The low level of intra-regional trade in South Asia reflects deeper trust and security deficits. Analyse the roots of this deficit and its impact on regional economic potential. Also suggest a pathway for balanced progress.

Topic: India and its neighbourhood- relations

Q3. The low level of intra-regional trade in South Asia reflects deeper trust and security deficits. Analyse the roots of this deficit and its impact on regional economic potential. Also suggest a pathway for balanced progress. (15 M)

Difficulty Level: Medium

Reference: TH

Why the question
In light of renewed diplomatic tensions after the Pahalgam attack (2025) and World Bank reports on South Asia’s declining trade-to-GDP ratio

Key Demand of the question
The question asks for an analysis of trust and security deficits affecting intra-regional trade, an evaluation of their economic impact, and suggestions for balanced regional progress.

Structure of the Answer:
Introduction
Mention South Asia’s low trade integration (5–7%) despite geographic proximity, driven by deep-rooted political and security barriers.

Body

• Trace historical, political, and security factors contributing to trust and security deficits.
• Examine impacts on trade flows, regional value chains, investment climate, and development outcomes.
• Recommend institutional reforms, sub-regional cooperation models, and security dialogues to rebuild trust and enable sustainable integration.

Conclusion
Call for pragmatic, phased engagement to unlock South Asia’s trade potential.