India suspended cross-border trade with Pakistan-controlled Kashmir because it was being used to funnel weapons and drugs, the government said on Thursday, in a further crackdown in the volatile territory.

Trade across the "Line of Control" (LoC), or the heavily militarized de facto border that divides the two parts of Kashmir between India and Pakistan, has served as a confidence-building measure and to help the local population.

But tensions between India and Pakistan have been running high ever since a Pakistan-based militant group claimed responsibility for bombing a security convoy in Kashmir.