The relaxation will also benefit Bangladesh, Nepal Maldives and Bhutan, sources said. The decision to extend increased market access to LDCs in South Asia would soon be taken by the Prime Minister's office in consultations with ministries of external affairs, commerce, agriculture and finance.

Since the European Union and the US would be present as observers at the Summit next month, the gesture would send a positive message about India's commitment to reach out to LDCs in its neighbourhood. India is also preparing a similar package for a wider group of LDCs under the WTO.

According to sources, it would also bring pressure on Pakistan, which has not opened up its market for India violating SAFTA that came into effect last year.

Under the SAFTA, the three non-LDC members - India, Sri Lanka and Pakistan - are required to bring their duties to less than five per cent in three years. "India could advance this date unilaterally," sources said.

While this package would bring goodwill to the country, it would not effect economic interests as India's $7 billion trade with SAARC is a small percentage of its global merchandise trade of over $300 billion.

Pakistan's refusal to open up its markets for India under the trade agreement is likely to figure at the SAARC Summit. Unlike other members, Pakistan allows concessional imports from India of only 1,075 items and everything else is closed for exporters here.