Past studies have shown that cost of doing trade within the south Asian sub-region is markedly higher than average costs incurred in other intra-regional trade cases across the globe. Geographical proximity and huge market sizes with scale economies have hardly benefitted South Asian traders in regional markets because of the incidence of many different types of trade barriers, non-tariff barriers (NTBs) in particular. As a result, intra-regional trade in South Asia remains very low, despite the application of lower preferential tariff rates on a range of products with high trade potential under the South Asian Free Trade Agreement (SAFTA). Incidence of non-tariff barriers and consequent high costs in trade between India and Pakistan, the two largest economies in South Asia, assumes particular importance in the regional context.

Efforts to reform NTBs face certain inherent difficulties and have remained at a nascent stage in South Asia. Generally, NTBs are categorised into policy induced barriers and others, wherein the former are disciplined using enforceable laws and the latter are addressed through non-enforceable voluntary commitments, international aid, technical assistance and capacity building. As regards the former category, the debates on NTBs revolve around the legitimacy of the policy in question and the legal requirements which determine legitimacy, while their trade distortive effects are not given adequate attention. In the latter category of non-policy related NTBs, high costs of reforms measures and budgetary constraints often act as deterrents.