India likely to liberalise cross-Kashmir trade.

NEW DELHI: India may further liberalise trans-Line of Control trade between the divided regions of Kashmir, started in October 2008, by increasing it from two to four days with an expanded list of items. It may also set up five communication points, where traders could interact with their counterparts in the absence of a telephonic link.

The Indian Home Ministry has included a proposal in this regard in the cabinet’s agenda for today (Thursday), as suggested by the Indian-held Kashmir government.

The ministry wants the cabinet to clear the proposal and send it to Islamabad as India cannot unilaterally change the trade terms agreed with Pakistan.

Despite cross-LoC trade limited to five hours twice a week from Uri and Chakan-da-Bagh in Poonch and that too in terms of Asian Clearing Union dollars and euros, both sides registered a business turnover of Rs 2.64 billion in 16 months until January end.

The IHK government has been pressing Indian and Pakistani banks to open vostro accounts of each other’s currencies for cross-LoC trade to recognise it as domestic trade.

However, since Indian and Pakistani rupees are not traded in either country, the Reserve Bank of India and the State Bank of Pakistan will have to buy and sell the currency at fixed rate to prevent exchange risk to dealers while trading in dual currency.

Source : dailytimes