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AUGUST 10, 2017

The goods exchange

  • With the resumption of cross-Line of Control (LoC) trade on the Uri-Muzaffarabad route this week, it seems that the Chief Minister of Jammu and Kashmir, Mehbooba Mufti, has upheld her promise of supporting this trade, which is also a part of the ‘Agenda of Alliance’ between the Peoples Democratic Party and the Bharatiya Janata Party. Trade was stopped in Uri on July 21 after banned drugs were seized from a truck while trade on the Poonch-Rawalakot route has stopped for over a month now after border tensions.

It’s about barter trade

  • Of late, cross-LoC trade has been in focus after the National Investigation Agency (NIA) began probing the funding patterns of traders.
  • Such administrative checks, although essential, do not address the root cause of trade irregularities.
  • While the results of the investigations have not been made public, it is important to realise that this is barter trade wherein goods are exchanged against goods without involving any monetary exchange. Therefore, regular accounting and other practices of international trade may not be applicable here.

Steps to better trade

  • First, a joint investigation team from India and Pakistan should be set up to investigate cases of narcotic and arms smuggling across the border.
  • At present, truck drivers end up being the victims although they may or may not be involved directly. Such a team should address the root cause of such instances in a speedy and transparent manner.
  • Second, to keep a check on the traders and trade practices, a monitoring cell of officials from State and Central agencies must be constituted.
  • It should monitor daily trade practices such as registration of traders, invoicing and exchange of goods, trade balancing, etc. to address allegations of hawala money, under-invoicing, and even misrepresentation of goods.
  • Trade data and information for each registered trader should be mandatorily recorded in an electronic format by the trade facilitation officer and shared with the cell at regular intervals for analysis and other checks.
  • Third, there is a need to institutionalise and formalise trading communities.
  • As an initiative, traders and chambers on both sides have come up with the idea of a joint chamber called the Jammu and Kashmir Joint Chambers of Commerce and Industry, which will have traders of both sides as well as the local chambers of Jammu and Kashmir and the Mirpur Chamber. Support from both governments will add weight to it.
  • This will also help create more transparency in transactions and information flow among traders and chambers in both inter- and intra-LoC.

Train the trader

  • Finally, it is important to impart training to LoC traders. With support from excise and security agencies, training sessions should be conducted on the standard operating procedures of this trade as well as established accounting practices such as maintaining balance sheets. This would help traders and government agencies monitor trade and ensure trader accountability.
  • Over the last year, cross-LoC trade has been affected by a number of allegations. With a resumption of trade, the government must uphold its promise of taking cross-LoC confidence building measures (CBM) to the ‘next level’ — as mentioned in the ‘Agenda of Alliance’. Thus, it is necessary that the Central and State governments take the necessary steps towards reforming trade and ensuring capacity building of traders.


Castles in the air?

  • Two months after the India-Afghanistan air corridor was inaugurated with great expectations, news that it has been hit by a shortage of cargo planes is a cause for concern.
  • Prime Minister Narendra Modi and President Ashraf Ghani had agreed on the project during the Heart of Asia summit in Amritsar in December 2016, as a gamechanger to get around Pakistan’s obstructionist behaviour in delaying truck shipments from Afghanistan to the Wagah border.
  • The fact that Mr. Ghani himself developed the plan, which allowed traders to pay what they would have to transport their goods by road with the Afghan government underwriting the rest, showed Kabul’s commitment to securing its trade links with India.

Shouldn’t India be optimising its efforts to secure connectivity and trade with other countries that lie to its west?

  • Despite its commitment of $2 billion in development aid to Afghanistan, there are few new infrastructure projects that the government has taken up in the past few years.
  • The big ones, mostly planned a decade ago, have been complete, including the Zaranj Delaram highway (which connects to Iran), the Herat dam, the Doshi-Charikar power project, and the construction of Afghanistan’s parliament complex.
  • In addition, India’s plans for the Chabahar port in Iran and the trilateral agreement to develop transit trade also need close attention.
  • The trilateral agreement has yet to be ratified in Iran, and tenders by India Ports Global Limited to develop berths as well as the railway line connecting Chabahar to the Afghan border at Zahedan (first planned in 2011) continue to be delayed.
  • Similarly, there has not been sufficient follow-through on the Turkmenistan-Afghanistan-Pakistan-India gas pipeline after its inauguration in 2015.
  • Eventually, India’s dealings with both Afghanistan and Iran are not just about circumventing Pakistan. They should open up important new connectivity and commerce avenues, as well as develop markets in Central Asia, and through them to Russia and Europe.
  • While it is heartening that Road Transport Minister Nitin Gadkari recommitted to the trilateral arrangement and development of Chabahar during his recent visit to Iran, regional connectivity needs more administrative will than just ribbon-cutting ceremonies and grandly announced plans that run aground when the government’s focus shifts elsewhere.