Why in News?

• India suspended Line of Control (LoC) trade between Jammu & Kashmir and Pakistan- occupied Jammu & Kashmir with effect from 19-04-2019 after receiving reports that the cross-LOC trade routes were being misused by Pakistan-based elements for funnelling illegal weapons, narcotics, fake currency, and so

Background:

• The LoC trade was meant to facilitate exchange of goods of common use between local populations across the LoC in Jammu &Kashmir
• The trade is allowed through two Trade Facilitation Centres located at Salamabad, Uri, District Baramulla, and Chakkan-da-Bagh, District Poonch. The trade takes place four days a week. The trade is based on barter system and zero duty basis.
• But unscrupulous and anti-national elements are using the route as a conduit for Hawala money, drugs and weapons, under the garb of this Trade

• According to ongoing investigations of certain cases by the National Investigation Agency (NIA), it has been brought out that a significant number of trading concerns engaged in LoC trade are being operated by persons closely associated with banned terrorist organizations involved in fuelling terrorism and
• Investigations have further revealed that some individuals, who have crossed over to Pakistan and joined militant organizations have opened trading firms in Pakistan. These trading firms are under the control of militant organizations and are engaged in LoC trade.
• After the Pulwama incident, Government of India has withdrawn the most-favoured nation (MFN) status to Pakistan. Inputs have also been received that in order to evade the consequent higher duty, LoC trade is likely to be misused to a much larger Extent

• So Government of India decided to suspend the LoC trade at Salamabad and Chakkan-da- Bagh in Jammu and Kashmir with immediate effect.and the issue of reopening of LoC trade will be revisited thereafter