Phulabani: Police on Sunday busted an interstate ganja smuggling racket following the arrest of two peddlers from Kandhamal 's Phiringia police limits.

The cops also seized foreign currency from the two Bangalore residents and also recovered ganja worth Rs 3 lakh. The seizure of foreign currency, including high-value currency notes of Iran, Qatar and Bangladesh, has lent credence to the belief that they were part of a larger smuggling syndicate.

"We are trying to contact or counterparts in Bangalore to cross-check their criminal antecedents," said Phiringia police station inspector-in-charge Dhiren Kumar Sahu.

The peddlers, who were arrested from Phirinigia bus stand, are Nayeem Ahmed, 28, and S. Sashi Kumar, 26, and hailed from Bangalore's Electronic City. They had procured 23kg high-grade hemp from a local mediator that is worth several lakhs in the open market.

"The duo had plans to procure large quantities of hemp from other places in Kandhamal before leaving for Bangalore. They had flown into Bhubaneswar on Saturday and planned to stay in Kandhamal for a week. They wanted to return with the contraband using the road route," the police said.

The cops have booked them under sections 20 (b), (c)/29 of the Narcotics Drugs and Psychotropic Substances Act, 1985. They are being interrogated for clues on their modus-operandi, police said.

The suitable climate, hilly terrain and support from local residents in the tribal-dominated district have made it a haven for ganja cultivators.

The money-minting racket continues to flourish allegedly because of overt and covert patronage of police and excise personnel, some residents said.

It is being alleged that effective crackdown on smuggling has failed to make much headway because of the alleged involvement of enforcing agencies. In the past, there were instances of police personnel being caught for their involvement in the illicit trade. On Saturday, an excise sub-inspector was arrested on extortion charge when he demanded protection money.