Barter trade between India-Pakistan across the Line-of-Control (LoC) has been suspended from tomorrow, a notification of the Union Home Ministry (MHA) issued on Thursday said, ascribing the move to suspicion that the avenue is being used to smuggle weapons, drugs, and fake currency into India. .
The cross-LoC trade was started in 2008. Goods worth Rs 5,000 crore have been bartered since. From both sides of Kashmir, traders were allowed to deal in 16 items, including spices, vegetables, dry and fresh fruits, carpets, rugs, embroidery items, shawls, paper mache goods, clothes and wooden furniture.
The decision to start cross-LoC barter trade was agreed upon by New Delhi and Islamabad in 2004 but the trade started four years later, in 2008. 
The cross LoC trade was through “Trade Facilitation Centres” at Salambad in Uri , Baramulla District and Chakkan-da-Bagh, Poonch District. The trade takes place four days a week.
“This action has been taken as the Government of India has been receiving reports that the Cross LoC trade routes are being misused by the Pakistan based elements for funnelling illegal weapons, narcotics and fake currency etc,” the statement of the MHA said and added that “it has, therefore, been decided by the Government of India to suspend the LoC trade at Salamabad and Chakkan-da-Bagh in Jammu and Kashmir with immediate effect. Meanwhile, a stricter regulatory & enforcement mechanism is being worked out and will be put in place in consultation with various agencies. The issue of reopening of LoC trade will be revisited thereafter.”
After the Pulwama attack by a terrorist of the Pakistan-based Jaish-e-Mohammed on February 14, that left 40 soldiers of the Central Reserve Police Force (CRPF) dead, India withdrew the “Most Favoured Nation Status” (MNF) from Pakistan.
“Inputs have also been received that in order to evade the consequent higher duty, LoC trade is likely to be misused to a much larger extent,” MHA added in its statement. .
Earlier, in 2014-2015, the National Investigative Agency (NIA) investigated the cross- LOC trade. It allegedly found items were under and over-invoiced , generating a huge surplus, part of which was being diverted to fuel protest in the valley.
The suspension of cross-LoC trade evoked sharp political reactions in Jammu and Kashmir. Former J&K chief minister and the vice- president of National Conference, Omar Abdullah blamed the BJP government for ending the legacy of former Prime Minister, Atal Bihari Vajpayee. “The Modi Govt buries another of the Vajpayee era CBMs (confidence building measures). Cross LoC trade was a legacy of the Vajpayee Govt decision to facilitate greater people to people contact across the Line of Control in J&K. That the LoC trade may have been used by some traders for illegal activities was suspected for years now and it was to plug this that the state has been pleading for the installation of full truck scanners at the trade points,’’ tweeted Omar Abdullah.
PDP president and former Chief Minister Mehbooba Mufti accused BJP of using Kashmir as a scapegoat. “Using Kashmir as a scapegoat to claw its way to power won’t help BJP. This is an excuse to worsen ties with Pakistan despite their peace overtures. By doing this PM Modi has dismantled a CBM Initiated by Vajpayee ji . Won’t be surprised if an attack on Pak is in the offing.” .