This study aims to explore the border effect between Pakistan and India. Disaggregated data of CPI as well as data of nine commodities is used for 12 cities of each country. Mixed results are seen for CPI group and for individual commodities. Cross border price variation is higher as compared to intra-country price variation which indicates the importance of national frontier. Transportation explains some part of price variation. Exchange rate instability appears as a major factor of cross border price variability; its impact is larger for disaggregated data of CPI and relatively smaller for commodities. Negligible role of non-tradable services in border effect reduction is also observed in this study. The impact of SAFTA in border effect reduction is still questionable. Overall the border effect is higher for commodities groups as compared to CPI data set. Supervisor:- Dr. Hasan Muhammad Mohsin