This winter capital of Jammu and Kashmir is slowly emerging as the nerve centre for terror funding, police say.

On Thursday, two people were arrested with 11 kg of heroin valued at Rs.140 million ($3.1 million) in the international market. Two months ago, the police had arrested two Nigerians and seized fake US dollars worth four million.

Police say the two incidents clearly point to Jammu emerging as the hub of terror funding.

The drugs were meant for sale outside the state and the "money thus generated was to be used for anti-national purposes", said Jammu's Senior Superintendent of Police Kamal Saini.

Saini said there were some other instances where "police have stumbled upon networks that clearly reveal the nexus between terrorists and drug traffickers" Saini added.

With the fencing along the international border and the Line of Control having effectively closed channels for arms smuggling and a close watch being kept on the hawala or illegal money transfer network, funding has become a difficult task, which is why drug smuggling is being resorted to, police said.

A police study disclosed that a staggering Rs.1 billion to Rs.1.5 billion is being spent annually on supporting and sustaining militancy in Kashmir. This money comes through different channels, with drug trafficking being one of them, the study said.

--Indo-Asian News Service