This chapter identifies the production network participation gap of the ‘PNP gap’ between South Asia and East Asia and within South Asia. It argues that although the newer theories of international trade associated with production networks and supply chains have both costs as well as benefits, the latter outweigh the former and there are significant dynamic network externalities associated with participating in supply chain trade. The chapter then argues that South Asian countries should implement the second round of ‘Look East’ Policies (LEP2) to (i) link themselves to production networks in East Asia and (ii) develop production networks in manufacturing and services within their region. An econometric analysis performed in this chapter helps us to identify the key determinants of supply chain trade and the components of the LEP2 that South Asian countries should implement. These are (i) improving the business environment by completing the reform process begun in the early 1990s, (ii) reducing logistics cost including promoting trade facilitation, (iii) joining and participating in various ongoing regional trade and financial cooperation efforts in East Asia, (iv) reducing communication and coordination costs in managing supply chains by improving Information Communication Technology (ICT), and (v) enhancing regional physical connectivity mainly through transport hardware.