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Cross‐border informal trade is one of the most important issues between India and Bangladesh. It takes place between people who live a short distance apart, but who find themselves separated by an international boundary. The people of international border areas believe that cross‐border informal trade is a process to maintain a sustainable livelihood because it provides a livelihood to the unemployed. This research has analysed the nature and impact of informal border trade between India and Bangladesh. It has highlighted the sources of security and insecurity through the process of informal border trade. It also analyses the different socio‐economic conditions of informal border trade in border trade prone areas. This research argues that although informal border trade is considered illegal, it is necessary for the maintenance of the livelihood for the poor in the bordering areas. The state failures in fulfilling the needs of the poor force them to involve themselves in informal border trade. [ABSTRACT FROM AUTHOR]