SRINAGAR - A once-vital link between the Indian and Pakistani controlled sides
of Kashmir, closed to trade for 60 years, is set to throb with the sound of
diesel trucks once more this month when trade is scheduled to reopen between
the administrative capitals of the two regions.
The 170-kilometer Srinagar-Muzaffarabad road connects the capitals of
Indian-administered Kashmir and Pakistan-administered Kashmir (PAK). Opening it
- planned for October 21 - could indicate the start of a new prosperous future
for traders and local people, if the central governments in New Delhi and
Islamabad allow it.
Up until now, the Indian-administered Kashmir (or IAK) has been
dependent on the lone
Srinagar-Delhi highway, called 1-Alpha, for
trading with the outside world. This route is
vulnerable to bad weather, landslides, insurgent
activities and lately blockade by Hindu
fundamentalists, who recently tried to block
Muslim Kashmir of essential supplies, triggering
mass protests in the region. About 50 people were
killed, which ultimately pressured
the
government to open the alternative Srinagar to Muzaffarabad road, also known as
the Jhelum Valley (JV) road.
The Kashmir economy is largely based on its horticulture and handicrafts
industries. Benefits of opening the shorter JV road include drastically reduced
transportation time for farmers' perishable commodities.
"Currently we incur huge losses as our fruit is wasted along the long and often
blocked Jammu-Srinagar highway," says Inayatullah, who has an orchard along the
JV highway. "The losses are sometimes unbearable for a farmer, and crops such
as cherry and apple are more prone to decay."
On average, a truck takes 36 hours to reach New Delhi on a clear road and much
longer if it is headed to other Indian markets. "But if we send our fruit
through the JV road, it would reach Muzaffarabad in four hours and Islamabad in
six to eight hours. Besides, it is an all-weather dependable road that will
never disappoint," he said.
Kashmir annually exports fresh and dry fruits worth US$600 million.
Farmers also believe that with the presence of an alternative market, India's
monopolistic grip on their output will break and they will get better prices
due to competition. At present the region's entire fruit crop goes to Indian
markets and to some extent to other countries through India.
Mubeen Shah, president of the Kashmir Chambers of Commerce and Industries
(KCCI), sees reopening of the JV road as holding vast potential for Kashmir.
"Trade via Muzaffarabad can be expanded to Gulf countries, with low delivery
charges. The market in these countries is vibrant and the demand for Kashmiri
items is perpetual," he said.
The trade, when started, could also help to create thousands of new jobs as new
markets will be established along the highway, along with expansion of existing
businesses, new shops and catering services.
Before its division in 1947, Kashmir's trade was largely with Pakistan and the
JV road was an important route. "There was no direct link with present day
India, and it too was connected via Pakistan," says Ghulam Rasool Khan, 70, a
prominent handicrafts businessman in Kashmir who like many contemporaries used
to have commercial establishments in both Kashmir and Pakistan. This changed
when the 1947 war between India and Pakistan left Kashmir divided between India
and Pakistan. All means of communication between the two sides were blocked,
including the JV road, which was cut by the heavily mined and militarized Line
of Control, the de facto border dividing Kashmir into two.
IAK, with a population of 12 million and gross domestic product of about $8.5
billion, is fed by imports from other Indian states. According to Shakeel
Qalander, president of the Federation Chamber of Industries Kashmir, "ours is a
totally one-sided economy; we import merchandise worth $8 billion every year
for our day-to-day needs".
The region has to import everything from needles to trucks and bananas to bread
to sustain itself. At present, this market has been catered to by Indian and
multinational companies (MNC) from mainland India.
By comparison, the PAK economy, sustained by a population of only 4 million
people, is very small and a large part of it was destroyed during the October
2005 earthquake. The most recent budget presented to the area's assembly was
only about $500 million.
While the two relatively small economies will gain from increased intermingling
of trade, India and Pakistan will see improved links in the wider perspective
of the parent countries' overall economies and politics. Yet both sides are
cautious about increased trade for different reasons.
India fears an expansion of trade with Pakistan through Kashmir might encourage
Kashmiri separatism and a reduction of Kashmir's dependence on India, while
increased contact raises other security issues. Pakistan fears its markets may
be flooded with cheap Indian goods under the guise of coming from Kashmir,
concerns compounded by the present dire state of the Pakistan economy.
Pakistan is already running a $20 billion trade deficit, including a $1 billion
deficit with India from bilateral trade that amounts to only $2 billion.
With both countries concerned about the outcome of increased traffic across the
Kashmir divide, trade may be limited to fewer than 15 low-cost itmes of
Kashmiri origin, according to initial reports. These would include fruit,
handicrafts, rock salt, molasses, saffron, medicinal plants, flowers and the
packaged Kashmiri dish wazwaan.
Items produced by multinationals or other companies in factories located in
Kashmir would not be approved for trade, according to official sources. That
reduces to the point of invisibility any chance of Kashmir securing large
investments to set up manufacturing bases by big companies to cater to Indian
and Pakistani markets.
"IAK has a market of about $500 million for poultry, meat and dairy products,''
says Shahnawaz Khan, a journalist based in Srinagar. "If these products were on
the list there is every chance that it would have lifted the PAK dairy
industry. Similarly, IAK has some indigenous manufacturing plants, involving
leather, watches, electric transformers, medicines, motor spare parts, and
paint, which would have gained by receiving orders from the Pakistan side. But
again these items are not included in the proposed list of items to be traded.
It is simply half-baked trade for the sake of trade."
PAK could have helped IAK when its only road link has been blocked by
landslides for weeks during the harsh winters. At times India has to airlift
vegetables and other items to IAK.
Khan believes that PAK can easily export goods such as poultry, dairy products,
vegetables, fruits and other simple items worth $1 billion to IAK if trade is
really thrown open between the two sides. "These are items which can be
produced in PAK easily, and Indian Kashmiris would love to buy products from
that side due to the curiosity factor, Kashmiri nationalism, Muslim sentiment
and quick transportation."
The US government is considering a bill to establish a number of Reconstruction
Opportunity Zones (ROZ) in Pakistan, from where goods would be exported duty
free to the US, with one proposed for PAK. If this were to become operational,
it is expected that Kashmiri investors from the Indian side would like to
invest there, particularly in the handicrafts sector.
The US is a leading consumer of handicraft goods, particularly carpets.
Kashmiri traders have expressed interest in relocating, outsourcing or
establishing their carpet weaving and other handicraft-manufacturing units in
PAK, to take advantage of the proposed US bill. Kashmir currently exports
carpets and other handicrafts worth $500 million.
With cross-border Kashmiri trade limited to low-priced goods, such an impetus
to economic revival seems as distant as ever.
As Qallander points out, "India says 'yes' to trade, but we don't know what to
trade, how to trade, when to trade and how much to trade. I think Kashmiris
will be allowed to trade but according to the wishes and whims of two
countries."
Haroon Mirani is a Kashmir-based journalist
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the
government to open the alternative Srinagar to Muzaffarabad road, also known as
the Jhelum Valley (JV) road.
