Nikita Singla’s article, Facilitating Confidence-Driven Trade in South Asia published by the Carnegie Endowment for International Peace, examines the prolonged suspension of trade between India and Pakistan since 2019 and its economic and social consequences. The trade halt, triggered by political tensions following the Pulwama attack and India’s revocation of Article 370, has severely impacted border communities and businesses reliant on cross-border commerce.
The article highlights how South Asia remains one of the least economically integrated regions, with intra-regional trade at a mere 6–8%. Confidence-building measures (CBMs) are essential to fostering stability and trust, as evidenced by successful examples such as Brazil-Argentina nuclear cooperation and the Karachi-Chittagong trade link. Historical trade ties between India and Pakistan, once robust, have drastically declined, underscoring the need for renewed engagement.
Singla argues for a three-pronged strategy to restore trade ties: providing alternative economic opportunities for border traders, re-establishing rules-based international trade, and strengthening regulatory frameworks. Recommendations include improving rail and air connectivity, reinstating the South Asian Free Trade Area (SAFTA), launching a joint trade portal, and implementing product-specific collaborations. The article also advocates for digitisation, infrastructure upgrades, dispute resolution mechanisms, and enhanced compliance programs like the Authorized Economic Operator (AEO) initiative to facilitate secure trade.
Ultimately, the piece underscores that fostering a trust-based trade ecosystem through CBMs, transparency, and regulatory reforms could not only benefit India and Pakistan but also contribute to greater regional economic stability.
