Why in News:

• India recently suspended the cross-LoC trade, alleging misuse of the facility by individuals linked to terrorist groups.

What is the government’s rationale?

• The Union home ministry has decided to suspend trade across the Line of Control (LoC) between J&K and Pakistan- occupied Kashmir (PoK) at two locations – Salamabad and Chakan-da-Bagh.
• The government’s contention was that this trade was being misused by locals on both sides of the border.
• Trade channels are being exploited for sending illegal weapons, narcotics and fake currency into India.
• The zero-tariff barter system is also being violated in the form of under-invoicing and exchange of third party items such as California almonds.
• Reportedly, government officials identified at least 10 militants who were essentially residents on the Indian side of the LoC.
• They were using trade openings to cross over to PoK and joining terror outfits such as Hizbul Mujahideen.
• Under the garb of local trade such individuals were assisting militants and separatists within Kashmir.
• Given these concerns, the decision to suspend the cross-LoC trade seems justified.
• But in terms of the Kashmir policy, this move seems to be yet another misstep by the government.

Why is Cross-LoC Trade Significant?

• The cross-LoC trade, started roughly a decade ago, gains significance given its nature and origin. Being in the form of barter trade, it allows locals on both sides of the LoC to trade without the international trade requirements. It was conceived as one of the confidence- building measures between India and Pakistan, following the 2003 India-Pakistan ceasefire along the LoC.
• The idea was to allow locals, who often have strong family and cultural ties across the LoC, to mingle. It was believed that the socio-cultural interconnectedness with barter trade would lead to a more structured economic and political coming together of the region.
• Trade created an atmosphere of trust that was more conducive to allow for a thaw at a higher political level. Since trade commenced in 2008, employment to the order of more than 1.6 lakh days had been created for the local population.
• The volume of trade over the decade has crossed Rs. 6,000 crore.

Why is suspending Trade Inadvisable?

• The government had recently decided to close the national highway between Udhampur and Baramulla to civilian traffic for two days a week. This move, to facilitate troop movement, had already caused a lot of unrest in the region.
• Now, stopping exchange of goods and putting at risk the livelihood of the people on both sides of the LoC seems a less effective idea.The solution to violations of trade agreement is to enforce the rules stringently, and not to stop exchange of goods altogether. Also, security concerns could be addressed through greater scrutiny by border patrol officials, in-depth background checks and better intelligence. Suspending the trade abruptly serves little purpose apart from further antagonising and alienating the locals.
• It is better that the government consider revoking the suspension of cross-LoC trade.