Jammu, 23-05-2026: Laghu Udyog Bharti has submitted a detailed representation highlighting critical issues concerning Micro, Small and Medium Enterprises in Jammu and Kashmir and has sought urgent policy intervention to protect genuine investors, strengthen industrial development, generate employment and ensure sustainability of local enterprises.
The representation has underlined that the New Central Sector Scheme, 2021 to 2037, was welcomed by entrepreneurs as a transformative industrial package after nearly three decades of instability in Jammu and Kashmir. The scheme, with a total outlay of Rs 28,400 crore and an average annual provision of about Rs 1,775 crore, was expected to provide long-term support for investment, employment generation and industrial growth. However, Laghu Udyog Bharti expressed concern that registrations under the scheme were closed on September 30, 2024 after exhaustion of the incentive corpus, leaving hundreds of genuine MSME investors in uncertainty despite substantial investments made in good faith.
As per the incentive distribution data cited in the representation, 956 MSME units availed incentives worth Rs 11,906.14 crore and generated employment for 43,426 persons, accounting for 83.68 percent of employment but only 33 percent of the incentive share. In comparison, 18 large units availed incentives worth Rs 20,098.39 crore, generated employment for 8,469 persons and received 67 percent of the incentive share despite contributing only 16.32 percent of employment. Laghu Udyog Bharti stated that this indicates a serious imbalance in incentive distribution and shows the need for a more MSME-focused policy approach.
The representation further pointed out that 602 MSME units, including 549 online applicants and 52 offline applicants who applied before September 30, 2024, are awaiting support involving incentive requirements of Rs 18,179 crore and employment potential of 33,509 jobs. It said these units represent the aspirations of first-generation entrepreneurs and local youth who mortgaged assets, secured bank loans and invested under the assurance of government support. Without timely intervention, many of these enterprises may face financial stress, loan defaults and operational uncertainty.
Laghu Udyog Bharti also raised concern over issues in public procurement policy, stating that MSMEs continue to face delayed payments, complex tendering processes, working capital constraints, digital gaps and limited awareness of procurement opportunities. It has urged that government procurement from MSMEs in Jammu and Kashmir be enhanced up to 50 percent in eligible sectors, considering the region’s prolonged industrial and developmental challenges. Such a measure, it stated, would provide direct support to local enterprises, encourage new investments and promote self-reliance in the Union Territory.
The organisation also sought reforms in the Credit Guarantee Fund Trust for Micro and Small Enterprises scheme. It noted that although CGTMSE supports collateral-free credit, operational complexities, bank reluctance, informal collateral demands, premium burden and low awareness continue to limit its effectiveness. The representation stated that only 19 percent of MSME credit demand was formally met as of FY21, leaving an estimated unmet credit demand of Rs 80 lakh crore, while around 40 percent of MSMEs still struggle to access adequate credit. Laghu Udyog Bharti has called for simplification of CGTMSE procedures, transparent credit profiling and a public portal for real-time tracking of applications.
The representation has also strongly recommended the establishment of a Rail Coach Manufacturing Factory in Jammu and Kashmir. It said the expanding railway connectivity in the region provides a major opportunity to build a manufacturing ecosystem where local MSMEs can supply components such as seating material, foam, handles, bars, sanitary fittings, doors and related products. Such a project would promote local manufacturing, create employment, encourage investment and strengthen ancillary industries.
Laghu Udyog Bharti further highlighted the issue of fuel price disparity, particularly in PNG and industrial LPG. It said inadequate PNG infrastructure and higher industrial LPG prices compared to neighbouring states are increasing production costs and weakening the competitiveness of local industries. The organisation urged the Government of India to ensure industrial fuel price parity and support the establishment of bottling plants, refilling plants and refinery-related infrastructure in Jammu and Kashmir.
Laghu Udyog Bharti has requested the authorities to take up these concerns at the appropriate level so that MSMEs in Jammu and Kashmir receive fair policy support, transparent implementation, timely relief and a conducive environment for sustainable industrial growth.