Having gained independence from British colonial rule in 1947,India and Pakistan have not been able to live in peace with eachother. Military confrontation has ranged from low to high intensityconflict. As a consequence, the economic development of bothcountries has been undermined. Since their overt nuclearisation in1998 both countries have been earnestly trying to address theirdifferences in order to avert a nuclear confrontation. Anassessment of the costs of conflict between India and Pakistanshould take into account considerable economic and developmentlosses as well as the low levels of bilateral trade between Indiaand Pakistan. Globalisation of the world economy makes itimperative for India and Pakistan to modify their national securitypolicies with a