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The retired police officer is seen as the face of the shift in the centre's hard line approach. His first and biggest challenge, a government official indicated, will be to send a clear message that his appointment wasn't merely an exercise in optics but substance as well.
Jammu and Kashmir will be the third state where the retired police officer has been called to play the interlocutor's role. In June, he was appointed as an interlocutor for talks with insurgent groups in Assam. The next month, he was asked to hold talks with groups in Manipur as well.
Mr Sharma has seen the worst of militancy in Kashmir back in the early nineties when violence was at its peak. He spent two years - 1992 to 1994 - in Jammu and Kashmir as an intelligence officer.
As a mid-career Indian Police Service, or IPS, officer from Kerala cadre, Mr Sharma had opted for the Intelligence Bureau a year earlier. His first Kashmir stint had come within a year of his induction into the agency.
Later, he again supervised the agency's Kashmir operations from its headquarters in Delhi before being sent out on other assignments including heading its field office in Nagaland. This is when he closely observed insurgent groups in the northeast.
Intelligence officials who have worked with him describe the 63-year-old as an officer with an affable personality who was able to get his point across. "He is soft-spoken but can be convincingly assertive," said one officer.
Over the last two decades, Mr Sharma is the fourth interlocutor for Kashmir. As planning commission vice chairman, senior politician KC Pant was the first with a mandate to reach out to separatists. Jammu and Kashmir Governor NN Vohra was later appointed with a similar job profile before he was elevated as Governor.
A group of three interlocutors led by Dilip Padgaonkar was the last such initiative in 2010 but many of its recommendations could not be implemented. Asked how he sees his role against this backdrop, Mr Sharma told NDTV: "I have hopes for Kashmir".
As head of the Intelligence Bureau, Mr Sharma was known to be convinced that much of the problem in Kashmir was an outcome of radicalisation of the youth that had been happening over the years, online and offline.
Earlier announcing his appointment, Home Minister Rajnath Singh said Dineshwar Sharma had been mandated to carry out "sustained interaction and dialogue to understand legitimate aspirations of people in Jammu and Kashmir".