Bridging the Line of Control
With reference to the restoration of cross Line of Control (LoC) trade as a result of protracted negotiations between India and Pakistan, two routes, Srinagar-Muzaffarabad and PoonchRawalakot, were opened between the divided state of Jammu and Kashmir.
Besides restoring broken ties among divided families, the move was also aimed at creating an environment suitable for more such steps leading to an amicable settlement of the Jammu and Kashmir dispute between India and Pakistan. Defying all odds and impediments, the initiative survived and has made modest progress. The initiative earned unprecedented backing from all stakeholders, including civil society and media.
However, recent incidents have highlighted the obstacles to the successful growth of cross LoC trade, which remained suspended for about 4 weeks earlier this year. Over 374 traders in Uri-Muzaffarabad and 164 from Poonch-Rawlakot boycotted the cross-trade. The major reasons were that the cross LoC traders demanded exemption of traded import and export items from prescribed duty and taxation laws like VAT. At present 21 items authorized for trade across LoC are duty free under the state law but not under central law. According to President, Salamabad-Chakoti Traders Union, Asif Lone, VAT should not be imposed on cross-LoC trade. Traders also presented several other demands including an increase in the number of trading commodities, as already there are 16 out of demand items included in the list.
The traders’ union also demanded that the number of days specified for trade be increased from 2 to four, keeping in view the increased number of traders and trade activity. The union members said that traders were facing difficulties in communicating with their counterparts as there was no regular communication link in place. Lack of telecommunication and banking facilities are regarded as the main stumbling blocks in the way of ongoing trade. Currently, only Azad Jammu and Kashmir (AJK) traders can make direct phone calls to their counterparts in Jammu and Srinagar. Absence of a proper banking system and restrictions on using Indian or Pakistani currency are also considered major impediments to the trade initiative which at the moment is being conducted on the basis of the outdated barter system.
Despite all hurdles, the resumption of cross LoC trade has shown remarkable progress. Amid mounting tensions, trade revenue crossed Rs. 200 million. The overall socio-economic impact of trade is significant for the local populations as well as those directly engaged the trade. This has provided opportunities for families to reconnect and generate self-employment. Trade unions and chambers of commerce have become functional. The impact of economic potential on the social ties between the two countries can be witnessed by the unusual activity at the LoC crossing point where officials from both sides are found hugging each other over trade resumption and local traders from Poonch (J&K) and Rawalakot (AJK) are seen exchanging sweets and pleasantries in the charged environment.
It has long been suggested that crossLoC trade should move beyond the 21 goods and diversified to include service sectors like tourism, forestry, waterways, power generation, information technology, education, anti-poverty programmes and disaster management. Additionally, trade should be open on all weekdays from morning to evening. Restrictions should not be placed on the number of freight trucks crossing the LoC and banned items should be replaced with new items immediately. Owing to the limited market, traders should be allowed to use AJK as a trade corridor to export their goods to Pakistan and beyond.
To facilitate dialogue, traders should be allowed to have weekly meetings to find immediate solutions at the Trade Facilitation Centre (TFO). They should also be allowed to travel via the weekly bus service to do business and multiple entry trade passes should be valid for a minimum of six months.
To streamline trade issues, the Jammu and Kashmir Joint Chamber of Commerce and Industries (J&KJCCI) can play a vital role by helping authorities in registering traders and conducting necessary verification at different levels to discourage proxy traders. Effective participation and active involvement of the Joint Chamber must also be ensured.
To some extent, cross-LoC trade has provided a positive alternative to the violence-stricken youth who can now become partners in trade and business. However, trade does not substitute political dialogue and it is important that changes in the policy framework are made to further accelerate the ongoing trade and flourish it into a success story