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Trans-LoC traders from divided Kashmir seek a free economic zone

J&K government has suggested inclusion of 27 new items to the trans-LoC trade basket even as eight of the 21 categories permitted for barter were banned by the two countries.

, ET Bureau|
Updated: Jul 10, 2012, 06.17 PM IST
SRINAGAR: J&K government has suggested inclusion of 27 new items to the trans-LoC trade basket even as eight of the 21 categories permitted for barter were banned by the two countries. A Joint Working Group that decides on the zero-duty trade between India and Pakistan is meeting later next week, for the first time in more than three years.

“We will do whatever is possible to ensure the initiative sustains,” Industries Minister Surjit Slathia told a seminar being attended by traders, mostly pessimistic, from both the sides. “We have already conveyed to the central government about the additional items that we want to trade through the two routes.”

Barter trade was permitted by the two governments in October 2008 from Uri and Poonch in 21 categories without any formal system for communication, banking, interaction or dispute resolution. By now the cumulative turnover of the eight-days-a-month trade is nearing Rs 1600 crore. Though former foreign secretary Salman Haider, a permanent fixture of the informal dialogue with Pakistan, believes that the trade has created a constituency of its own, the traders are unhappy.

Dr Mubin Shah, who heads the joint trans-LoC chambers of trade, says the CBM may not be sustainable for a long time if it fails to benefit the people of the state. Neither he nor any of his members in Srinagar was ever permitted to go to PoK. “We have been making suggestions but these are not being adhered to.” Shah’s predecessor Zulfikar Abbasi, a PoK industrialist said of the 21 items eight have already been banned and most of them are not tradable reducing the exercise to a symbolic one. “The Joint Working Group (JWG) is meeting for the first time in four years and that speaks for itself,” he said. As president of the joint chamber of the trans-LoC traders, Abbasi was refused visa twice. Host of the seminar Ms Sushiba Barve said it took her five month to get the necessary travel permissions for her PoK invitees.

In last more than three years, the two governments have been banning particular item running the trading volumes and the overall business through LoC. It started with the green grams, moved to garlic, ginger, then to Ajwain and dates and finally to kidney beans and cardamom. “We are now being asked to stop almonds,” said Rajiv Tandon of Poonch. “This is despite the fact that almonds grow abundantly in Kashmir and on the other side as well.”

But the frequent banning has led trade to opt for introspection. Abasi shared with participants, the interesting details of how the traders in Pakistani Kashmir managed the green grams that dominated the trade for nearly two years as this was in huge demand across India. “As we purchased all the categories of green gram in Pakistan, the rates jumped from Rs 15 a kilogram to Rs 140 and it was out of an average Pakistani’s purchasing capacity,” Abasi said. “Then we purchased whatever Afghanistan had and once we drained it totally we started looking at China and we were in the middle of purchase that it was banned.”

Pakistan, Abasi said does not want the trans-LoC trade compromising its economy the same way as Afghanistan did. “We are trading between Karachi and Peshawar and so far Pakistan has lost 33000 containers,” he said. “This trade has to be sustained without compromising the national interests of the two countries.”

FICCI’s Wagha leader Pradeep Sehgal asked the traders from the two sides to explore the possibilities of sustaining the zero-duty trade without impacting the formal trade happing in Wagha. “It (trans-LoC) is a non-market, exchange of goods but if you want to monetize it, tariffs will come and it will become formal trade,” Sehgal said. “If the goods exchange impacts the revenue stream of any country, tariffs will automatically be invoked.”

But these suggestions were not taken kindly by the traders from either side of the LoC. “We see the trans-LoC trade as the base for a free economic zone within the territory that existed in the erstwhile state of J&K,” president Dr Mubin Shah said. “We ultimately want transit trade and till then if the goods traded through LoC enter tariff areas of India and Pakistan, they should take care of it.” His predecessor Abasi talked about the historic ignorance that the two countries exhibited towards the two halves of erstwhile Kashmir. “Do we see the same infrastructure in the Indian and Pakistani Punjab that exist in Muzaffrabad and Srinagar?” he asked. “They will have to offer the concessions to mend the growth gap.”

Asked why the trans-LoC trade does not take care of the huge Rs 55000 market with around 17 million populations in the erstwhile J&K and convert it into a single market using the available windows, Dr Shah said the geography of the state has all along remained a locational disadvantage for J&K. “Why not use it to the advantage of the place and the two markets in the neighbourhood?” he asked.
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