SRINAGAR - Two systems of moneyless international trading reminiscent of
medieval business practices have grown up in Indian-administered Kashmir (IAK).
Together, they help the tension-fraught territory generate some cash, yet the
future of both is under threat.
One, illegal, system deals with China, the other involves legal trade with
Pakistan-administered Kashmir (PAK), and both take place in the form of barter
- one article is swapped for another considered to have about the same value.
A recent heightening in Indo-China hostility has led to both countries stepping
up their border surveillance, making more difficult the illegal Kashmir-China
trade, forcing many traders out
of business as the supply of Chinese-made shoes, blankets, mobile phones and
flasks in Leh market, high up on the ancient trade route to China, dries up.
On the Pakistan front, where cross-border trade marked its first-anniversary in
October, numerous problems are making business even more difficult than with
the Chinese.
"We can't go there, we can't use money, we can't talk with them, tradable items
are limited, and if this trade has survived, it is surely a miracle" said
Raashid Ali, a trader.
Started after a gap of 60 years, the IAK-PAK trade has seen increase in both
volume as well as number of participating traders, even as teething problems
remain.
The trade was started in 2008 when Kashmir was beset with mass unrest following
the controversial order to transfer eco-fragile land to a temple trust. The
protests against and counter protests by Hindus in favor of the transfer
polarized the entire state. During the protests, right-wing Hindu activists
blocked Kashmir's sole highway linking it with India. Entire supplies to
Kashmir came to a halt and people demanded an alternate highway for trade.
India soon announced that the old Srinagar-Muzaffarabad road connecting the
capital cities of the two sides of Kashmir would be opened for trade. "This was
done to pacify the sentiments of the people, and restrain them from turning
uncontrollable," said Ali.
The trade initially got a good response, but the Indian government soon backed
away from developing it.
"Just after three months, the support from the Indian government started
receding, and today there is hardly any support in improving the condition of
the trade across the LoC, " said Ali, referring to the Line of Control
demarcating the two parts of Kashmir.
Now businessmen feel the Indian government has no will to further the progress
of the trade. Mubeen Shah, who was chairman of the Kashmir Chamber of Commerce
and Industries (KCCI) when trade got under way, said "last year, both
governments started the trade in just 10 days, as they had the compulsion to
diffuse tension. After that, nothing was done.
"If they can start trade in 10 days, they can streamline it in just two days,
but when they are not willing, what can we do?"
The Indian and Pakistani governments have yet to decide over the mode of
payment for the cross-border trade. One proposal was to allow the two leading
banks from either side to open six branches, three each in IAK and PAK, but
India continues to deny permission for this. Traders rank the lack of banking
facilities high on their list of problems. "In the absence of banking, the
problems are increasing with every possible day," said Shah.
Security agencies who maintain a constant watch over the entire trading process
recently alleged that some traders are exporting commodities of less value than
what they are importing. Allegations were made that surplus money went to
insurgents, and the agencies initiated an inquiry.
"Some of our genuine traders are even being accused of Hawala trade [money
laundering] by police, as they feel there is a discrepancy between the import
and export data," said Shah. "No doubt there are security apprehensions, but
all of them can be met with the start of proper banking facility, otherwise
everybody will be suspected."
India has also denied permission to traders from its side of Kashmir to cross
the border to sign individual trade agreements, although traders from PAK have
visited the Indian side. Traders have been demanding multiple permit passes, so
that they can move easily to and fro across the Kashmiri divide.
Nor do telephone links offer help, with lines jammed from the Indian side,
rendering calls to Pakistan impossible - although calls can be made in the
other direction.
Fruit traders, with easily perishable goods, feel these limits on their
business acutely.
"They can't go to that place, they can't telephone them, they can't go to
anybody for dispute resolution as there is no such authority, and they don't
know how to get the money" for their goods, said Shah.
Traders say the entire process is run blindly, as most of them don't know who
is sending commodities to whom across the Line Of Control. "It is more
difficult than smuggling," said one in the border town of Uri. "In that case,
you at least know your trading partner, talk with him, select the items and so
on."
Even when a sale might be possible, there is no authority that can resolve any
differences arising out of delay in payment or in the comparison of the prices
of products being exchanged. According to G R Bhat, president of the Fruit
Growers Association, "we had a problem with payments being held in PAK for
apple exports, but we couldn't make a complaint to anybody as nobody was
authorized, so we had to stop the trade in apples."
Even with all the barriers, the trade on this route is duty free, and so has
attracted the attention of traders from non-Kashmir parts of India and
Pakistan. "Whatever minimal trade we carry on is also being eyed by traders
from Delhi and Lahore, and they have planted their agents to do the trading,"
said one businessman.
Trade is at present carried out under rules termed the Standard Operating
Procedure (SOP). Under these, goods imported in dozens of trucks have to be
unloaded within two hours, which is not always possible, and vehicles often
have to be sent back without unloading, causing losses and leading to traders
mocking the SOP as "strange operating procedure". Adding to frustrations,
security conscious border guards demand entire consignments be opened for
manual checking, which affects the packing and quality of exporting goods.
A weight restriction on trucks involved in the cross-LoC trade also limits them
to carry just 1.5 tonnes of goods. Traders want the limit to be raised to 10
tonnes.
In the first year of operation, trade worth 450 million rupees (US$9.7 million)
was officially possible, involving 2,273 trucks, but traders say this could
increase substantially if all the hurdles were removed.
"This is the turnover we reached in one year," said KCCI president Nazir Ahmad
Dar. "In reality, this trade has far more potential, and could bring in
billions of rupees, if only the government removed the bottlenecks."
Even so, Mohammed Ashraf Wani, custodian of the Trade Facilitation Centre in
Uri, on the Indian side of the Line of Control, said, "Despite the number of
shortcomings, trade has progressed a lot. We started with few traders and now
there are 190."
Officially, the trade is limited to about two dozen items that have their
origin of produce in Kashmir region. In reality, trade occurs in commodities
such as dates, oranges, and coconuts produced elsewhere in both countries.
India occasionally bans certain imports on one pretext or another. In the
middle of the year, garlic was a hot item to import and send on to markets
within India, before that was halted with pest problems given as the reason.
Last year, traders from both sides formed a Joint Chamber of Commerce and put
forward a list of demands to their respective governments. They have
recommended that the telecommunication links between the two Kashmirs be
restored, a banking facility be created, trade permits granted for multiple
entry from both sides, and that trade be demand-driven, with a list of items to
be traded put forward for review every three months.
Indian Prime Minister Manmohan Singh agreed during a recent visit to Kashmir
that cross-border trade there is beset with problems. While calling for
cooperation from Pakistan, Singh however said that for a "productive dialogue"
it is "essential that terrorism must be brought under control".
Businessmen had hoped that the cross-LoC trade would ultimately lead to
important trade activity between Kashmir, Pakistan and Central Asia. "But all
our hopes have been dashed," said Shah. "No promise has been kept. We were led
down a path which was a mirage."
Haroon Mirani is a Kashmir-based journalist.
(Copyright 2009 Asia Times Online (Holdings) Ltd. All rights reserved. Please
contact us about
sales, syndication and
republishing.)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
