Dear Readers,

The mood in South Asia is undeniably heavy. India and Pakistan’s longstanding rivalry—rooted in historical, political, and territorial disputes—has flared up once again. But this time, the pressure feels sharper and the stakes higher. While headlines focus on the tensions between these two nuclear-armed neighbors, there’s a lot more happening behind the scenes: think U.S.-India trade talks and regional power plays. Here’s what you need to know this month.

India-Pakistan Ties Hit Rock Bottom

On April 22, a brutal terrorist attack in Pahalgam, Indian-administered Kashmir, left 26 civilians dead—25 Indian nationals and one Nepali citizen. The attack jolted the region and thrust the Kashmir dispute, and forever volatile India-Pakistan relations, back into the international spotlight. 

India immediately blamed the attack on Pakistan-backed elements, citing "cross-border" links. Pakistan rejected the allegations.

But the diplomatic fallout was swift and sharp. India announced a raft of retaliatory measures, most notably placing the Indus Waters Treaty (IWT) of 1960 into abeyance, an unprecedented step. It also suspended all SAARC Visa Exemption Scheme (SVES) visas issued to Pakistani nationals and ordered a cut in diplomatic staffing on both sides.

Pakistan responded in kind: suspending all trade, including via third countries; cancelling SVES visas for Indian nationals; closing its airspace; and declaring any disruption to river flows under the IWT as an act of war.

Meanwhile, tensions on the ground have been far from rhetorical. Reports of cross-border firing continue to surface, and the risk of military escalation hangs thick in the air.

Global capitals have condemned the attack and offered support and condolences to PM Modi. China, Pakistan’s all-weather ally, voiced support for Islamabad and called for restraint and an impartial investigation. The United States said it was in touch with both sides and urged a responsible solution, with President Trump remarking that he’s close to both countries and that “they'll figure it out one way or the other.” The UN Security Council also condemned the attack unequivocally, calling terrorism in all its forms “one of the most serious threats to international peace and security.”

Why It Matters: This is the most serious India-Pakistan flare-up in years. The suspension of the IWT, long seen as a rare pillar of bilateral cooperation, signals a deeper erosion of trust. As environmental and geopolitical pressures mount, the region’s transboundary rivers (not just the Indus, but also the Ganges and Brahmaputra) are increasingly at risk of becoming deeply politicized. Water security could become the next fault line in South Asia’s already precarious landscape.

As nationalist fervor builds and media narratives harden on both sides, the risk of further escalation remains real, with grave regional and global ramifications. The days ahead will be critical in determining whether tensions subside or spiral into another dangerous cycle of retaliation. Along with China, the United States is also keeping a close eye on the situation. Last week, Secretary of State Marco Rubio spoke with leaders in Islamabadand New Delhi , calling on both sides to de-escalate tensions and uphold peace in South Asia.

Vance in India and Trade Talks

While the tragic terror attack in Pahalgam cast a shadow, U.S. Vice President J.D. Vance’s recent trip to India with family marked an important moment in the steady cadence of high-level U.S.-India engagements under the new administration. Though largely personal in tone, the visit subtly advanced a strategic function: reinforcing momentum on the bilateral trade negotiations.

In Jaipur, Vance made it official that Washington and New Delhi have finalized the terms of reference for comprehensive trade talks, adding that U.S.-India cooperation could shape a prosperous, peaceful 21st century. 

Why It Matters: U.S.-India trade talks are holding steady on the glide path toward a deal. Both President Trump and Treasury Secretary Bessent say an agreement is within reach. New Delhi is also reportedly prepared to offer Washington a forward most-favored nation (MFN) clause. Still, trade deals are rarely straightforward and take time to negotiate. While momentum is real, a number of delicate trade-offs remain. Whether this ends in a limited “mini-deal” or the more ambitious BTA could hinge on last-mile diplomacy ahead of the Quad summit later this year.
 

Moves in the Neighborhood

Earlier in April, PM Modi visited Sri Lanka at the invitation of President Dissanayake, who himself chose New Delhi for his first official trip after taking office last year. The visit saw the signing of seven key pacts, including a standout agreement to develop an energy hub with participation from the UAE. PM Modi was also honored with the Sri Lanka Mitra Vibhushana, the country’s highest civilian award for a foreign leader, underscoring the warmth and symbolism of the visit.

PM Modi’s Colombo stop came right after the BIMSTEC summit in Thailand, where he had a noteworthy interaction with Bangladesh’s Dr. Yunus. The two met on the sidelines for a candid exchange where Dr. Yunus reportedly raised concerns about Sheikh Hasina’s remarks from exile in India, urging New Delhi to rein in the rhetoric. PM Modi called for restraint on Dhaka’s side too, warning against language that could further sour the mood. The conversation also touched on long-standing issues like water sharing and the treatment of minorities.

Why It Matters: India’s growing engagement with Sri Lanka reflects a conscious effort to strengthen its Neighbourhood First policy and SAGAR initiatives. With Colombo focused on economic recovery, India’s role in sectors like energy and infrastructure could be pivotal. But there’s more at play as closer ties with Sri Lanka also help New Delhi push back against some of China’s regional influence. 

It’s also worth noting that last week, Sri Lanka’s Defence Secretary was in Pakistan for the fifth bilateral defense dialogue, a reminder that while ties with India are deepening, Colombo is still keeping its broader network of regional relationships active.

And while the brief meeting with Dr. Yunus didn't rewrite the script on India-Bangladesh ties, it did offer a starting point for cautious engagement. In a neighborhood often defined by political friction, even small steps toward dialogue should be on the radar.
 

Critical Minerals: A New Frontier for Pakistan?

Critical minerals have quietly become the backbone of 21st-century industrial growth. Now, Pakistan is positioning itself to enter this high-stakes arena.

At the Pakistan Minerals Investment Forum 2025, held in Islamabad last month, officials rolled out an ambitious vision to shift Pakistan’s image from an underutilized resource holder to a key global supplier. PM Shehbaz Sharif declared that tapping into the country’s estimated “trillions of dollars’ worth of mineral reserves” could finally break Pakistan free from its decades-long dependency on IMF bailouts. At the heart of this new push is the Reko Diq project, one of the world’s largest untapped copper and gold reserves, that’s projected to yield around $74 billion in free cash flow over the next four decades.

Why It Matters: Eric Meyer, Senior Bureau Official for the U.S. State Department’s Bureau of South and Central Asian Affairs, visited Islamabad for the investment forum and held meetings with both PM Sharif and COAS Asim Munir, conveying an interest in critical minerals cooperation. For Pakistan, this could open the door to a more diversified engagement with the United States.

Pakistan’s mineral sector offers real potential, but its success depends on sound governance, and security and political stability. Missteps could risk repeating the trajectory of CPEC, which was high on promise but short on delivery.

Stay Tuned!

With India-Pakistan tensions rising and U.S. trade talks with regional countries moving forward, South Asia remains on edge and in focus, and we’ll be tracking every turn.

Warmly,
Farwa Aamer

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