Diversity in primary energy sources in South Asian countries and their electricity demand patterns open up opportunities for greater use of cheaper, cleaner resources for electricity generation, reducing fossil fuel use in the region.

Such sharing of resources through electricity trading requires electricity transmission system strengthening including planning and development of cross-border transmission lines. The paper presents the economic and reliability benefits of electricity trading among the South Asian countries with case studies involving six cross-border transmission lines:

•Bhutan-India additional grid reinforcement,

•India-Nepal 400 kilovolt transmission link under construction,

•India-Sri Lanka proposed high voltage direct current transmission link which includes a submarine cable component,

•Bangladesh-India high voltage director current transmission link which was commissioned in October 2013,

•India-Pakistan 220 kilovolt and 400 kilovolt transmission link and

•India-Pakistan 400 kilovolt transmission link coupled with CASA 1000 transmission link.

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The paper emphasizes the need to construct these transmission interconnections in an orderly manner, extending the existing power exchanges in India to accommodate regional trading and strengthening legal and regulatory regimes. A market-driven process for cross-border power trading together with a regulatory framework that enforces a strong economic discipline would maximize the benefits from the development of interconnection projects.