Hardening its stand against Pakistan, Government of India (GoI) Thursday indefinitely suspended cross-LoC trade at two points along the Line of Control in Jammu and Kashmir effective Friday.
In an official statement, the Home Ministry said orders have been issued for halting the trade at Salamabad of Baramulla in Valey, and Chakkan-da-Bagh of Poonch district in Jammu region, after reports of very large scale "misuse" of the cross-LoC trade.
"It has, therefore, been decided by the Government of India to suspend the LoC trade at Salamabad and Chakkan-da-Bagh in Jammu and Kashmir with immediate effect,” the statement said.
It said a stricter regulatory and enforcement mechanism is being worked out and will be put in place in consultation with various agencies. “The issue of reopening of LoC trade will be revisited thereafter".
The four-day-a-week trade is meant to facilitate exchange of goods of common use between local populations across the LoC in Jammu and Kashmir. It is based on 'Barter' system and works on zero-duty basis.
The MHA statement said that reports have been received that the LoC trade is being misused on a very large scale.
"It has been revealed that the trade has changed its character to mostly third party trade and products from other regions, including foreign countries, are finding their way through this route.
"Unscrupulous and anti-national elements are using the route as a conduit for Hawala money, drugs and weapons, under the garb of this trade," it claimed.
It said that during ongoing investigations of certain cases, the NIA has found a significant number of trading concerns engaged in the LoC trade are being operated by persons closely associated with banned terrorist outfits.
"Investigations have further revealed that some individuals, who have crossed over to Pakistan, and joined militant organisations have opened trading firms in Pakistan. These trading firms are under the control of militant organizations and are engaged in LoC trade," it said.
It said that after the February 14 Pulwama incident, in which 40 CRPF personnel were killed by a suicide bomber of Jaish-e-Mohammed, the government withdrew the Most Favoured Nation 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," it said.
The cross-LoC trade on Srinagar-Muzaffarabad and Poonch-Rawalakote routes was started on October 21, 2008 as a Confidence Building Measure (CBM).
The trade is carried out as per a Standard Operating Procedure (SoP) prescribed by the Ministry of Home Affairs, in which a list of 21 Agreed Items to be traded are mentioned. From October 15, 2011, trading days were extended from two to four.
The trade from 2008 till the 2017 fiscal stood at over Rs 4,400 crore at the Uri trading centre, while the figure for the same period at Poonch stood ar Rs 2,542 crore.
The main items exported were bananas, herbs, embroidery, zeera and Tamarind, red chilly and cumin, while imports mainly included almonds, dry dates, herbs, mangoes and pistachio.