South Asia suffers from low levels of regional integration, high rates of poverty and is among the regions with lowest levels of human development. With the pockets of poverty deepening in South Asia, combatting poverty has remained a priority issue in its development agenda as well as in its regional integration efforts. In this context, this study analyses the possible impacts of improved regional integration in South Asia on poverty and welfare in the region. An empirical analysis identifies the potential to improve integration via trade in goods, trade in services, and investment in the region. Furthermore, regional cooperation in migration, food security and energy are discussed in detail, identifying the challenges the region faces and the scope for regional cooperation.