Relations between India and Pakistan are cratering following a deadly attack in the disputed Himalayan region of Jammu and Kashmir that left more than two dozen tourists dead, raising fears of military escalation between the nuclear-armed rivals.

It was the deadliest attack against civilians in years in Kashmir, a region claimed by both India and Pakistan that has been racked by violence for decades.

India and Pakistan's reciprocal actions following the killing of 26 men by suspected militants at a tourist spot in Kashmir are set to further curtail trade, which has more than halved since 2018, trade analysts and exporters said.