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Cross-LoC trade runs into problems

Nirupama Subramanian

No bank arrangements, no telephone links; traders don’t know each other nor the market

— Photo: AFP

The first truck with goods from Pakistan-occupied Kashmir crosses the Line of Control on October 21, 2008.

ISLAMABAD: Less than a month after it was inaugurated with much fanfare, trade between the two sides of the divided Jammu and Kashmir State across the Line of Control has run into a wall of problems, with traders even threatening last week to suspend supplies if these were not sorted out.

The cross-LoC trade began on October 21 after India rushed it through as one way of handling the crisis in the Kashmir Valley that erupted around the land-for-Amarnath controversy, and the subsequent blockade of the Srinagar road by Jammu residents.

Pakistan, not wanting to be seen as dragging its feet on what was termed a historic development for the resolution of the Kashmir issue, cooperated with India to get the trading off the ground as early as possible.

But Kashmiri traders are now complaining that in the hurry, neither side paid attention to essential details. Top on the list is the basic issue of money. Traders are grappling with how to obtain the money for the goods they send across the LoC.

Earlier, the chambers of commerce and industry on both sides agreed that trade would be done through part-barter and part-remittances. In other words, if a trader in Srinagar sent goods worth Rs.1,000 to Muzaffarabad, he would barter it for goods of an equivalent value from a Muzaffarabad trader. If the exchanged goods were worth more, say Rs.1,200, he would pay the Muzaffarabad trader the difference.

But no arrangement exists to make these payments. Banks in J&K will not accept remittances from Pakistan-occupied Kashmir, neither will they send money to the other side, for security reasons.

“Traders in Srinagar have been saying that we should send the money through the truck drivers, but we don’t want to do that because there can be all kinds of consequences to sending Pakistani rupees to the other side or accepting Indian rupees in this manner. We want to send the money through formal channels, that is, only through banks, so that everything is legal and transparent,” said Zulfikar Abbasi, president of the Azad Jammu and Kashmir Chambers of Commerce and Industry.

Fed up, traders on both sides — they are now in a joint organisation combining the respective chambers of commerce and industry — decided to suspend supplies last Tuesday in order to draw attention to the issue, said Mr. Abbasi. But on account of the special importance that Kashmiris on both sides attach to the trade between them, they finally decided to make a token protest by sending reduced volumes.

Thus on November 11, instead of 21 trucks from Srinagar, only four arrived in PoK, while three went from Muzaffarabad instead of the scheduled 13.

The other problem that traders are facing is the complete absence of communication facilities. There are no telephone links between the two sides of Kashmir. The traders can communicate through e-mail, but they find this inadequate.

“What kind of blind trade is this that the seller and the buyer cannot speak to each other? At the moment, traders don’t know each other and they don’t know the market. How can we go on like this,” Mr. Abbasi asked.

On behalf of the joint Federation of Jammu and Kashmir Chamber of Commerce and Industry, Mr. Abbasi, who heads the organisation, recently wrote to the Pakistan Foreign Ministry with specific recommendations “to support and facilitate cross-LoC trade.”

Among the proposals the two sides have jointly formulated are the opening of three branches of the Jammu & Kashmir Bank in PoK — in Muzaffarabad, Mirpur and Rawalakot — and three branches of the Azad Jammu & Kashmir Bank in Srinagar, Jammu and Poonch.

Another is that traders be given multiple entry permits so that they can visit the other side frequently and get to know the buyers and markets there. The traders want to meet every quarter by rotation at Srinagar, Jammu and Muzaffarabad.

Included in the list of recommendations is the long-standing demand that the list of tradeable items be expanded so that trade becomes “viable and meaningful.”

The traders demand that trucks of higher capacity be allowed to cross over so that transportation costs can be brought down. At present, due to fears that the Aman Setu bridge cannot cope with big vehicles, only one tonners and 1.5 tonners are allowed. As a result, said Mr. Abbasi, a consignment that could be transported in two trucks is being loaded in 20 trucks.

A senior diplomat at the Indian High Commission here acknowledged that there were problems, but said these were “teething troubles.” He also said that on account of the special circumstances of the cross-LoC trade, certain issues that would be considered pre-requisites in any other trading operation, were bound to be complicated in this situation, especially financial transactions and communications.

But the diplomat said both the Indian and Pakistan governments were seized of the matter and were looking into the joint recommendations.

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