh High Commission in New Delhi.

Menon said this option is currently being considered and would involve searching for centres of excellence around the region that would hold campuses for each discipline.

He also said the foreign secretaries agreed the need to improve the intra-regional transport network in accordance with the Regional Multi-modal Transport Study that recommended opening up a Dhaka-Lahore corridor, with a possible extension to Kabul.

He said an inter-governmental expert committee on Transport would meet in 6 months to work out the role of each country and divide operations on a national, bilateral and regional bases.

During the meeting many countries suggested improving air links and lower tariffs, as part of the summit's focus on connectivity, he said.

Menon quoted the Sri Lankan foreign secretary as saying that she urged Saarc to implement the instruments included in the Saarc Regional Convention on Suppression of Terrorism.

A Saarc cultural function will be held in India in November, and there will be meetings of taskforces on micro-finance for women and another taskforce on the trafficking of women and children, Menon said.

The Standing Committee will draft these recommendations today and pass them on to the meeting of Council of Advisers comprising foreign ministers, who will then set the agenda for the Saarc leaders summit.