ANALYZING THE SIGNIFICANCE OF PAKISTAN-INDIA TRADE

The study examines the significance of Pakistan-India trade, focusing on their trade potential, impediments to their bilateral trade; political barriers and non-tariff barriers. For seven decades, troubles and tensions in Pakistan-India relations have directly affected trade ties between the two countries. The unresolved issues, especially the dispute over Kashmir, which is the bone of contention between the two countries, continue to impede the normalization of relations between the two countries, thus leading to socio economic damage on both sides of the border and also hampering regional trade. India`s reluctance to resolve the issues through negotiations, along with its aggressive policies towards Pakistan, has always been a factor in creating political and non-tariff barriers to trade between the two countries. Currently, trade between Pakistan and India takes place through three channels: formal trade, illegal trade, and trade through third countries. Pakistan is at the gateway to Central Asia via the 350-km-long Wakhan Corridor and can play the role of a bridge between the two regions (South Asia and Central Asia). The study provides policy recommendations for enhancing formal trade between the two countries. The recommended policies have strong grounds for streamlining trade when viewed through the lens of Comparative Cost Advantage Theory and Heckscher-Ohlin Theory