Human cost of cross-LoC trade ban very high, says new research

Published : January 30, 2021 15:22 IST

Protest against the suspension of the cross-LoC trade by the Ministry of Home Affairs, in Srinagar, an April 2019 picture. Photo: NISSAR AHMAD

As many as 4,229 families, at two trading points of Uri-Muzaffarabad and Poonch-Rawalakot, have been severely impacted by the suspension of cross-Line of Control (LoC) trade in Jammu and Kashmir in April 2019, a new research, “Bridging the Divide”, has found.

The research, carried out and published by the New Delhi-based Bureau of Research on Industry and Economic Fundamentals (BRIEF), was based on on-the-ground interactions with stakeholders in Srinagar, Baramulla, Uri, Poonch districts.

The research stated that of the total families impacted by trade suspension, around 2,500 families were traders and their staff, 728 trucker and helper families, 420 labourer families, apart from families of people associated with guest houses, gas stations, restaurants, and mechanics in border areas that were all directly involved in the day-to-day trade operations at the two trading points.

As per the findings of the research, an annual loss of about Rs.40 crore has been incurred by different stakeholders along the Uri-Muzaffarabad route due to the suspension of LoC trade. Estimates of cross-LoC trade in 2008-19 and interactions with merchants at Uri suggest that about 12,312 trucks would have been used to transit goods via the Uri-Muzaffarabad route for a period of one year after March 8, 2019, had there been no trade ban. With so many trucks crossing over the LoC, potential freight earnings of Rs.9 crore to transporters from trucks transiting to and fro via the Srinagar-Chakoti route were lost. “Assuming that traders average a profit of Rs 20,000 per truck, potential profit of Rs.25 crore for the 12,312 trucks that would have crossed LoC, could not be realised by the traders in Uri,” the findings of the research said.

As per the research, a wage loss of Rs.1.60 crore for labour and Rs.1.45 crore for support staff, including agents, middlemen and representatives, has been estimated at the trade facilitation centre, Salamabad, Uri. The research brought to the fore voices of deprivation from the region. “When the trade was suspended, I had six trucks of fresh bananas ready to be sent across the following day. I had to dump the trucks of bananas because of their short shelf-life. From earning over one lakh rupees, I now earn less than Rs.20,000 a month,” a trader from Poonch is quoted as saying.

A labourer from Uri says, “I am a father of six children. I used to earn around Rs.800 a day before the trade suspension. Since I currently don’t draw anything, the financial constraints have pushed my son to quit his studies to work in a dhaba [hotel].”

Despite intermittent suspensions and ceasefire violations, cross-LoC trade survived more than a decade, until this trade was suspended in April 2019. Between 2008 and 2019, Rs.7,500 crore worth of trade was recorded across the LoC. This trade generated more than 1,70,000 job days, and freight revenue of about Rs.66.4 crore for transporters in Jammu and Kashmir, on account of 1,11,113 trucks exchanged so far and Rs.90.2 crore paid to labourers.

The report underlines that while these numbers may be only a minuscule part of India’s overall economy, the impact of such Confidence Building Measures (CBMs) go beyond standard metrics. The report also highlighted the assault on the source of livelihood that this ban entailed, as cross-LoC trade had significantly helped enhance connectivity for the otherwise far and isolated border areas of the districts of Poonch and Baramulla.

It was in 1972 that the Line of Control (LoC) between India and Pakistan was conceived as a part of the Shimla Agreement to serve as de-facto border between India and Pakistan. Though it was almost always an issue of contention, it was 33 years later that the Union governments of the two nations decided to set wheels in motion. On April 7, 2005, Prime Minister Manmohan Singh flagged the first cross-LoC bus titled ‘Karwaan-e-Aman’ from Sher-i-Kashmir Stadium in Srinagar towards Muzaffarabad. Later, in 2008, the governments on both sides decided to enhance the existing CBM by establishing trade routes across the LoC. The routes connecting Uri-Muzaffarabad and Poonch-Rawalakot were established as trade routes for cross-LoC trade.

The Ministry of Home Affairs (MHA) in April 2019 suspended the cross-LoC trade in Jammu and Kashmir citing “funnelling of illegal weapons, narcotics and fake currency” as reasons. “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.,” said an MHA spokesman who briefed the media at the time. The move was seen as a fallout of the deterioration of India-Pakistan bilateral relations in the aftermath of the Pulwama terror strike of February 14, 2019, which left 40 Central Reserve Police Force personnel dead.

The research advocated the need for a revised strategy to re-initiate the cross-LoC trade when and if India and Pakistan look at reviving the CBMs across the LoC. Based on a detailed diagnosis of the trade model and on-ground research and direct interviews with stakeholders, Afaq Hussain and Nikita Singla, who authoured the research, recommended some very critical reforms in the areas of infrastructure, digitisation of trade, establishing trade talks, dispute settlement mechanism, expanding the trade constituency and revision of standard operating procedure guidelines. “These apprehensions need to be addressed across the complete trade ecosystem, including enhancing transparency in the standard operating procedure, invoicing, GST norms, and trader registration,” they said.

Afaq Hussain told Frontline, “Clarifications on HS codes to prevent misrepresentation of commodities; setting up a rules of origin framework to avoid import of third-country goods; devising rules pertaining to GST and inter-state taxation to prevent evasion; and trader-registration policies to ensure credibility of the traders involved are immediate steps that need to be taken in order to address long-standing concerns over cross-LoC trade.”


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