How Pakistan funds separatists, stone-pelters in Kashmir through illegal barter trade at LoC

The NIA has told the government that slush funds generated from the cross-border barter trade between 2010-2011 and 2015-16 amount to at least Rs 500 crore.

An Amritsar-based million dollar business, a thriving trading house in downtown Srinagar and another in Old Delhi are among many now being probed by the National Investigation Agency (NIA) for 'bankrolling' separatists and stone throwers in the Valley using slush funds generated through the border-barter trade.

The NIA has told the government that slush funds generated from the cross-border barter trade between 2010-2011 and 2015-16 amount to at least Rs 500 crore.

Estimates of slush funds, however, differ. "It is about Rs 800 crore a year," says Apresh Garg, the whistle-blower who also runs a thriving pan-India business.

In 2009-10, when under-invoiced goods from Pakistan-occupied-Kashmir (PoK) flooded markets in India - a violation of the border-barter trade since goods should be traded locally - Apesh Grag, a Delhi based businessman, raised an alarm.

It wasn't taken seriously. Goods are bartered between India and Pakistan. Money doesn't change hands. But an equal value of goods is traded to balance-out the books.

HOW THE ILLEGAL TRADE IS CARRIED OUT

"Much of the consignments coming from Pakistan are under-declared in terms of value. These are sold in the open market in India. A truck carrying nine tonnes of goods declares only eight tonnes. The money generated by selling the excess one tonne finds its way to separatist leaders," a senior police officer said.

"The description of goods is also concealed - high value items are declared as local produce. We suspect Pakistani agencies are paying traders across the border to make up for the shortfall or are directly involved in the trade," he added. Investigations have revealed gross irregularities.

'END BARTER TRADE'

For instance, trucks carrying goods from Pakistan are not weighed. "Over-declaration of quantity of goods being exported from Pakistan becomes easy. There are no scanners on either side, as a result of which, it is impossible to say what goods are being transported," the officer said. Goods are bartered between India and Pakistan through two designated routes - Uri-Muzaffarabad and Poonch-Rawalakot.

These routes were opened for trade in October 2008 after a gap of 61 years. A select list of 21 items - mainly local produce such as carpets, handloom, fruits - can be traded through these points.

There are no customs checks as setting up a check point validates the Line of Control (LoC) as the border between India and Pakistan and legitimises Pakistan's claims over PoK. Top sources said security agencies have suggested doing away with the barter trade. "We have advised that barter trade should be discontinued. Instead, it should be a normal trade with proper customs barriers. And in 2016, after separatists and stone throwers locked Jammu & Kashmir down, chief minister Mehbooba Mufti also recommended the same. The government is seriously considering this," said Rakesh Gupta, president of Jammu Chamber of Commerce and Industry.

"It, however, has a problem. Putting up customs and emigration barriers would mean accepting Pakistan's claims over PoK. Trade bodies too are uncomfortable. Trade must go on, but it should be trade and not barter trade," he added. NIA has begun questioning some traders suspected of being involved. The FIR names government officials and unknown traders.

"Initial findings pointed to a cartel involving traders, hawala dealers and a strong link to separatists," a top source said. About 300 traders are involved in border-barter trade. "Our investigations indicate that at least 60 traders could be involved in over and under-invoicing of goods," special director, NIA, Anil Shukla said.