Ministry of Home Affairs announced the suspension from midnight of trade at the two designated points at Salamabad and Chakan-da-Bagh, citing concerns about “illegal weapons, narcotics and fake currency”Trade is recorded between India and UAE and between Pakistan and UAE, but is not recorded between India and Pakistan.
The trade is allowed through two trade facilitation centres located at (1) Salamabad, Uri, District Baramulla and (2) Chakkan-da-Bagh, District Poonch.As per a study by ICRIER, informal trade between the two countries in 2012-13 was almost double the value of formal trade.
Cross-LoC trade is one of the Four-point proposal:
(i)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.
Reasons stated by Ministry of Home Affairs:
“During ongoing probe of certain cases by NIA, it has been brought out that a significant number of trading concerns engaged in LoC trade are operated by persons closely associated with banned terror organisations involved in fuelling terrorism/separatism.”
It is also being argued that the zero-tariff barter arrangement is being violated through under-invoicing and the exchange of third party items such as U.S.-origin California almonds.The first is presumably a way to transfer funds; and the second would be to exploit the zero-tariff trade, something brought up by traders who operate via the Wagah border.
At a protest in Srinagar against the trade suspension, for instance, a leader of the cross-LoC traders association argued that they had, in fact, themselves been seeking a “fool proof mechanism” to enforce the terms of the agreement.
To now summarily suspend LoC trade is to invite suspicion that the step has been taken without careful consideration of the consequences and also for political reasons. The suspension must be urgently revoked.A stricter regulatory and enforcement mechanism is being worked out and will be put in place in consultation with various agencies.More than its value in currency terms, the cross-LoC trade holds much symbolic value in Jammu and Kashmir, especially in the Poonch-Rawalakot sector, where there are more divided families and villages than at the Uri crossing point.