The seven nations of southern Asia, which account for one-fifth of world's population, took the first halting steps last week toward overcoming decades of hostilities and achieving regional cooperation.

While internal tensions in a far-off corner of the world ordinarily would be of little concern elsewhere, southern Asia has found itself in recent years swept into the East-West super-power rivalry, with the Soviet invasion of Afghanistan and moves by both sides to expand militarily into the Indian Ocean.

The effort here last week to bury mutual suspicions enough to form a cooperative front to deal with major regional issues was only partly successful. The differences are still so great that the foreign secretaries of the seven countries could not agree to move the talks up to the next level officialdom, the foreign ministers, and instead decided simply to meet again within six months.

The foreign secretaries picked five subjects for possible regional cooperation: agriculture, rural development, communications, weather, health and population activities.

While these are far less than Bangladesh President Ziaur Rahman had in mind when he proposed a meeting on regional cooperation, diplomatic observers here said they appear to be a good starting point for nations that are so close geographically but so far apart in mutual confidence.

"Considering the mistrust among the countries in the region, the most significant thing is that the meeting took place at all," said a high-ranking and well-informed southern asian diplomat.

The meeting was held, in fact, because neither of the two most powerful countries in the area -- India and Pakistan -- wanted to bear the onus of refusing to come even though they both had serious, although different, reservations about a regional grouping.

The idea was suggested last May by Zia, who called for a summit conference of the seven southern Asian nations -- Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka.

India, the major power of the region, feared that the other nations would use a regional grouping to gang up on it and break its hold on such vital matters as trade with its neighbors, control of Ganges River waters that flow through Bangladesh and the development of hydroelectric power with Nepal.

Pakistan, the most hesitant of the seven, feared the opposite: that the creation of a regional organization would allow India to increase its domination over the area. Pakistan long has resented the "big brother" attitude it feels India takes toward it and the rest of the area.

Complicating the scene, the Sri Lankan government, while playing host to the meeting, has begun looking eastward toward the developing Asian countries such as Singapore rather than northwest toward the southern Asian subcontinent.

Sri Lankan President J. R. Jayewardene makes no secret of his dislike for Indian Prime Minister Indira Gandhi, who publicly deplored his country's stripping former Sri Lankan prime minister Sirimavo Bandaranaike of her right to vote and take part in politics.

A common concern of the seven countries is that they sit in the middle of a major area of East-West confrontation.

The region is bordered by Afghanistan, now occupied by 85,000 Soviet troops, and the Indian Ocean, which the United States considers vital for the protection of key oil lanes from the Persian Gulf to Western Europe and Japan. U.S. and Western European naval vessels patrolling the ocean have drawn a corresponding fleet from the Soviet Union, which is establishing bases on the ocean's northern fringes.

The new position of prominence in world power politics and the Soviet invasion of a neighboring state have aroused fears among nations of southern Asia but the effect has been to worsen tensions among them rather than pulling the region closer together.

Pakistan, for instance, appears likely to become a Western-armed frontline state against further Soviet advances from Afghanistan -- a move opposed by India, which is Moscow's best friend in the noncommunist world and the only country in the region not to condemn its invasion of Afghanistan in December 1979.

Even the little island-chain nation of the Maldives has been drawn into the East-West conflict. According to reliable reports here, the Soviets are trying to get hold of a former British military air base on the island of Gans, the southernmost in the chain, which is just 240 miles from the vast U.S. air and naval installation on the British-owned island of Diego Garcia.

Even without those external undercurrents, the differences between southern Asian nations run deep.

The key forces revolve around India's predominate place in the region as the largest, most heavily armed and technically proficient nation in southern Asia, and the continuing tensions between it and Pakistan. The two nations have fought three wars since they were carved from British India almost 34 years ago and they now appear headed for a nuclear arms race.

There also are many differences between India and her smaller neighbors. They range from India's desire to control Bhutan's foreign policy and an attempt to keep Nepali-made Coca Cola from India to the knotty problem with Bangladesh over water rights.

They have led to such strains that Bangladesh public pressure forced the government to stop negotiations for the sale of natural gas to India that could have been beneficial to both sides. This animosity toward New Delhi holds true despite the aid India gave in securing Bangladesh's independence from Pakistan -- help that is resented these days in Dacca.

To avoid breaking up any regional grouping before it was even formed, the foreign secretaries yielded to India's insistence that bilateral and "contentious" issues be avoided. Furthermore, all decisions are to be unanimous -- thus ensuring that India cannot be outvoted by its smaller neighbors.

The lack of confidence among the seven regional neighbors is reflected in many simple ways. It took, for example, overnight trips for many diplomats to reach here because there are direct flights between Colombo and only two other southern Asian capitals -- Mali in the Maldives and Katmandu, Nepal

Similarly, it is much easier for any of the seven capitals to communicate with Europe and the United States than with each other. Messages between India and Pakistan regularly are routed via London or the United States and there are no direct telex lines between Dacca and New Delhi.