Clashes in North India Affect Trade

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Aug. 14 – On the eve of the sovereign, secular, republic of India's 61st Independance day, fresh violence has broken out across the Kashmir valley.

A simmering land dispute has polarised Indian Kashmir, split between the Muslim-majority Kashmir valley and the Hindu-dominated region around Jammu city, severely curbing trade between the two areas. The unrest was triggered by a Kashmir government decision in June to donate local land to a Hindu pilgrimage trust. The violence has also fanned fears that communal tensions could spread beyond Kashmir.

About 80 percent of Kashmirs tarde is agriculture-based. Crops include rice, maize, apples and saffron. The area is also known for handicrafts such as carpets, woodcarving, woollens and silk. Tourism, once flourishing, has been badly hit by the conflict.

Industries in India's Jammu & Kashmir state have suffered a cumulative loss of over Rs 15 billion (US$ 300 million) in the last two weeks due to the ongoing agitation, Reuters said the Associated Chambers of Commerce and Industry of India estimated.

The worst hit industrial sectors in the nothern Indian state include tourism, fruits, hosiery, carpets, handicrafts, dry fruits, forest-based products and herbs, Sajjan Jindal, president of the association, said in a statement on Wednesday.

Exports from Jammu fell by at least 30 percent, while silk and handicraft industries, leather products, fruit juice concentration and processed food have also suffered enormously, the trade body said.

If the agitation continues, the economy of the state will be hit as investors who have committed over Rs 50 billion (US$1.1 billion) of investment for 2008/09 will depart to other destinations in neighbouring states, the association said.

Investments in the Jammu & Kashmir region has surged nearly 10 times in six years to more than US$2.3 billion in 2007, ASSOCHAM said.

Kashmir, formerly referred to as heaven on earth has been the center of contentious land disputes between India and Pakistan since the land was improperly divided by the British. Religious anger in the region is often stroked to ignite violence between Hindus and Muslims both who revere the land as sacred. Separation protests have further been sparked by muslim kashmiris demanding their own state, however the political gridlock between India and Pakistan who have failed to even acknowledge the issue means that peace and stability is yet a far away dream.

Kashmir continues to be a flash point between India and Pakistan, both of whom claim the territory in its entirety. The nuclear-armed nations have fought two wars over the region. The current upheaval is threatening to undo four years of improving relations between India and Pakistan over the Kashmir issue. Their troops have exchanged gunfire across the Line of Control in Kashmir at least three times in recent weeks.