How suspension of cross-LoC trade shattered Uri’s economy

With businesses collapsing and families under debt, the abrupt freeze on cross-LoC trade in 2019 has thrown thousands of lives into a tailspin.

Pakistani vehicles being unloaded at the Salamabad Trade Facilitation Centre in June 2014. | Photo Credit: NISSAR AHMAD

Unannounced rain had turned the magnificent natural surroundings of Uri ominously dull and colder than usual. It formed an apt setting for a group of traders who had assembled outside an eatery at the town’s main market to talk about their ruined businesses and the immitigable impact on all aspects of their lives, a fallout of an abrupt embargo imposed on trade across the Line of Control (LoC) in April 2019.

“Our businesses ended overnight, there is no source of income now, and we are dealing with surly bank officers who are pressuring us to repay our loans. They have declared us loan defaulters, and that has effectively ended any hope of procuring a fresh loan to start a new venture,” said Imran Ahmed Awan, 35, about his ordeal.

In 2008, India and Pakistan decided to enhance confidence-building measures by establishing trade routes across the LoC, through the 55 km Uri-Muzaffarabad route in Kashmir and the 46 km Poonch-Rawalakot route in Jammu. The two neighbours worked out a barter system: a trader on one side sent goods worth a certain amount, and another on the other side sent back goods worth an equal amount. The trade was limited to 21 items, including carpets, wooden handicrafts, saffron, and fresh fruit. It was initially scheduled to take place two days a week, but in July 2011, this was extended to four days as demand and supply networks multiplied quickly. For thousands living near the LoC, this was a new dawn of opportunities, one they had been hoping for ever since Prime Minister Manmohan Singh flagged off the first cross-LoC bus, titled “Karwaan-e-Aman”, on April 7, 2005, from Srinagar. The bus plied between Srinagar and Muzaffarabad.

Despite intermittent suspensions and ceasefire violations, the trade survived for more than a decade, generating 1,70,000 job days, according to a survey done by the Bureau of Research on Industry and Economic Fundamentals (BRIEF), a New Delhi-based think tank. The survey found that between 2008 and 2019, trade worth Rs.7,500 crore was recorded across the LoC. That may only be a fragment of India’s economic turnover, but for the people of Uri, tucked away in the high-altitude, narrower stretches of the Kashmir Valley, just ahead of the point where the river Jhelum swirls into Pakistan-occupied Kashmir, the suspension of cross-LoC trade brought an unending cycle of debts, mortgages, joblessness, and economic hardship.

‘Jobs, and more jobs’: A decade of prosperity

Imran Ahmed Awan recalled how there were “jobs, and more jobs” in Uri when the cross-LoC trade flourished. He had over a dozen employees working at his Imran Trading Company, which he set up in 2012. The company yielded a net profit of Rs.3-5 lakh every year, of which Rs.1.5 lakh was disbursed for staff upkeep.

Every week, roughly 250 trucks arrived at and left from Salamabad village, the transit point, as porters, chauffeurs, mechanics, and hoteliers swarmed into Uri from all over the valley. Hilal Turki, who was chairman of the Salamabad Cross-LoC Trade Union, said that some 92,000 trucks were hired between 2008 and 2019, indicating the significant volume of the trade and its spillover impact on businesses it facilitated, including tourism and hospitality. According to him, it provided “an average per day wage of Rs.850 for various support staffers”. According to the BRIEF survey, the trade throughout its span generated freight revenue of about Rs.66.4 crore for transporters in Jammu and Kashmir, besides Rs.90.2 crore in wages for labourers.

The traders who had gathered at the eatery in Uri’s main market were reminiscing about those prosperous times. “The cross-LoC trade did not only benefit the merchants but set in motion a chain of smaller businesses and kiosks, all building off one another. At first, there arose the need for porters and drivers, then for dhabas [eateries]. Then for lodging. Then the main market started to expand. When the trade was at its peak, some 60-odd shops sprang up outside the Salamabad Trade Facilitation Centre,” recalled Javed Ahmed, a trader.

The now deserted centre, in January 2024. | Photo Credit: ANANDO BHAKTO

As commerce grew brisk, people came up with ideas to reap more dividends. “Some local people remodelled parts of their houses into lodges and rented them to traders coming from Muzaffarabad,” said Attaullah Handoo, a septuagenarian who helmed the Khwaja Trading Company. “Others rented out their cars. Tourist footfall increased as traders poured in from the other side of Kashmir with their families and friends.”

According to Turki, this people-to-people exchange was a kind of sociopolitical cross-pollination that “eliminated the Pakistani deep state’s myth-making which tends to showcase India as an utterly unsafe territory for Muslim minorities, who live in insufferable poverty and without basic religious rights”. “You can call us the ambassadors of development. We sold an overtly pro-India image across the Line of Control, often sharing personal anecdotes that captured India’s impressive health, education, disaster-management, and agricultural infrastructure. The truck drivers told their counterparts about the role of the Army in facilitating trade and their ready support during inclement weather. This positive narrative went down to a place like Muzaffarabad, which constitutionally is Indian territory,” Turki said. He now runs a confectionery at Nowgam, Srinagar, making a living that is “just about adequate”.

Highlights

• Traders in Uri, Kashmir Valley, who benefitted from the cross-LoC trade initiated in 2008, now face challenges following its suspension in 2019 by the Union Home Ministry.
• The suspension, prompted by the Pulwama terror attack in February 2019, was justified by the Home Ministry citing security concerns.
• The abrupt halt has left thousands of families grappling with the consequences, despite the Home Ministry’s promise in 2019 to resume trade with a stricter regulatory regime to prevent misuse.

