An what do you think ISROs proposal is?
The plan/offer is still very vague, but going by the article that was posted, it could be an earth observation satellite.
Considering the issues like necessities of member states, cost, time, and expertise required for development and launch of a satellite, the best option for India could be to develop an Earth observation satellite as the first SAARC satellite. Basically, such a satellite could be of much use for land and water resources management for the entire region. India would also be expected to assist member states to develop ground infrastructure and create expertise. Some analysts believe that, at times, SAARC gets held hostage to the divergence of the India-Pakistan relationship. In fact, satellite technology could come very handy to silence such critics. As confidence building measures, such technology could be used to undertake joint surveillance of the border regions and resolve issues related to infiltration, water sharing, and more.