Neighbourhood turmoils

South Asian region will recede from India's focus due to tensions with Pakistan and Bangladesh

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At a time when adverse headwinds buffet global trade, India is intensifying its trading relationships with important developed and developing countries. However, South Asia remains a diminishing focus due to its tensions with Pakistan and Bangladesh, contrary to economic theory which states that neighbours often tend to trade more with each other. Bilateral trade with Pakistan has in any case been in deep freeze since the Pulwama terrorist attacks in 2019 and April this year in Pahalgam.

The recent regime change in Bangladesh is adversarial to India's interests and has now led to a tit-for-tat closure of land borders, which is bound to impact bilateral trade with our most important trading partner in the region. India's restrictions have hit Bangladesh's mainstay of readymade garment exports, among other commodities. Trucks are piling up at Petrapole, which is the largest land port in South Asia on the international border between India and Bangladesh and accounts for 30% of land-based bilateral trade.