Across the LoC, trading in mistrust

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The trade was intended to bring together Kashmiris across the border. Baba Umar reports why it’s not going according to plan

Frontier business : Pakistani trucks at the trade facilitation centre in Salamabad
Frontier business : Pakistani trucks at the trade facilitation centre in Salamabad
Photos: Abid Bhat

IN SALAMABAD, located 12 kms from the Line of Control (LOC), Shabir Ahmad bartered Kashmiri chillies for dates with a trader across the de facto border while Asif Lone traded South Indian coconuts for almonds. The cross-LOC trade was supposed to be one of the baby steps in solving the vexed Kashmir dispute but the deal is fast turning sour.

“Every week you will see a newcomer in the trade. After facing serious problems they retreat,” explains Asif Lone, a cross- LOC trader from Baramulla in north Kashmir. “There is no guarantee of recovery of money if you don’t know your trading partner across the LOC.”

Cross-LOC trade began with a shootout on a separatist-led rally. On 8 August 2008, thousands of protesters made their way to Uri in a bid to breach the LOC. The protests were triggered by the blockade of the only road link to the plains by right-wingers in Jammu. On the road connecting Srinagar and Muzaffarabad, the rally led by pro-azadi leader Sheikh Aziz resulted in his death besides three others when soldiers fired at them.

Two months and 13 days later, New Delhi initiated the cross-LOC trade in a bid to defuse the explosive situation. Pakistan termed it a “historic development” and helped in getting the trade off the ground quickly. Soon goods-laden trucks started to roll in and out of Salamabad in Uri and Chakan-da-Bagh in Poonch district. Two trade facilitation centres also came up in the border towns.

However, in the haste, both sides ended up paying little attention to the details of what is a moneyless trading practice reminiscent of the medieval barter system. Traders of divided Kashmir, who until then were partners all set for a new business venture, are now suspicious defaulters and slowly pulling back from the trade.

“There is nothing left in this trade. Traders have been defaulting. But if we stop, both countries will blame us for undermining the so-called (CBM) confidence-building measure,” says Lone.

Modalities were discussed when New Delhi allowed a Pakistani trade delegation to meet their Kashmiri counterparts. The proposal stressed on the need to restore the telephone facility that was snapped in 1989, and banking facilities on both sides of the LOC. Other demands included frequent buyer-seller meets, storage, truck scanners, weigh bridge and increase in the number of tradable items, which is restricted to 21 at present.

Both countries took almost two-and-a-half years to announce additional cross- LOC trade CBMs when Pakistan Foreign Minister Hina Rabbani Khar met her counterpart SM Krishna in New Delhi last week. But the traders’ key demands of restoring telephone communication and banking system remain unmet.

Frontier business : Imported goods go under the X-ray scanner
Frontier business : Imported goods go under the X-ray scanner

Usually traders use relatives in POK or a neutral venue to deal with their counterparts across the LOC. Lone had to meet his trading partner in Delhi to reconcile accounts. Some also exchange business cards through truck drivers to build a relationship with their trade partner.

The Indian government tried to address this issue by installing three hotlines each at the offices of the custodian of Salamabad Trade Facilitation Centre, deputy commissioner, Uri, and the Srinagar-based Kashmir Chamber of Commerce and Industries (KCCI), but they can be used only by the officials concerned.

Although the number of trading days have been extended to four per week, barter takes place only on Tuesdays and Wednesdays. Security agencies maintain a tight vigil, while sniffer dogs and X-ray machines are used to ensure that nothing objectionable passes through.

Despite the trade, mistrust reigns. Traders are warned against chatting with Pakistani truck drivers. The police have found that some traders are exporting goods of less value than what they are importing and they suspect that militants are using the trade to route hawala money.

“If I export chillies worth Rs 10 lakh and get almonds worth Rs 18 lakh, police suspect foul play and question us. This wouldn’t have happened had there been phone lines and banking facility had been available,” says Sheikh Tariq, vice-president of the J&K trans-LOC Traders Chamber.

‘Efforts to resolve disputes ended in fights. Traders exchanged blows,’ says Abdul Hamid of Poonch Trade Facilitation Centre

The trade also faces interference from the army. In March 2010, the Indian Army asked for limiting the number of trucks to 100 per day. The suggestion had in fact come from the Pakistan army, which wanted to limit the number of trucks to 50.

According to the new CBMs, traders in Uri will be allowed to meet and settle accounts with their counterparts on the zero line. In Chakan-da-Bagh, such meetings already take place. However, most of these interactions don’t bring the desired results. During a meeting in April 2010, 29 traders from J&K and 18 from POK were declared defaulters and measures to settle the accounts began in the presence of government officials and policemen.

“But efforts to resolve the dispute ended in fights. Traders exchanged blows and invectives. It was embarrassing for all,” says Abdul Hamid of the Poonch Trade Facilitation Centre. For more than six weeks, the trade remained suspended.

Kashmiri fruit traders, who expected access to markets in central Asia through Pakistan, were the first to withdraw. In Uri, more than 450 traders had registered but less than 80 are active. Similarly, not more than a hundred traders are active in Poonch. The result has been frequent boycotts and decline in the traders’ numbers.

Frontier business:Sniffer dogs check for contraband
Frontier business: Sniffer dogs check for contraband

Since October 2008, traders in Uri have exported goods worth Rs 279.21 crore, while the import figure is Rs 227.11 crore. In Poonch, the exports were worth Rs 160.33 crore and imports were for Rs 155.44 crore.

“Until banking facility, which is the top priority, comes into effect, traders will continue to suffer. Lack of the facility tells upon transparency of this trade. Defaulting has become the norm now,” reveals Nazir Ahmad Baba, custodian of Salamabad Trade Facilitation Centre.

Duty-free trade is limited to 21 products that are supposed to have their origin in Kashmir. But on the ground, trade takes place in items such as tamarind, Peshawari chappals, dates, dry fruits, oranges, and coconuts produced from other regions. Traders say rules don’t define dry fruit or explain the rationale for putting tamarind and Peshawari chappals on the list.

THE CONFUSION has resulted in the ban of many items. New Delhi prohibited import of garlic and ginger, which were a hot item for almost two years followed by a ban on ajwain and cardamom. Pakistan banned the export of moong dal. And recently a home ministry directive to the J&K government asked for banning the export of coconut saying “the item is not the produce of J&K/POK”. Traders say almost 16 items included in the list of tradeable items are not actually in demand.

“This trade can’t survive on products that have their origin in the divided state. We can’t trade apples and handicrafts only. The trade should consist of items that are in demand. But interests of J&K’s economy have to be considered too,” says KCCI President Nazir Ahmad Dar.

Meanwhile, local traders say trade with POK should be exempted from Value Added Tax (VAT). To push for this demand, traders from both sides suspended trade for four weeks starting May. They relented only when CM Omar Abdullah promised to exempt exported items from the state VAT.

J&K’s Commerce Minister Surjeet Singh Salathia concedes that until banking and communication facilities come up, the cross-LOC trade will continue to remain a barter system without attracting many traders. “As long as India and Pakistan don’t address these issues, this trade has no chance of prospering,” he says.

Baba Umar is a Correspondent with Tehelka.
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