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Thursday, August 05, 2021

Explained: LoC trade, in perspective

India last week suspended the cross-LoC trade, alleging misuse of the facility by individuals linked to terrorist groups. How and when did this trade start, and what was it intended to achieve for India and Pakistan?

Written by Nirupama Subramanian
Mumbai | Updated: April 22, 2019 1:36:29 am
India Pakistan LoC trade, India pakistan trade ban, loc trade, india pakistan trade, Indian Pakistan relations, loc trade suspended, pok kashmir trade, The trade has been taking place through two crossing points, Poonch-Rawalakot at Chakan da Bagh and Srinagar-Muzaffarabad at Uri. Shuaib Masoodi/Archive

Compared to the cross LoC bus service that was flagged off with much fanfare in 2005, cross-LoC trade between Jammu and Kashmir and Pakistan Occupied Kashmir got off to a low-profile start, receiving little attention at the time in India or Pakistan.

In diplomatic parlance, these two measures are categorised as “Kashmir specific confidence building measures” and flowed out of backchannel negotiations between India and Pakistan on a resolution to Kashmir, in the belief that this would then give both sides legroom to “remake” India-Pakistan relations.

Four-point proposal

Specifically, these measures seems to have originated in a four-point proposal for Kashmir that began to get regular airing from about 2005 from then military ruler General Pervez Musharraf. The four points were:

The LoC will stay but Kashmiris on both sides will be allowed to move freely back and forth; (ii) self-governance or autonomy to the region, but not independence; (iii) gradual demilitarisation on both sides; (iv) a joint supervision mechanism with India, Pakistan and Kashmir represented on it.

In India, Prime Minister Manmohan Singh spoke about “soft borders” and “making borders irrelevant” in Kashmir. These proposals, now denied by both India and Pakistan, represented the closest that the two sides have got to an agreement on Kashmir, but neither side could take it further, each for its own reasons. The joint mechanism was one stumbling block in the proposals themselves.

Editorial: Suspension of LoC trade is a poorly-thought move that shrinks the space for manoeuvre in Kashmir and with Pakistan

The road to opening

On July 7 that year, the Indian Embassy in Kabul was bombed, killing an Indian diplomat and a senior Army officer and several Afghans. The US and India said the ISI was behind the bombing.

But the India-Pakistan foreign secretaries’ talks were held as scheduled later that month on July 21 under the composite dialogue format, and they agreed to the opening of trade routes across the LoC. The two sides then rushed to finalise the details in the following weeks, including at a meeting of the “working group of cross LoC CBMs” on September 22, 2008.

To Pakistani observers it appeared that India was eager to provide a vent for the steam building up in Kashmir over the Amarnath land row earlier that year, when there was a blockade of the Valley by the Jammu-based BJP and other Hindutva groups. That in turn led to the demand for opening the Srinagar-Muzaffarabad road. Separatists and others called a “Muzaffarabad March” on August 11. Firing on the march left 5 people dead.

Read | Trading in red chili, mangoes, herbs to be hit after cross-LoC trade shut

Cheer on both sides

Both sides of Kashmir welcomed the opening of the trade routes. On October 21, two crossing points, Srinagar-Muzaffarabad at Uri, and Poonch-Rawalakot at Chakan da Bagh, were opened for trade. A convoy of 13 trucks carrying apples and honey set off from Kashmir to PoK, and 13 trucks came from Muzaffarabad to Kashmir. Three trucks crossed over from either side at Chakan da Bagh.

PDP president Mehbooba Mufti said at the time “it is a dream come true”, and Sardar Attique Khan, the prime minister of POK, named the day “Youm-e-Karvaan-e-Commerce” (Day of the Caravan of Commerce). The Mumbai attacks put a freeze on India-Pakistan relations, but the cross-LoC trade remained unaffected by that.

Hiccups and demands

The agreement was for zero duty trade for a list of 21 items. It ran into problems almost immediately as traders on both sides floundered on currency and communication issues. A chamber of commerce, called the Intra Jammu & Kashmir Chamber of Commerce & Industry (IJ&KCCI), came into existence. They pointed to the need for banking relations and mutual acceptance of letters of credit, a communication network, a regulatory network to determine the composition of trade, and a legal network for dispute resolution.

The joint chamber recommended expansion of the list of items for trade, facilitation of travel and traders’ access to each other, infrastructure facilities, banking services, use of dual currency of both countries as the mode of payment with the US dollar as the reference point, inclusion of the services sector, and opening of more trade routes.

Despite the difficulties, trade grew. In the absence of banking facilities, traders on either side, mostly from divided families, made it work. From 180 trucks carrying freight worth Rs 1.3 crore, the value of the trade grew to Rs 3,076 crore by March 2019. There were complaints that the trade had expanded to include non-Kashmiri goods. The complaints were particularly loud from the traders at Wagah border who catered to the same markets and were envious of the zero-duty cross LoC trade.

Trade in perspective

Last week, the government cited malpractice and the involvement of terrorist groups in the trade to suspend the LoC trade. There have been previous suspensions. Once in 2015, trade was suspended for 40 days after drugs were discovered in a truck from Muzaffarabad. The longest suspension came during the post-Burhan Wani killing agitation in the Valley, for three months. There were other brief spells when trade was suspended, mostly at Chakan da Bagh, on account of heavy cross-border shelling.

However, Kashmiris point out that trade has never been suspended for under-invoicing or other such violations at any other port in the country where Customs and other enforcement officials strictly monitor the inflows and outflows, and the same could have been done at the LoC.

As for the involvement of former militants in the trade, this was seen as a welcome development towards creating “constituencies of peace” and building stakes for normalcy in the Valley. In 2011, a four page report called Intra Kashmir Trade, jointly prepared by the Delhi-based IPCS, Conciliation Resources of London, and the Islamabad-based Pakistan Institute of Legislative Development and Transparency, said cross border trade had proved it could be insulated from the ups and downs in the India-PAkistan relationship, and had begun to establish a “bottom up” approach to peace-building. “Trade has attracted divided families and some former combatants and provided a non-violent and alternative vision for change and conflict transformation,” the report said. It spoke about 40 former militants who had chosen to participate in the economic activity.

More than its value in currency terms, the cross Loc trade holds much symbolic value in Jammu & Kashmir, especially in the Poonch-Rawalakot sector, where there are more divided families and villages than at the Uri crossing point. They would be hoping that the current suspension is not permanent.

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