The long-standing mutual embargo on direct trade between India and Pakistan and the severe restrictions on personal travel have acted as significant brakes on the South Asia's economic development. Their effects have been particularly pronounced in Kashmir. Prior to 1947, almost all of the external trade of the Vale was funneled westward along the Jhelum River and through the Baramula Gap to what are now Azad Kashmir and Pakistan. Since then that trade has been rerouted southward across the Pir Panjal Mountains, initially via the high Banihal Pass and now, by a somewhat lower route, via the Jawaharlal Nehru Tunnel to Jammu and other destinations in India. However, even on the latter route, transport is costly and undependable because of frequent landslides and heavy winter snows. Among the attractions of the proposals in this document to create one or two sovereign Kashmiri entities is that doing so would provide an opportunity to establish in Kashmir a free-trade zone with borders open to the free flow of peoples, goods, and services to and from both India and Pakistan. This would lead to more economically rational trade and transportation patterns, enhance the volume of tourism, help restore social and cultural ties shattered by the de facto partitioning of the state, and speed the reconciliation of former adversaries.

Initially, overland travel and trade across the borders of the Kashmir entity or entities might be channeled through a small number of border crossing points on the principal highways linking that area to the outside world. But, as the volume of traffic increases, especially in regard to tourism, the number of crossing points could be greatly expanded.

If, as anticipated, the system of free trade and open borders proves to be workable, even greater benefits could be realized by extending it to the whole of the erstwhile state of Jammu and Kashmir. And if, as is also anticipated, doing so results in further economic, social, and political benefits, there is no reason why, in the fullness of time, a system of free trade and travel should not be made to apply along the whole of the Indo-Pakistani border or even to the entire SAARC region.