Indian Prime Minister Manmohan Singh will lead the eight-member regional grouping that kicked off in Dhaka in 1985 with a shared vision of a prosperous South Asia.

The outgoing chair, Chief Adviser to Bangladesh's caretaker government Fakhruddin Ahmed, handed over the helm to the Indian prime minister in the inaugural session of the 14th Saarc Summit that began at Vigyan Bhaban.

Afghanistan was formally admitted to the Saarc through the signing of a joint declaration by the South Asian leaders at the opening session of the summit.

Saarc leaders shook hands with Afghan President Hamid Karzai, who is leading his country to the summit. Addressing the opening session, Karzai said Kabul's political and economic isolation must never be repeated.

"Instead, enhanced economic cooperation must be pursued for the sake of regional economic and political stability," he said.

"Terrorism and criminality plagued Afghanistan with detrimental consequences for all of us, Karzai told the august assembly of South Asian leaders. "Therefore, it's our common duty to fight extremism and terrorism in all forms and sources, including political sponsorship and financing," he said.

He said the Afghan people are eager to learn from regional experiences in many endeavours, including micro-finance projects in Bangladesh, rural development in India and oil and gas exploration in Kazakhstan.

About energy cooperation, Karzai suggested speeding up the process of Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline and its expansion to other Saarc countries should be a priority to the regional forum.