India Pakistan Cross - LoC Trade A Low Hanging
Fruit That Can Deliver
By Afaq Hussain
and Shakti Sinha*
The people of Kashmir are
hopeful the PDP-BJP government, in power in the state of Jammu & Kashmir,
will take up local concerns at the national level. The “Agenda for Alliance”
released by the state government in March spoke about many issues, including
political and developmental concerns. We would argue that one important issue
deserves more detailed attention — the largely unexplored subject of “Cross-LoC
Trade”.
In 2008, barter trade commenced across the Line of
Control as part of a Confidence Building Measure (CBM) between India and
Pakistan. The measure is considered one of the most significant CBMs taken by
the two countries in recent history. This was expected to enhance economic
cooperation between the two sides of Kashmir and eventually between India and
Pakistan. Though initially this trade was in the limelight and did serve its
purpose, but over the last few years its benefits seem to have been clouded by
other “considerations”. It is of utmost importance that government looks into
cross-LoC trade from the lens of the Valley, for them to make astute policies
that would deliver politically, socially and economically.
In recent years, the term LoC has often being referred to
as Line of Commerce and even Line of Cooperation. This is not surprising as
trade volumes have shown a substantial increase despite trade being on barter
terms, lack of proper communication channels, absence of a banking system,
dearth of legal enforcement of contracts and, limited number of trade days and
tradable goods. LoC trade has expanded from US$0.3 million in 2008-09 to $97.2
million in 2011-12.
There is a need to build on this since the potential is
immense. Interaction with traders bears this out. There is tremendous zeal
amongst people on both sides to further cross-LoC linkages. Trade across the
LoC would serve as a source of employment, especially for the local youth. Such
linkages would also offer Kashmiris an opportunity to reunite and associate
with family members and friends, despite being on opposing sides of the LoC
line. The development of cross-LoC trade should, thus, be a major priority of
the Peoples Democratic Party-Bharatiya Janata Party (PDP-BJP) alliance as this
trade offers a host of economic prospects to the state, in terms of employment
generation, revenue generation and contributions to state GDP.
In addition to basic measures, increasing the number of
vehicles, increasing the tradable commodities, promoting tourism and travel,
fostering communication amongst people from both sides, encouraging greater
stakeholder engagement — required to give LoC trade a boost, it is important to
retain and preserve the character of the initiative. Conferences, consultations
and talks focused on promoting cross-LoC trade usually dwell on the aforementioned
measures but overlook the need to make the people of Kashmir feel that the
government recognises the importance of this trade. The optics of such
recognition cannot be underestimated.
Undoubtedly, the six-decade-long Kashmir dispute has had
tremendous human and economic cost. Cross-LoC trade deserves serious and
immediate attention because the short and long term impact of trade across
divided Jammu and Kashmir would have major implications for the region. Based
on repeated interactions with numerous stakeholders, it becomes clear that if
both national governments give this trade proper attention and focus, it has
the potential to reap positive economic benefits to the state and, in the long
run, to the two nations.
At a geo-strategic 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
region. Economic benefits have always served as a means of powerful conflict
resolution. Prime Minister Narendra Modi has been emphasizing the importance of
trade and greater regional integration. The LoC trade fits in completely with
his agenda. Pakistan Prime Minister Nawaz Sharif is on the same page in
recognising the importance of bilateral trade. Despite the recent flare-up on
the LoC, the need to build on the Ufa summit is important. A peaceful border
and neighbourhood will ultimately help the development agenda of India.
Governments on both sides should use the prospering
cross-LoC trade to provide the much-needed boost to the presently latent
India-Pakistan relationship. It would call for courage and imagination. Recent
developments in the larger neighbourhood, particularly on the subcontinent’s
northwest, offers both hope and challenge. Stated positions would have to be
discarded and agility shown both in taking advantage of unexpected openings and
in countering adverse trends. Strengthening cross-LoC trade is a relatively
low-hanging fruit that would deliver domestically and externally.
*Afaq
Hussain is Director and Shakti Sinha is Chair – Policy Research
Group Bureau of Research on Industry and Economic Fundamentals, New Delhi. They
can be reached at editor@spsinida.in
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