Outlining a new vision for SAARC, Prime Minister Manmohan Singh [Images] on Saturday asserted that there should be 'zero tolerance' for cross-border terrorism among member states and made far-reaching proposals for stepping up economic cooperation, enhanced air connectivity and setting up of a regional mechanism for disaster relief and management.

Addressing the twice-deferred SAARC Summit in Dhaka, he said no SAARC nation should allow its territory to be used against the interests of another member state.

"There should be zero tolerance for cross-border terrorism and for the harbouring of hostile insurgent groups and criminal elements," he said.

• Read highlights of this speech here

India has been concerned over terror camps operating in Pakistan as also north-eastern insurgent groups operating from Bangladesh.

"It is only in an environment of mutual confidence and a collective commitment against the scourge of terrorism, that we can register the progress we desire in more intense interaction," he said.

Underscoring the need for regenerating the arteries of transport and communication in the region, the Dr Singh suggested that the South Asian countries should agree to provide each other, reciprocally, transit facilities to third countries, not only connecting one another, but also connecting to the larger Asian neighbourhood, in the Gulf, Central Asia and the South East Asia.

• First Look: SAARC turns 30

"India, which borders each of the members of South Asia, is willing to do so," he said. Highlighting the need for improved air services among SAARC countries, Singh took the initiative announcing that India was prepared to offer to all SAARC neighbours 'on a reciprocal basis and without prejudice to existing rights, the facility of daily air services by designated airlines' to Delhi [Images], Mumbai, Chennai, Bangalore, Hyderabad and Kolkata besides 18 other destinations all across India.

The prime minister followed this up by offering designated airlines of SAARC countries the facility to exercise fifth freedom rights, both intermediate and beyond, with the SAARC region, also on a reciprocal basis.

In his address, Singh indicated the need for countries to change their mindsets. "The challenges we face as a region and as members of the larger international community are no longer susceptible to purely national solutions," he said.

"There is an imperative need to change and overcome the divisions of history and politics to forge a new architecture of mutually beneficial economic partnership. India, for its part, remains ready for this endeavour," he said.

The Summit of the seven-nation grouping comprising India, Bangladesh, Pakistan, Sri Lanka [Images], Nepal, Maldives [Images] and Bhutan, was first postponed in January in the wake of the tsunami disaster and again in February when India pulled out expressing serious concern over the security situation in Bangladesh and developments in Nepal.

Unprecedented security apparatus has been put in place manned by over 30,000 personnel to ensure that the Summit went off peacefully. Observing that food security was a major challenge for all South Asian countries, Singh recommended establishment of Regional Food Bank to which all member states would contribute. This could be used to meet shortages and losses caused by natural calamities in any of these countries, he said.

Emphasising the need for promoting regional cooperation in strategising for the future, Dr Singh proposed a South Asian Energy Dialogue involving experts, academics, environmentalists, officials and NGOs, to recommend measures to tap this potential.

The prime minister regretted that not a single project proposal had been received relating to utilisation of the Poverty Alleviation Fund for which India had offered to contribute $100 million a year back on the understanding that this money would be used entirely on projects with SAARC but outside India.

India, he said, welcomed the decision to merge the different existing and proposed funds into an Umbrella South Asian Development Fund with different windows for different purposes. As a step in the direction of creating a South Asian Economic Union by 2020, Singh recalled that at the July Ministerial meeting it was recommended that a SAARC High Economic Council be set up, which could promote initiatives in economic, trade, finance and monetary areas with a view to moving towards regional economic integration.

Noting that South Asia possesses a very rich and living tradition of exquisite handicrafts and textiles, he conveyed India's readiness to establish a SAARC Museum of Textiles and Handicrafts.

The Museum could sponsor training of craftsmen, foster design skills, hold promotional events such as fashion-shows and demonstrations by artisans and also undertake research, the prime minister said adding setting up of retail outlets in each of the SAARC capitals could be explored to promote their textiles and handicrafts region-wide. Singh also announced India's offer to hold a South Asian Car Rally in the run-up to hosting the next Summit in the first half of January 2007. It would symbolise vividly regional identity of SAARC and also underline the urgent need to improve transport infrastructure in these countries, he said.

To provide an enabling environment and world-class facilities to talented people in the region, the prime minister suggested that the member states pool their resources to create a centre of excellence in the form of a South Asian University. India is willing to make a major contribution to the realisation of this project over the next three to four years, he said.

Observing that regional economic cooperation in South Asia has fallen far short of expectations, he hoped that SAFTA would come into force by January 1, 2006. Singh also announced India's offer to hold a South Asian Car Rally in the run-up to hosting the next Summit in the first half of January 2007. It would symbolise vividly regional identity of SAARC and also underline the urgent need to improve transport infrastructure in these countries, he said.

To provide an enabling environment and world-class facilities to talented people in the region, the prime minister suggested that the member states pool their resources to create a centre of excellence in the form of a South Asian University. India is willing to make a major contribution to the realisation of this project over the next three to four years, he said.

Observing that regional economic cooperation in South Asia has fallen far short of expectations, he hoped that SAFTA would come into force by January one, 2006. Contending that it was important to assess South Asia regional cooperation in the larger Asian context, the prime minister said, ASEAN was evolving rapidly into a truly integrated economic community.

"My question is, is SAARC prepared to be an integral part of this emerging Asian resurgence or is it content to remain marginalised at its periphery?

"If our region wishes to be a part of the dynamic Asia, which is emerging in our neighbourhood, then we must act and act speedily," he stressed.

Referring to disasters afflicting the region, he said the Summit should evolve regional mechanisms for effective and timely cooperation in disaster relief and management.

India's offer to host the SAARC Centre for Disaster Preparedness has been accepted by all member states.

He said the possibilities for meaningful cooperation range from early warning systems to relief and reconstruction.