Despite the hype and promise of trade flourishing on both sides of the Line of Control, the reality is far from ideal. Shams Irfan reveals the tangled web that trans-LoC traders are increasingly finding themselves in.

In a small dimly lit restaurant named Sukoon [peace of mind], half a dozen men, looking weary, sit at two big tables. With the fear of bankruptcy visible on their faces, they discuss the losses they have incurred in cross LOC trade. Their collective whispers remind you of the early nineties, when people would often talk in hushed voices to avoid any attention.

The eldest among them is Haji Abdul Rehman Shagoo. After getting the necessary clearances, Shagoo started trading onions across the LoC (the de facto border that divided jammu and Kashmir between India and Pakistan) in 2008. Within a few months,  he made some profits and started to trade in a few more listed items and bartered dry fruits and medicinal herbs with a Muzaffarabad based trader through his trading company—Shagoo and Sons.  

Downward Spiral

Initially things looked really favourable on both sides of the LoC. But once the media-attention waned off, we were abandoned like orphans by authorities,” said Rehman.

Within six months of trading, Rehman started losing money as there was no proper market available for the goods he received from across the LoC. “Without proper communication facilities between traders from Srinagar and Muzaffarabad, it became difficult for a trader to keep tabs on the goods he sent across the LoC,” said Rehman.

“We are not able to travel across the LoC. If a trader’s record is clean and he is not involved in any anti-India activity, then he should be allowed to travel frequently across the LoC so that cross-LoC business flourishes,” he added.

The government had promised people to people contact when the trans-LoC trade links with Pakistan were opened. But that promise never became a reality. Traders still struggle to convince the authorities on both sides of the divide to allow them to trade goods freely.

“Traders on both sides of the LoC should be able to meet each other freely,” said Haji Asif Akbar Lone, a young trader from Baramulla who also heads the trans-LoC Traders Association. “The real success of this trade lies in confidence between traders on both sides of the border,” he said.

In most of the cases traders on both sides are not aware of who they are dealing with. “Trans-LOC trade is like a big gamble for us. We have to trust unknown, unseen people with goods worth lakhs of rupees,” he added. As traders don’t know who they are dealing with there is no guarantee of recovery of money as traders on both sides default regularly leaving the other party in heavy debt. Out of 21 tradable items agreed upon by Indian and Pakistan in 2008, only two items are being traded right now. “Presently we only trade chilies and dry fruits,” said Lone. “At the height of trans-LoC trade there were around 500 registered traders in J&K. But after people started losing money, only a few remained,” he added.

Paved with Corruption

Another trader who wishes not to be named for fear of reprisals from the authorities said, “The only people who are making profits from this trade are the corrupt custodians at Salamabad Terminal.” Custodians and custom officers were appointed by the state government to facilitate the trade but the alleged mismanagement by these officials have dented the trade in a big way, said one of the traders.

“If I send goods worth say about ten lakh rupees, and receive goods worth 15 lakh rupees from across the LoC, then authorities accuse us of using trans-LoC trade as a cover for Hawala transactions,” he said. “If the government provides us with banking facilities to transact with traders across the border, then things will become transparent and hassle free,” he said.  “Right now we are allowed to exchange goods only. It seems we are moving backwards. Imagine, in the 21st century we are doing business using the old barter system,” he added.

Traders also claim that government has failed to provide infrastructure needed for the smooth flow of goods at Salamabad. Out of 21 prefabricated structures there are only six storage houses at Salamabad. “Our goods rot in the open while the government thumps its back for succeeding in facilitating the trade,” said Ali Mohammad Wagay, a trans-LOC trader.
One of the traders from Pattan, Baramulla who wishes not to be named, previously traded apples at the Fruit Mandi Sopore. He jumped into the trans-LoC trade in mid 2009 as things looked upbeat at that time. He started sending spices across the border and received dry fruits in return.  

“I had to sell my ancestral land to compensate the losses incurred in trading goods across the LoC,” he told Kashmir Life.  
Sixty-five -year old Abdul Majid Wani, of Pattan in district Baramulla, started trading in dry fruits procured from a Muzaffarabad based trader.  After negotiating prices with a Delhi based trader, Wani started sending him truckloads of dry fruits. But things turned ugly for Wani when the trader in Delhi refused to pay the agreed upon prices and blackmailed him into reducing the price of goods, once he received the consignment. “After goods reached Delhi, he [trader in Delhi] told me that the goods sent by me are substandard and he will not be able to pay the agreed upon price,” said Wani.

Taking advantage of the situation, traders in Delhi often take undue advantage of trans-LoC traders as they know that there is no local market in Kashmir for such items. “They back off from their commitment at such a time when we do not have any other choice but to sell our goods at a loss,” said Wani.   

“I had already paid custom duties and transportation for those goods and then he told me that, ‘either take your goods back or be flexible with your rates,’” he said in a stammering voice.  As losses started to mount, a nervous Wani traded more vigorously with an unknown trader in Muzaffarabad thinking that he would compensate the losses by raising the trade volume. But the trader in Muzaffarabad defaulted soon after, and Wani is now left at the mercy of a less friendly trader in Delhi who refuses to pay the amount agreed upon previously.

“If we had a proper trading facility in Kashmir where buyers would come from all over the world for these goods, then we could have negotiated terms and conditions according to our convenience and not the other way round,” he said sadly.

Harrasments and Accusations        

Muzaffar [name changed], told Kashmir Life that in the last financial year, he paid around one lakh 60 thousand in bribes to police, cargo, and STF—all just to save himself from unnecessary harassment from them. “Since the start of the trans-LOC trade, each year we have to repeatedly prove ourselves innocent, and prove that we are not involved in Hawala transactions. They even accuse us of being pawns in the hands of Pakistan and that we facilitate the flow of arms into Kashmir instead of goods,” he said.

Another major reason for traders losing their money was the lack of a proper system in place that would have kept a check on goods bartered through the Salamabad – Chakothi terminal. “When we jumped into the trade we were not aware of the risks involved. Now they are harassing us for petty gains,” he said.

According to traders, custodians at Salamabad have maintained proper registers with names and details of goods traded. “They have kept personal registers for keeping a tab on how much bribe a trader owes them. Rampant corruption is killing this much hyped trade link between India and Pakistan,” he added.   “We have to pay 0.50 rupees towards custodians on each kilogram of goods we send or receive. Their [custodians] monthly commissions are usually more than what we make as profits,” he said.

Mohammad Ashraf Pandit, 45, forayed into trans-LOC trade towards the end of 2009, hoping that it would improve his financial condition. But recently, he had to sell his wife’s jewelery and is still not able to pay off his debt. “The custodians at Salamabad terminal treat us like beggars. They won’t even allow us to enter the compound where goods belonging to us worth lakhs of rupees lie unattended,” he said.

Before Kashmir Life left the scene, an enthusiastic trader who owes 35 lakh rupees to a trader in Delhi said, “We bore losses to keep their [Pakistanis] heads high.”


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