ISLAMABAD, July 4: An Indian based working group has suggested creation of a free trade area across the Line of Control (LoC) after nearly 60 years of forced aloofness, officials told Dawn on Wednesday.

The working group headed by M Rasgotra was set up by the Indian government with a mandate to work out some practical solution for allowing trade between the two divided regions of Jammu and Kashmir.

A diplomatic source told Dawn that the modalities were being worked out by the two sides. The group also submitted its report at the third roundtable conference on Kashmir in April 2007.

The report said that the trade and commerce representatives, including those of chambers of commerce, had already visited the LoC and reported that there was lot of enthusiasm for the opening up of trade and commerce between the two sides.

The group recommended setting up a joint consultative machinery of officials and representatives of commerce from both sides, to resolve any difficulties in the flow of trade.

The list of items for export and import would include handicrafts, fruits, cement, iron, medicines, sugar, basmati rice, machinery and equipment, and other items that are manufactured or assembled by small-scale industries in Jammu and Kashmir, said the report.

The issue of state taxes on goods traded across the LoC may be determined by the state government after due consideration of all aspects, it added.

India and Pakistan made the landmark agreement to revive trade and commerce between the divided regions of Jammu and Kashmir in the year 2006.

According to an official, the two sides had already agreed to allow trading of only raw products, mostly food items, between the divided regions of Jammu and Kashmir. No value-added products — manufacturing products — would be allowed for trade under the proposed trade treaty between the two Kashmiri regions, he added.