LoC trade can’t be de-linked from politics in the contested Kashmir region

Almost a decade old cross-LoC trade initiative between Indian and Pakistan administered Kashmirs that was intended to give people hope, and ‘heal wounds’ across the Line of Control (LoC) in Jammu and Kashmir is seemingly on the verge of closure due to policy lapse and lack of infrastructure.

This year, says Mohammad Tanveer, custodian of LoC Trade, tensions between the two nations suspended trade at LoC for over four months resulting a loss of over $12 million USD.

The limited trade program was adopted as a peace-building tool in 2008, the year when the Amarnath land row transformed into a massive agitation across the state. Since then, the trade saw many interruptions, often due to ceasefire violations by India and Pakistan, and has been under heavy police scrutiny following accusations of drug smuggling.

Suspicion over the revenue generated by cross-border trade has encouraged the Indian Union Home Ministry to build a case to shut it down. Officials in Home Ministry believe the barter trade has become not just a source of funding militancy, but of destabilizing the region. Officials in state government revealed that there was a recommendation from New Delhi to close the trade completely.

“With chief minister Mehbooba Mufti’s intervention in favour of continuation of the trade the decision is being reconsidered,” the People Democratic Party’s youth president said in Srinagar.

On the pretext of freezing the overseas funding that supports the political struggle in Kashmir against Indian rule, the present Narendra Modi headed government has choked every possible space given to pro-freedom groups by invoking India’s ‘counter-terrorism’ agency, the National Investigation Agency (NIA), against them. While at military-level the counter insurgency operations are being intensified against the indigenous militancy.

According to the political commentator, Sheikh Showkat, problem cropping over LoC trade is an indication of a larger lingering dispute. It is often difficult to delink trade and politics. Modi government has launched a crackdown on pro-freedom groups through the NIA at the time when counter insurgency operations are being intensified against the indigenous militancy, he said.

Basically, the trade at LoC should have been normal instead of barter-trade which often becomes victim of trust deficit of both states, a Srinagar-based journalist notes. “Indian home ministry’s simply calling barter trade as a source of militancy is a ploy to overcast Modi government’s own failure of improving infrastructure and policy framework for advance trade,” he said.

Many countries, such as Kenya, Myanmar, and China, use barter trade to support the well-being and self-sufficiency of people affected by conflict.

In the recent months, cross-LoC traders have been frequently summoned by NIA, for questioning. Many traders have accused the NIA of harassing their families. This has led to more and more traders quitting their association following NIA raids on their homes. “Over 350 traders’ records were seized by the NIA investigation team,” the report states. “The traders are accused of supporting pro freedom politics.”

“We are traders, not terrorists. If the government and its agencies believe that this trade is a threat to the national security let them stop it,” traders told reporters.

The total turnover of trade across the LoC has a potential of $974 million USD. Nearly 21 items were permitted to cross under a zero-tariff regime as a part of the trust-building initiative. The value of this trade increased from $27 thousand USD to $44 million USD from 2008 to 2012.

However, after a common market tax regime, traders allege the “rules have changed” drastically as they are subjected to double taxation. “We find ourselves hanging in between the two allies – whereas the PDP wants the trade should remain open, the BJP wants to close it,” the LoC traders told Congress leader Ghulam Nabi Azad.

Trade as a Confidence Building Measure

With the British departure from India in 1947, both India and Pakistan laid territorial claims on the region now known as Jammu and Kashmir. Despite the fact that the state had geographical, religious and economic proximity to Pakistan, India overtook the territory three months after its independence on October 27, 1947.

After Kashmir acceded to India, the Banihal Pass and Qazigund roadway—notorious for landslides—served as the region’s only corridor to the world, since historic routes connecting Kashmir with Central Asia and China closed after 1947 due to tensions between India and Pakistan. Kashmir traditionally relied on the area now known as Pakistan for essential goods and services, including petrol, wheat and salt. After India’s administering of the region, these trade linkages were broken.

Since 1947, three wars have occurred between the two nuclear nations over Kashmir, which was formerly a princely state under the British colonial rule. The scale of the 1972 conflict forced India and Pakistan to create the LoC, the ceasefire line that serves as a de-facto border between the two rivals.

In the 1990s, a Kashmiri insurgency against Indian rule rocked Kashmir, with violence claiming the lives of hundreds of thousands of its people over two decades. Meanwhile, ceasefire violations across the LoC did not stop until an official ceasefire was announced in 2003. (Though the ceasefire violations have never halted entirely.) For the next five years, the situation remained stagnant: no trade took place across the de-facto border. Finally, after a political agreement in 2008, the LoC opened for limited trade service.

Initially, locals showed little interest. As most people had no prior experience trading across the boundary, the unstable situation deterred them from getting involved in cross-LoC trade. Most traders decided to avoid taking part in trade that might land them in trouble.

Advanced traders were given “trade passes” valid for two years and were allowed to move across the LoC in order to facilitate trade.

Traders began to see their business grow. Ultimately, cross-LoC trade proved beneficial for marginalized sections of Kashmir society and in some cases eased the commodities crisis in the region, as in 2013.

However, the subsequent mass uprisings infuriated the political conflict in the Kashmir Valley. In February 2015, cross-LoC trade was interrupted following the accusation that a trucker was carrying drugs from Muzaffarabad in Pakistan-administered Kashmir. Previous reports of smuggling also occurred in January 2014 and August 2013 and led to a weeks-long halt in cross-LoC trade in both instances.

The number of registered cross-LoC traders has declined with time. The number was reduced to 60 traders from 600 traders in 2015 and presently only few dozen traders are involved in trade.

“The cross-LoC trade economy was accepted initially and improved over the years, besides the economic aspect, it helped people reconnect socially,” Irfan Bhat, an economics professor in Srinagar opined.

Blockage of trade across borders potentially deprives locals of traditional connections which imply that a decision of closing the LoC trade permanently will increase the trust-deficit and create more problems for futuristic peace-building initiatives.


The writer is a New Delhi-based journalist.

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