South Asian industry officials said on Thursday that continued tension between India and Pakistan, the two regional powers, was preventing the abysmally low volume of trade in the impoverished area from growing.

South Asia, home to around a quarter of the world's six-billion-plus inhabitants, accounts for less than one per cent of total global trade, which officials are not optimistic will increase soon.

"South Asia's share of world trade is embarrassing," Padma Jyoti, president of the South Asian Association for Regional Cooperation's business chamber, told a news conference in Kolkata.

Jyoti heads SAARC's Chamber of Commerce and Industry, the apex South Asian business grouping, which is meeting in Kolkata this week.

"We have not made progress due to political differences between some countries," Jyoti said in a reference to tensions between India and Pakistan.

Other nations in SAARC, which represents a region where 40 per cent of the people live in poverty, include Bangladesh, Bhutan, Maldives and Nepal.

India, South Asia's largest economy, and Pakistan, the region's second-largest, have fought three wars, two of which have been over the disputed region of Kashmir. The two nuclear-armed neighbours came to the brink of a fourth conflict last year.

A Pakistani ban on Indian commercial flights over its airspace remains in place and businessmen of both countries complain that getting visas is very difficult.

Tensions between India and Pakistan have also blocked an agreement on a South Asian free trade zone.

"Politics between India and Pakistan has hurt moves to develop trade relations in South Asia, particularly between India and Pakistan themselves," Jamil Magoon, a leading Pakistani businessman and SCCI vice-president, told reporters.

"There is lot of potential for trade. For example, India can export cycles, medicines and motorcycles to Pakistan and Pakistan can sell rock salt and molasses to India's liquor industry."

Official trade between India and Pakistan in the past year to March 31, 2002 stood at a measly $250 million, but industry officials said trade through third countries like the United Arab Emirates and Singapore is around $1 billion annually.

"We are losing a huge opportunity to develop trade in the region and fight poverty together," India's A C Muthiah, SCCI vice-president, told Reuters.