Jammu and Kashmir Industrial Policy: Hopes for a New Era of Development

August 28, 2021

Introduction

Since the abrogation of Article 370 and 371(A) resulted in the scrapping of the special status of the state of Jammu and Kashmir, the central government has continuously assured a new era of economic development and prosperity in the region by promoting industries and commerce. J&K, which was struck in decades of insurgency and subsequent economic stagnation, needed a revival through efficient and sincere policies. The central government emphasised it and introduced the Jammu and Kashmir Industrial Policy for 2021-30, which came into effect from 1^st April 2021.

The new industrial policy aims to receive investments from outside and promote the Ease of Doing Business in the two union territories, making steadfast economic activities in various sectors. The advisor to Lt. Governor Bashir Ahmed Khan stated making Kashmir the most investor-friendly union territory[1]. The recent investments of around Rs. 23,000 cr. Also, show the immediate success of the industrial policy assuring rapid socio-economic development in Kashmir. This article will brief the important details of this policy and bring forward the desired developments in Jammu and Kashmir.

Major Outline of the Policy

The official order[2] regarding the new industrial policy has listed seven main objectives meant to be fulfilled-

To attract substantial investment across focus sectors
Creation of jobs for youth
Promoting the development of backward regions
Maximising job opportunities by optimum utilisation of the available resources
Creating backwards and forward links
Harnessing the talents and skills of the people and ushering prosperity in every household
To nurture existing industries.

The new industrial policy has an expenditure outline of Rs. 28,400 crore meant for the next 15 years. This makes it the largest economic allotment made to Kashmir till now. The incentives are supposed to garner investments around Rs. 20,000 crore and generate employment of 4.5 lakh[3]. The policy will foster industrialism with the help of local talent, skills and resources.

The policy now includes additional sectors such as education, tourism, health, renewable energy, and outside investments in IT, tourism, renewable energy, etc. These have summed up to Rs. 23,000 crore.

The UT government has also identified 292 investment zones for land allotment, out of which 152 are located in 10 districts of Jammu, and 140 locations are in 10 districts of Kashmir. A committee has also been set up for scrutinising the applications for industrial land.[4]

Various incentives have also been introduced for the business units that are starting commercial production or expanding their business from 1^st April 2021. Erstwhile units will be subjected to stimuli according to the previous policy of 2021 and will be available till 31^st March 2021. The incentive package introduced by the government has several relaxations in capital investments and insurances. It also has reimbursement options for the GST paid.[5]

Under the incentive package introduced by the state government, there are subsidies on pollution control devices and subsidies on diesel machinery purchases. Similarly, 30 percent subsidy on quality certificates and automation and 50 percent subsidy on green environmental protection has also been provisioned under the state package[6]. Subsidy of 100 percent is assured on the purchase of Diesel Genset, whereas installation of pollution control devices will be rewarded with a subsidy of 60 percent. A subsidy of 30 percent is provisioned for automation.[7]

Different committees shall also decide the incentives on district, division and UT levels. The DIC shall approve the incentive cases up to Rs 5 lakh in the District Level Committee, and Division Level Committee shall approve the incentive cases from Rs 5 lakh to Rs 50 lakh while UT Level Committee shall approve the incentive cases exceeding the the the Rs 50 lakh.[8]

Capital investment incentives have also been enlisted. According to Lt. General Manoj Sinha, “capital investment incentive will be made available at the rate of 30 per cent in Zone A (urban) and 50 per cent in Zone B (rural) on the investment made in plant and machinery (in manufacturing) or construction of the building and other durable physical assets (in the service sector).”[9]

The official document lists ease of doing business, inviting reputed industrial houses and potential investors from within and outside the UT to promote Jammu and Kashmir as an ideal Investment destination[10] as some of the major aims of the new industrial policy.

Another critical focus of the policy is the horticulture sector, which employs 33 lakh people or 7 lakh families[11].

As discussed earlier, the policy will also emphasise local skill development to promote entrepreneurship in the people. Two skill development sectors will be established in Baramulla and Jammu as per the initiative of the Tata group. [12]

Another thing that would have been highlighted by now is the land distribution process to which this policy gives a great significance. As per the official records, 6,000 acres of land will be acquired to be allotted to the different industrial groups, and 3,000 acres out of it had been acquired in the year 2020 itself.[13]

The policy shall also address the issues like the sale of land, regulations regarding rent, lease and tenancy of the holdings. The land will be allotted to the investors on lease for an initial period of 40 years which can be extended up to 99 years.[14]

One can find the general approach of the central government regarding the free market and investments in the newly formulated policy for Jammu and Kashmir also. The government has acquired the role of facilitator rather than the regulator. Making Kashmir a preferred investment hub by opening it and promoting industrial houses are in line with the assurances of high development of the region and welfare of the people given at the time of abrogation of the special status. Removal of Article 370 and 371 (A) will allow large scale investments to flow into the state as per the government’s wish, and this policy is a further step in the same direction.

