Stalled Foreign Secretary talks delay plans to hike LoC trade

The first casualty of the stalled India-Pakistan peace dialogue process through the foreign secretary-level talks is the cross-LoC trade between the two countries. Keen to give a major boost to cross-border trade in 2016, the Narendra Modi and Nawaz Sharif governments had earlier decided to increase the number of trade items, from the existing 21, which had remained stagnant for many years, to at least three times more, amid demands by trade associations in both countries. Top government sources said the external affairs ministry put the move on hold for now till the time the foreign secretary talks are resumed.

The joint working group on cross-LoC trade is now likely to meet only after the two foreign secretaries meet, the sources said, adding that the MEA had communicated this to the home ministry.

The volume of bilateral trade between India and Pakistan has been of major significance to both countries with the Indian cross-LoC trade touching nearly Rs 3 crores. The impetus for increased cross-LoC trade came after external affairs minister Sushma Swaraj’s Islamabad visit in December 2015, where both countries announced the restoration of the peace dialogue to pre-26/11 levels. The recent Pathankot terror attack, however, has not only hit the diplomatic dialogue, but also halted the speed with which New Delhi wants to engage Islamabad and dole out “friendly” gifts.

The Narendra Modi government has in the meantime also decided to ramp up its security mechanism at the cross-LoC trade points to ward off new threats from smuggling of arms. The home ministry has ensured the installation of full-body scanners at the Uri-Muzaffarabad and Poonch-Rawalakote routes. This move had been hanging fire for some years. The scanners will be able to check if vehicles are ferrying arms, explosives or drugs.

What remains a matter of worry for New Delhi is the refusal by Pakistan to convert the existing barter system to a “banking” system. Cross-border trade between India and Pakistan, started in 2008, is based on a barter system with both countries trading goods of equal value.

Indian intelligence agencies have raised a red flag, warning that it is prone to misuse by terrorists to fund militancy. So far, the cross-border trade has items such as carpets, rugs, honey, papier-mache, saffron and medicinal herbs which are exported from Uri to Chakotti (PoK), while precious stones, Peshawari leather chappals, foam mattresses, shawls and stoles and black mushrooms are sent from PoK to Jammu and Kashmir.