India and Pakistan are now at a point where the oscillating political situation between the two is expected to shape future dialogue and economic discourse. While the world is talking about India’s “surgical strikes” across the Line of Control, scant attention is being paid to the fact that truckloads of goods are being exchanged across the same LoC. It is ironic that while on the one hand the K-word is most contentious between India and Pakistan, on the other it is this cross-LoC trade that is supporting thousands of stakeholders in Kashmir and acting as a harbinger of peace.
Today cross-LoC trade completes eight years. The two countries agreed to initiate barter trade across the LoC in 2008 following the ceasefire in 2003 and commencement of cross-LoC travel in 2005. This is by far the most celebrated and successful confidence-building measure (CBM) between India and Pakistan. While several bilateral trade dialogues have not reaped expected results over the years, the success of this trade is worth mentioning.
Contours of cross-LoC tradeCross-LoC trade takes place between Jammu and Kashmir and Pakistan-occupied Kashmir along two routes — Uri-Muzaffarabad and Poonch-Rawalakot. The modalities of this trade have been recorded in the form of a standard operating procedure (SOP), which also lists 21 local items that can be exchanged in barter, based on zero tariff. The trade regularly takes places four days a week, with 100 trucks allowed to be exchanged per trade day.
Over the years, cross-LoC trade has remained immune to the political trajectory of India and Pakistan. While the past three years have witnessed the waxing and waning of bilateral dialogue, cross-LoC firing and the Pathankot attack early this year, goods worth over Rs.2,800 crore have been traded through the LoC. Trade-out goods (read exports) amount to Rs.1,496.66 crore and the trade-in goods (read imports) account for Rs.1,307.62 crore, from both the trade routes.
This week, cross-LoC trade celebrates eight years. In the midst of talks about withdrawal of “Most Favoured Nation” status and economic sanctions, the economic benefits of this trade have been silently creating a sizeable positive constituency. Trade has acted as a source of employment not just for the local traders but also for the unemployed and vulnerable youth of the border areas. This is evident from the fact that most of the people employed through this trade are below 40 years of age. As per various sources, the trade has generated employment of approximately 50,000 manpower days in seven years (2008-2015) with a total income of approximately Rs.800 crore. Transporters have also reported a benefit of approximately Rs.45 crore by plying trucks from Uri to Srinagar in these years.
Any mention of ‘cross-LoC’ is usually associated with the words ‘firing’, ‘tensions’ and ‘strikes’. It is high time ‘trade’ started being associated with it.
To build on the success achieved over the past eight years, various complementary measures are needed in addition to the existing modalities to boost this trade and help it achieve its economic potential. In addition to basic measures, increasing the number of vehicles, augmenting the type of tradable commodities, promoting cross-LoC tourism, fostering communication amongst people from both sides, and encouraging greater stakeholder engagement are required to give LoC trade a boost.
Stakeholders in the peace processThere should be provisions for regular trade facilitation meetings by representatives from both sides at the Zero Line. The governments could also consider setting up LoC mandis (markets) in big cities to bring together consumers and sellers, and establishing production and manufacturing units in Jammu and Kashmir.
At a geostrategic and micro level, the importance of LoC trade needs to be understood in the context of the free flow of trade raising prosperity levels of people on both sides of the LoC and enabling them to become key stakeholders in the peace process. At a macro level, the governments can use this as a means of mitigating the long-drawn-out conflict in the State. With firm political will, there is immense potential to transform this into positive economic gains for the people in the State. Such a transformation can prospectively act as a driver of peace between India and Pakistan, which can then view Kashmir not as a subject of contention but as a subject of economic interest.
Afaq Hussain is Director and Riya Sinha is Research Assistant at Bureau of Research on Industry and Economic Fundamentals (BRIEF), New Delhi. Views expressed are personal.
