India suspends cross LoC trade between divided Kashmir

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India's federal government Thursday announced suspension of trade through Line of Control (LoC) between divided Kashmir, saying the routes were being "misused", the home ministry said.

The ban would come into force from Friday. A statement issued by Indian home ministry said the action had been taken as the Indian government had been receiving reports that the cross LoC trade routes were misused for funnelling illegal weapons, narcotics and fake currency.

LoC is a de facto border that divides Kashmir into India and Pakistan controlled parts. The trade across LoC was used to facilitate exchange of goods of common use between local population on both sides of the divide.

The cross LoC trade was allowed by governments of India and Pakistan in October 2008.

"During the ongoing investigations of certain cases by National Investigation Agency, it has been brought out that a significant number of trading concerns engaged in LoC trade are being operated by persons closely associated with banned terrorist organizations involved in fuelling terrorism/separatism," the statement said.

In February this year India announced withdrawal of Most Favoured Nation (MFN) status that it had granted to Pakistan. It also hiked customs duty on goods imported from Pakistan to 200 percent.

The steps were taken following killing of 40 paramilitary personnel in a suicide car bomb attack in India-controlled Kashmir. India blamed Pakistan of links with the attack but Pakistan rejected the allegations.

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