Very few contiguous neighbours trade with each other in the ‘triangular' manner adopted by India and Pakistan. While most neighbouring countries trade through bilateral agreements, India and Pakistan are still in the negotiating process, with less than 2 per cent formal trade taking place between the two. Freer trade could usher in an era of better political understanding. However, it is possible that some vested interests have been discouraging this move as it could then put ‘Kashmir' on the backburner. Some resistance may also be coming from traders and manufacturers who fear disruptions and prefer to play it safe by keeping formal trade at a low level. That such suspicions still remain is evident by the fact that Pakistan has still not extended a Most Favoured Nation status to India.

Freer trade would go a long way towards curbing the illegal trade and smuggling regularly taking place along the 675 km of unfenced stretch in Rajasthan. Both nations stand to gain enormously with the opening up of the two markets. In tyres, drugs and food products, Pakistan would be the clear beneficiary. According to the UN Human Development Report, trade with India would make foodstuff 20 to 30 per cent cheaper in Pakistan. India could import fine cotton for its textile mills from Pakistan to increase its competitiveness.

Together, the two nations could leverage a middle-class market of 350 million people which would increase the inflow of foreign investment. But trade can only improve with more investment in roads and easier visas between the two countries. For this. strong political will and mutual trust about each other's economic policies — including those on subsidies — is important.