"The SAARC Regional Railways Agreement will strengthen transport connectivity in the SAARC region. Strengthened rail and transport connectivity will not only provide stimulus to the economic development in the region as a whole but also promote social and cultural contact and encourage tourism amongst the member states.

"The Regional Rail Agreement will also enable low-cost, energy-efficient and environmentally sustainable transportation in the SAARC region and provide trade and economic links for the land-locked countries and semi-isolated regions," the official statement said.

The SAARC region is considered one of the least networked regions in terms of physical and soft connectivity leading to high costs and low volumes of trade, recognizing which the leaders of the SAARC countries agreed that better transport infrastructure and linkages among their countries was necessary.

A study, the SAARC Regional Multi Modal Transport Study (SRMTS) in 2005 undertaken by the SAARC Secretariat had recommended multilateral agreements permitting free movement of people, goods and services within the region in the road and rail sector and this was endorsed by the SAARC countries at the summit level and transport ministers meetings, it said.

Accordingly, the Regional Rail Agreement (RRA) was drafted by India for Saarc countries in 2008. Since then, the draft agreement has been discussed in the three meetings of the Expert Group on Regional Rail Agreement and in the meetings of Inter-Governmental Group on Transport (IGGT).

 The text of the agreement proposed now for signing was finalized in the 5th IGGT held in New Delhi September 30, 2014.