Cashmere. Companies call for reopening of cross-border trade with Pakistan | Asia | An in-depth look at news from across the continent | DW

Traders in Indian-administered Kashmir are calling on authorities to reopen trade routes with Pakistan as prices for goods and food continue to soar.

In 2008, India and Pakistan opened up trade across the “Line of Control (LoC)”, a heavily militarized de facto border dividing Kashmir between India and Pakistan. The move was seen as a “trust-building” measure between New Delhi and Islamabad.

However, New Delhi halted cross-border trade in April 2019 as it prepared to scrap Indian-administered Kashmir’s semi-autonomous status. India claimed the road was being misused by people linked to terrorist groups.

During the Islamic holy month of Ramadan, more and more people eat fruits and buy other goods in Muslim-majority areas of Indian-administered Kashmir. The shutdown resulted in high prices for commons.

Hilal Turkey, chairman of the LoC Traders Association in Kashmir, told DW that commodity prices rose by 200% after the suspension.

“Buying fruits like grapes, oranges, dates, Miswakhs (teeth-cleaning twigs) or spices that used to be traded through the check line is now beyond many people’s budget,” he said.

Informal trade has a significant impact on rural communities

When cross-border trade in Kashmir was active, 21 items were allowed to be traded, including varieties of fruits, vegetables, and handicrafts. Trade was conducted duty-free using a barter system and did not involve currency exchanges.

The trucks would cross the border at Chakan-da-Bagh station near the town of Poonch and at a crossing near the town of Uri to the north.

The trade route created a frontier economy and provided livelihoods for thousands of people living in remote areas that typically experience low economic activity.

Uri and Chakan-da-Bagh turned into business hubs and thousands of North Indian traders converged there to buy goods at cheaper prices. New shops, warehouses and restaurants have sprung up, employing young locals as managers, drivers and day labourers.

The route has also provided the remote region with cheaper access to basic foodstuffs and commodities that would otherwise enter Kashmir from mainland India at a higher price.

Even cotton goods and suits brought from Pakistani-administered Kashmir are said to be sold at cheaper rates on the Indian side of the border.

The trade route was opened in 2008 to much fanfare

Traditional Pakistani shoes and costumes have become a big hit. Many shops have sprung up across Kashmir selling Pakistani costumes.

In ten years, annual trade via the LoC route has been estimated at $1.2 billion.

However, as the trade continued to grow, it also sparked controversy, with traders from mainland India paying taxes on their goods complaining that cheap and duty-free goods entering India via Kashmir were distorting competition.

Additionally, authorities grew concerned after reports of narcotics, weapons and counterfeit currency from trucks arriving from Pakistan raised suspicions that the trade was being used to promote anti-Indian activism. In April 2019, New Delhi suspended trade indefinitely.

The border is closing and the money is drying up

Official data shows that more than 4,000 families were directly involved in day-to-day business operations across the Line of Control. Manufacturers, farmers and truckers who supplied and transported goods also benefited.

After the road was closed, many traders stopped trading or were heavily in debt.

“We have been victims of harassment from investigative agencies and banks,” said Turkey, whose fruit business has closed.

Laborers in once bustling border towns are now struggling to find work. Before the trade suspension, laborer Mushtaq Ahmad earned $10 a day.

“I have three children and one of them stopped studying to work in a hotel in Srinagar because there was no income for the family,” Ahmad said.

Trade was a bridge between India and Pakistan

Inter-LoC trade has been an important contributor to economic and social development in the conflict-torn Himalayan region.

A sign on a bridge crossing the Line of Control reads: “From house to house we welcome our Kashmiri brothers.”

“The purpose of the trade was to bring peace to the region. It created a virtuous circle between trade, trust and connectivity between people, with its impact rippling through the overall Indo-Pakistan dynamics,” said Afaq Hussain, an economist who has done extensive research on the LoC trade route.

According to him, the ban led to the loss of the goodwill and cooperation that had been gradually built up because of the trade.

Hussain said trade was key to promoting peace and regional cooperation in the region, and said it should resume immediately.

“LoC trade may only represent a tiny fraction of India’s overall economy, but its impact goes beyond standard measures. The cases of successful businesses and families reunited on both sides of the LoC testify to the effectiveness of these confidence-building measures,” he told DW.

Edited by: Wesley Rahn

Comments are closed.