In June 2014, Prime Minister Narendra Modi had asked ISRO to develop the satellite which can be dedicated as a "gift" to the neighbouring countries.
After Pakistan, which pulled out of India-mooted South Asian Satellite Project, Afghanistan too has shown no interest in the venture.
Sources said Afghanistan has tied up with a European company for its space-related needs.
"We had several rounds of discussions with Afghanistan.
At one point they demand a particular thing and we have an agreement. In the next meeting, they would put forth some other demand.
"Another issue was the location of the satellite. The location where India and Afghanistan wanted to place their satellite in the orbit was more or less the same," an official involved in the negotiations said.
Sources said Bangladesh too is not very keen on the satellite project as it is set for launch of its own geostationary communications satellite Bang Bandhu-1.
However, Sri Lanka, Bhutan, Maldives and Nepal are still keen on taking the project forward and talks are on with these countries.
In June 2014, Prime Minister Narendra Modi had asked ISRO to develop the satellite which can be dedicated as a "gift" to the neighbouring countries. He had also made the announcement at the SAARC summit in Kathmandu.
India had held deliberations with experts from other SAARC countries to finalise modalities for the satellite exclusively for the regional grouping.
The expenditure on the ground system of the proposed South Asian Satellite Project will be borne by the regional bloc countries, while India will bear the expenses to be incurred on building and launching it.
"The objective of this project is to develop a satellite for the SAARC region that enables a full range of services to all our neighbours in the areas of telecommunications and broadcasting applications like television, DTH, tele-education and disaster management," the official added.
The satellite is to be launched in December this year.
Since the beginning, Pakistan had insisted that the project be brought under the ambit of SAARC, which was opposed by India. Following this, Pakistan opted out of the project.
India has made it clear that it will go ahead with the project irrespective of whoever is on board.