Politicisation of national security?

All this ended in April 2019 when, following the Pulwama terror attack in February that year, the Ministry of Home Affairs suspended the cross-LoC trade. The ministry briefing to the media said: “The action has been taken after reports that the cross-LoC trade routes are being misused by Pakistan-based elements for funnelling illegal weapons, narcotics and fake currency, etc.” The cross-LoC trade stood at about $95 million in the first four months of 2019.

The government’s decision was widely perceived as carrying the imprint of trenchant nationalism and politicisation of national security issues. It impacted the livelihoods of 4,229 families, as BRIEF’s statistics show. Of these affected families, around 2,500 were traders and their staff; there were 728 trucker and helper families, and 420 labourer families; the rest were families of people associated with guest houses, gas stations, restaurants, and mechanics in border areas. All these people were directly involved in the day-to-day trade operations at Uri and Poonch. According to BRIEF, wage losses running into Rs.1.60 crore for labour and Rs.1.45 crore for support staff, including agents, middlemen, and representatives, were estimated at the Trade Facilitation Centre in Salamabad, Uri.

Pakistani trucks cross over at Aman Sethu in Salamabad near Uri in January 2017. | Photo Credit: NISSAR AHMAD

On the day the trade suspension was announced, there was chaos at Salamabad. A battery of trucks, loaded to the brim with merchandise, was suddenly stranded. Imran recalled: “My 10 trucks carrying fresh bananas were ready to ship when the news arrived. In the next few days, produce worth thousands of rupees rotted as I watched helplessly. Several trucks carrying merchandise had already reached Muzaffarabad, but the barter which was due from their end could not come. The losses were monumental. The GST [payment] also stopped.”

Imran had procured a loan of Rs.25 lakh at an interest rate of 10 per cent per annum from the Jammu and Kashmir Bank. He now finds it hard to repay it. Attaullah Handoo has a loan of Rs.20 lakh. Suhail, who owns the Aamir Trading Company, said that an additional 2 per cent interest rate had been levied on the defaulting traders effective from October 15, 2023. So much for the government stepping in to ease the suffering.

Loss of livelihoods

A few months after the trade suspension, the Lieutenant Governor’s government in Jammu and Kashmir announced a scheme offering 20 per cent additional loans to borrowers to upgrade their businesses. But Yasir Banday, a textile trader, said that traders in Uri were denied that benefit. “Not only were we entitled to get 20 per cent additional loan amount, it was to be interest-free for the first three years, and the EMIs were to start only thereafter. But the banks did not pay any heed to us,” said Banday.

A crestfallen Attaullah Handoo said: “There is no income. And we have to not only repay our loans but also make deferred payments to other traders from whom we had procured various merchandise. With no avenue to float a new enterprise, we are selling or mortgaging family assets to keep the cash flow. We have to shift our children and grandchildren from convents to government schools to cut down on education expenses. The situation is agonising. I know several men who are suicidal.”

At the once flourishing Trade Facilitation Centre at Salamabad, a score of porters and labourers, now rendered jobless, spoke about their everyday deprivation. Mohammed Younus, who was in charge of a group of labourers until 2019, said on an average a porter made Rs.2,000-Rs.3,000 every week, which was a competitive stipend for the unskilled workforce. “Prices are skyrocketing, and people’s income is gone,” he said. “Some of them have been accommodated as helpers in the main market, but at much lower wages.”

Mohammed Lateef, whose 5 kanal of land at Nowpura village the government acquired in 2005 for the trade centre and an NTPC project, said that his situation makes him want to drown in the Jhelum. He says his two sons discontinued studies as he could no longer support their education and he had no money to marry his three daughters. “The land is gone, and the trade is gone, too,” he said. Roughly two decades ago, when the land acquisition was initiated, he had thought that a new era was beckoning. Villagers said that the government gave them Rs.80,000 for every kanal of land. But today, they regret giving away their holdings.

Traders protest against the suspension of cross-LoC trade in Srinagar in April 2019. | Photo Credit: NISSAR AHMAD

Rashid Ahmed, who also hails from Nowpura, said that soaring prices had made it difficult for people like him to make ends meet. Others in the crowd agreed and pointed out that government intervention was minimum. “A family of five gets 10 kilogrammes of rice at Rs.25. But when there is no source of income, is that enough?” one of them asks.

The BRIEF survey findings show that an annual loss of about Rs.40 crore has been incurred by different stakeholders along the Uri-Muzaffarabad route. The government’s decision in September 2023 to lift additional duties on several American products, including apples and walnuts, has made things worse.

National Conference leader Omar Abdullah and Peoples Democratic Party president Mehbooba Mufti had appealed to the Centre to reconsider the decision. The traders in Uri who spoke to Frontline claimed that they were “indeed at the receiving end, as imports of walnut from the US and Chile have considerably spiked”. “Minimum support prices are not implemented. The government did not even procure pear, which we sold at throwaway prices,” one of them said.

When the trade suspension was announced, the Home Ministry briefing said trade would be resumed after “putting into place a stricter regulatory regime” in order to block misuse of the route for “weapons, narcotics and currency”. Five years down the line, nothing has been done. There is general agreement among traders that the matter is political. Attaullah Handoo, who stresses that local people in Uri are a peace-loving community, said: “Unless diplomatic relations between India and Pakistan improve, there is little chance that the trade will resume.”