India and Pakistan must re-visit their policy on cross-LoC trade to harness the tremendous potential of this Confidence Building Measure which can transform the political and economic landscape of the landlocked Kashmir. 

A Truck carrying goods at Salamabad, Uri during cross LoC trade. Pic Credit: Javed Dar

The Jammu and Kashmir BJP unit recently called for closure of cross-LoC trade, terming it a “source of terrorism funding”. The statement came in the wake of reports that the National Investigation Agency (NIA), which is probing separatist/militant funding in Kashmir, may recommend closure of trade activities along LoC routes. However, Chief Minister Mehbooba Mufti was quick to add that she will not let trade across the volatile Line of Control with Pakistan be halted, insisting on its confidence-building potential between India and Pakistan.


It has been nine years since the cross-LoC trade was started with fanfare. The opening of the trade route between the divided parts of Kashmir was touted as one of the biggest Confidence Building Measures in the region. But as it turned out, India and Pakistan failed to take it beyond symbolism. The trade remains mired in bureaucratic hurdles. As a result, it has not emerged as a viable, self-sustaining entity. The initial enthusiasm has given way to disappointment among the traders. Despite assurances from New Delhi to make the trade more viable and hassle-free, there has been little progress on ground in this regard. Hoping to move beyond the barter system, the traders on both sides of the border feel cheated by New Delhi and Islamabad.


Operational and infrastructural problems have prevented the trade from growing. Absence of banking facilities, lack of communication links and restrictions on travel reduces it to something akin to a ‘blind trade’. There is a lot of scope to improve the trading mechanism and facilities. In fact, several steps have been taken to facilitate streamlining of the trade over the years, like increase in the trading days from two to four per week. More recently, a team of central government officials agreed to install full-body truck scanners at trading points in Jammu and Kashmir and provide ISD and banking facility to the traders. It is a significant development since the SOP (standard operational procedure) has only made exchange of goods a time-consuming and laborious exercise. The screening of goods is being done manually and traders have to unpack their consignments which can affect the quality of goods. Unloading the goods from as many as 50 trucks within two hours can indeed be a very hectic task.

The trade remains restricted to only 21 items and then there is the embargo on several items imported from Pakistan administered Kashmir including garlic, ginger, dates, raisins, moong dal and pistachio. These banned items were apparently gaining popularity in this part of Kashmir. The traders would obviously not be happy to be deprived of profitable items.


Other than the problems in modalities, inadequate infrastructure at Trade Facilitation Centres (TFC) is also making business cumbersome. Traders have been complaining of inadequate proper storage facility at Salamabad TFC. Frequent suspensions, mostly due to political reasons, have cast a shadow of uncertainty on the trade.


Despite the plethora of problems and lean patches of trade, people involved in the barter system have been witnessing good trading days as well. On several occasions, the trade has witnessed business worth over Rs 20 crore which implies that there is a scope for the trade to grow, at least in terms of quantity.


Besides the economic benefits, trade across the Line of Control can help in normalisation of relations between India and Pakistan by enhancing their interdependence. Some experts believe that had the two countries nourished the trade, it could have defused the tension on the de facto border, helping in stabilizing the relations between them. In fact, they are of the opinion that trade and travel across the LoC is the only CBM which directly benefits people of Kashmir as it creates stakeholders on both sides and allows greater human interaction.


Economics has played an important role in achieving conflict resolution in many instances. In the contemporary world, the economic and political elements of peace processes cannot be separated. While CBMs like LoC trade cannot resolve conflicts on their own, they certainly can help in creating a conducive environment for conflict resolution. The Line of Control can indeed serve as a Line of Commerce rather than a line of conflict where all parties stand to gain. Unfortunately, like all other outstanding issues between India and Pakistan, the LoC trade has been held hostage to politics of animosity.


To capitalize on the economic and peace-bulding potential of the trade, it needs to be nurtured in a concerted way by removing the bottlenecks and addressing the operational and infrastructural impediments.


New Delhi and Islamabad must seriously consider the grievances and recommendations of traders and move beyond symbolism.  It is imperative for them to re-visit their policy on the cross-LoC trade so that this CBM with tremendous potential does not get wasted.

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