Crime and terrorism can potentially have a very close linkage. While there may or may not always be a linkage between the two, however, both international case studies and those in India do point towards it.
Terrorist groups, whether indigenous or sponsored by outside states, need arms and money for their fight against the security forces. Organized crime conglomerates need a clientele and couriers who can smuggle drugs, arms and human beings across the countries and regions.
If we look at some of the regions in the country affected by terrorism, this linkage becomes apparent. In the Northeast, extortion is the fundamental basis for funding all forms of terrorism. In addition to this, kidnapping has been used extensively for spreading terror and raising funds. Human trafficking, drug trafficking and gun running are some of the other criminal activities that have been common in these areas.
In J&K, counterfeit currency has been a major source of funding terrorism. Money laundering plays a significant role. Hawala (money laundering) transactions take place swiftly and effectively in Kashmir. Besides, it is also believed that the ISI uses drug money to fund militant activities in Kashmir.
In the Maoist terror movements, extortion is yet again a common phenomenon. They have also indulged in robberies of banks to fund their movement. There have also been reports of cuts being enforced on drug yielding crops in the region.
The Indian Mujahideen has also resorted to crime to raise funds. This includes robberies, kidnappings, etc.
There are also a number of insurgent groups which over a period of time have morphed into crime syndicates.
What began as an ideological movement is now merely a means of generating profit. This is especially the case with insurgent groups in Northeast India.