Major Investments

The recent news of investments worth rupees- Twenty-three thousand crores is a significant landmark in the achievements of this policy. It can be too early to conclude its success or failures definitively, but receiving such investments is undoubtedly a significantly assuring development.

Ranjan Thakur, Principal Secretary, Industry and Commerce, Jammu and Kashmir, informed that 11,000 corers would be directed to Kashmir while the rest 13,000 crores will be utilised Jammu region.[15]

The solidity of the policy can be gauged from the fact that these investments aren’t MOUs and actual payment for the lands has been made by the companies and investors[16]. The government plans to reach 50,000 crores by the end of this financial year, underlining the ambitious planning behind this policy.

Also, it is clear that as a part of the investments, Jindal Steel Works (JCW) have set up a profile sheet making unit in the Lassipura Industrial Estate in Pulwama, South Kashmir. The other three major investments are telecom, cyber optics and hosiery. Around 40 companies, including Tata and Reliance, have shown their interest in investments. [17]Foreign investment from Japan and Dubai has also been made in Kashmir[18]

The investments are being in major clusters in both Jammu and Kashmir. Areas receiving high investments in Jammu are Jammu, Kathua, and Samba districts, whereas Srinagar, Budgam, Pulwama and Shopian are the significant districts receiving investments in the Kashmir Valley.

The Jammu region is seeing investments coming from mainly food processing, beverages and profile sheet making industries. Several pharmaceuticals companies have decided to shift their base from Baddi in Himachal Pradesh to Jammu to availing these benefits. Due to the factor of connectivity and proximity to Punjab, Jammu is touted as a potential production hub.

Educational institutions, meat processing, apple and food processing and BPOs are the significant sectors investing in Kashmir. The main focus of the policy in Kashmir will be on the service sector owing to the difficulties in the transportation of goods in and out.[19]

Investments have also been made for power generation. Three MOUs were signed with the National Hydroelectric Power Commission on 3^rd January 2021 to generate 3000 MW additional power. Lt. Governor Manoj Sinha declared that Kashmir would be power surplus by 2024[20]

As per Thakur, the policy has also kept the ecological sensitivity of the region in fair consideration, and it has been planned from a long-term approach so that a conducive environment for industries can be created and they can function smoothly even after the incentives are withdrawn after a given point of time. [21]

Concluding Note

The situation of Jammu and Kashmir has been a complex one since the independence of our nation. Successive governments have attempted to address the multi-faceted issues of socio-economic development, progress amidst the unstable situation and bring prosperity and development in the entire region. But, all the policies have left much to be desired.

There is no guarantee in regards to the present industrial policy that it will be successful in achieving all the aims. Nonetheless, it has given great hopes of development and economic growth finally coming to the state. Investments worth 23,000 crores are a huge success, and the interest of major industrial houses in investing in Kashmir can result in the policy’s success. Various incentives and other provisions listed are at par with the central government’s general approach towards the economy, which promotes private capital and investments.

The success of the policy will ensure a continuous flow of investment and commerce in Jammu and Kashmir and establish it as a viable option for MNCs and corporations benefitting people to the grass-root level. Other developments like the recent procurement of GI tag of saffron for Kashmir should also be linked with the government’s intention of making Kashmir a commercial destination.

The people of Kashmir were incredibly assured about the economic development after the scrapping of the special status. The new industrial policy for Jammu and Kashmir has an objective to live up to the people’s faith.

[1] https://www.aninews.in/news/world/asia/indias-new-industrial-policy-opens-jammu-and-kashmir-to-world20210427135614/

[2] http://jkindustriescommerce.nic.in/Orders%202021/117%20IND%20OF%202021.pdf

[3] https://www.aninews.in/news/world/asia/indias-new-industrial-policy-opens-jammu-and-kashmir-to-world20210427135614/

[4] https://www.theweek.in/news/biz-tech/2021/08/05/after-article-370-removal-how-much-development-has-happened-in-jk.html

[5] http://jkindustriescommerce.nic.in/ips.html

[6] http://jkindustriescommerce.nic.in/ips.html

[7] https://www.greaterkashmir.com/news/business/new-industrial-policy-comes-into-effect-in-jk/

[8] https://www.greaterkashmir.com/news/business/new-industrial-policy-comes-into-effect-in-jk/

[9] https://www.business-standard.com/article/economy-policy/j-k-announces-new-industrial-development-scheme-worth-rs-28-400-crore-121010800036_1.html

[10] http://jkindustriescommerce.nic.in/Orders%202021/117%20IND%20OF%202021.pdf

[11] https://theprint.in/india/new-jk-industrial-policy-set-for-launch-looks-at-investment-worth-rs-35000-cr-by-2022/577067/

[12] https://theprint.in/india/new-jk-industrial-policy-set-for-launch-looks-at-investment-worth-rs-35000-cr-by-2022/577067/