'Terror funding through almond, drug trade through LoC'

Instances like almonds produced in California finding their way to Kashmir violating norms and using profits earned from it for terror funding as well as using the cross-Line of Control (LoC) trade route for drug trade prompted the government to indefinitely suspend the mechanism from Friday.

New Delhi has promised to re-visit it after enforcing stricter measures to ensure that the benefits of LoC trade can be availed by local population only and not terrorist organisations and “unscrupulous” traders who aim to “syphon off benefits to fuel instability” in Kashmir.

The announcement on suspension of trade between India and Pakistan through the LoC, which started on 21 October 2008 and saw intermittent stoppage, was made on Thursday came two months after withdrawing the Most Favoured Nation (MFN) status to Pakistan following the Pulwama terror strike.

Sources said a combination of factors prompted the decision to suspend trade across Chakan-Da-Bagh and Salamabad, which was “manipulated” by third parties for trading goods being produced from outside Jammu and Kashmir.

"For example the almonds produced in California finding their way through LoC trade involving a large transport network spread in many countries," a senior Ministry of Home Affairs (MHA) official said.

During investigations, the National Investigation Agency (NIA) had found out about the "dubious hawala transactions for terror financing". It claimed that "inimical elements” in Pakistan used to identify a suitable Pakistani trader firm and hand over the money that is to be transferred to anti-national elements and terrorists organisations on the Indian side.

"The Pakistani trader under invoices the product like California almonds to the extent of money received by him. On receipt of the consignment, trader on the Indian side sells California almonds at the prevailing market price and makes an extra and undue profit to the extent of under-invoicing. Extra money so generated is handed over by the trader to anti-national elements and terrorists organizations in the valley to fuel anti-India operations," the official said.

DH had in December 2016 reported about the NIA investigating large-scale transfer of funds from Pakistan to India through import of California almonds through the cross-LoC trade mechanism.

Sources said a large number of trading concerns engaging in cross-LoC trade were being operated by those closely associated with terrorist organisations, especially Hizbul Mujahideen.

“Some India nationals who have crossed over to Pakistan and joined militant organisations have opened trading firms in Pakistan. As a result, many trading firms under the control of militant organisations are doing LoC trade with Indian traders who are their own relatives on the Indian side," the official said.

The route was also used by cartels indulging in arms smuggling and drug trade into the Kashmir valley. Fake currency was also being sent through this route, sources said.