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Envisaging free –economic zone in South Asia

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By Zafar Iqbal

zafar picBarak Obama is not alone when he imagines that cross -border connectivity can lead greater prosperity and understanding in South Asia.  There are some domestic voices that confirm this notion.  Dr. Mubeen, a physician turn entrepreneur, is one of those who advocate that best way forward for India and Pakistan is improved trade relations.

“India and Pakistan should declare Kashmir as free economic zone so the people of the region can gain benefits of grown trade and development.”

Since October 2008 the starting of barter trade between India and Pakistan on their disputed Kashmir border, there is a mounting demand to convert -the cross-Line of Control (LoC) trade between Jammu and Kashmir and Pakistan-administrated Kashmir (PAK) – into actual trade.


Beleaguered in historical religious and political animosities and with the legacy of deadly wars trade between India and Pakistan has been moribund for decades, turning South Asian region among one of the least integrated region with at less than 2.7 per cent regional trade, as compared to 20- 25 per cent of Gross Domestic Product (GDP) trade done with other parts of the world.

One of the major contributors of economic stalemate between the leading players -Pakistan and India, is embedded with historical Kashmir conflict which has witnessed few key social and economic processes like resumption of trade and travel ties between divided parts of Kashmir.

The Cross LoC Trade is carried out on historical road which before the partition of British India was called as Jhelum Valley Cart Road from Kohala to Baramulla in Indian Kashmir. It was completed in 1889 and was extended to Srinagar in 1897. The first metaled road in Kashmir was only link to connect this area with India and rest of the world. It was made by British to respond to the possible Russian attack on the British India.

Amid looming Russian threats for Empire compelled the shrinking British administration to construct 248 kilometer long road within only two years at a time when engineering and technology  were not so sophisticated and local engineers had estimated the duration of proposed task over 12 years.  After the completion in 1890 it boosted the trade with Kashmir and rest of the world.

 “At the end of 19th centenary the volume of trade was 65, 000 Crore Rupees according to current monetary value,” estimates Dr. Shah, who heads Jammu and Kashmir Joint Chamber of Commerce and Industry (JKJCCI).


However, 1947 Indian partition ceased all trade and travel movement on this road till 2007 when India and Pakistan agreed to start Intra-Kashmir barter trade.

Dr. Shah is optimistic about dramatic surge in trade in this route, if Pakistan and India resolve the hindrances. His firm assertion about the future of enterprise is based on unmatched interest and unprecedented support from trader’s fraternity from both side of Kashmir who gathered recently in Summer Capital of Kashmir to discuss the challenges and prospects of their businesses.

Traders from Pakistani Kashmir were not allowed to ride on a much hyped Muzaffarbad-Srinagar Bus, which is operational since 2005 as part of Confidence Building Measures (CBMs) between India and Pakistan. The traders had to take the long and tiresome Lahore-Delhi-Srinagar route. Sadly, they took a journey of over 48 hours to reach a destination which could have been covered within 6-8 hours easily. 

This is a bitter aspect of the commerce that has witnessed a plethora of pitfalls since its commencement. Inexistence of banking mechanism, poor communication facilities, absence of conflict resolution mechanism for stakeholders, widespread logistic controls, excessive manipulation of security forces and shabby packaging are few prominent problems unaddressed so far by Pakistani and Indian diplomats who periodically meet in New Delhi and Islamabad, presumably honouring tapping of Obama administration to foster bilateralism in subcontinent.

The diplomatic commencements move with the snail’s pace in terms of their implementation, traders complain. They call for more representation and powers in the enterprise which is   enormously dependent on the whims of Indian and Pakistani spy agencies and bureaucrats who decide what is tradable and who can travel in his or her own homeland which is tragically divided into Indian and Pakistani parts.

Traders are allowed to do the business of only 21 tradable good. In reality the list of tradable items has come down from 21 to 15. Indian and Pakistani regimes imposing such bizarre regulations on the trade make the mockery of notion and process of the trade liberalization.

As a result, unresolved problems have caused conspicuous slowdown to cross-LoC trade. For instance, in only Indian administrated Kashmir it has declined from 600 registered traders in 2008 to only 70.

Furthermore, India and Pakistan have restricted the movement of traders so they cannot interact freely. Even civil society interventions could not free such controls.  As a result, traders from Pakistani side had to wait for over 8 months to receive their visas for their recent Indian visit.

Aside from modalities and logistics problems there are some more critics who question the viability and intentionality of the handlers of this trade.  They blame Indian and Pakistani governments for eye washing the real issues by undermining through cosmetic measures. Since 1989 Kashmir has witnessed a separatist’s movement from India. Albeit a visible decline in militancy, few of them consider these trade relations take the original dispute to the back burner.

Wounded emotions of divided Kashmiris are not the only concern, some complex modalities also hampering this trade process.  People say that goods which come from Indian side must bring the real effects for the consumers in Pakistani Kashmir; however, imported goods are sent to Pakistani markets in Islamabad and Rawalpindi and then again brought back to the Pakistani Kashmir with rocketing prices due to tolls and taxes.

 “This nonsense should be stopped, if the architects of Cross-LoC trade really want the trickle- down effects of the business for common consumers, local business structures must be strengthened ,” opined Mubarak Haider, President of Intra-Kashmir Traders in Muzaffarabad, who recently returned from Indian Kashmir.


He hopes that recent pledge by Indian and Pakistan governments to initiate religious and tourist exchanges across Jammu and Kashmir and resolve the   complexities of Cross LoC trade will help to people contacts in a divided region and also translate the dreams of   harmonious and prosperous South Asia into a reality.

(The writer is a campaigner and independent writer.  He could be reached at

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