The present study is part of a research project at ICRIER on India’s Informal Trade with Sri Lanka and Nepal, which is being carried out in collaboration with the International Center for Ethnic Studies, Colombo and the Nepal Council for Development Research under the aegis of SANEI. This paper prepares quantitative estimates of the informal trade between India and Sri Lanka and spells out the institutional mechanism that governs such trade. The study is based on an extensive survey carried out in the Indian cities of Chennai, Trichy, Thiruvananthapuram, Tuticorin, Mumbai and Rameshwaram.