WORKING INDUSTRIAL MSME UNITS ON THE VERGE OF CLOSURE IN JAMMU & KASHMIR DUE TO LEAST PRIORITY OF CONCERNED DEPARTMENTS-FOIJ
Jammu, 22-05-2025: Industrialization in the private sector is always a priority for any country, and at present, the micro, small, and medium enterprises (MSME) sector is the backbone of the Indian economy and has created 11 crore jobs, so as the Industrialization provides greater opportunities for employment in small, medium, and large-scale industries.
While highlighting the issue, Sh. Lalit Mahajan, Chairman Federation of Industries Jammu, draws the kind attention of Sh. Manoj Sinha, Hon’ble Governor and Jenab Omar Abdullah, Hon’ble Chief Minister, J&K that to provide Employment Opportunities to local youths, a process has been started in 1960 with the establishment of Small Industrial Estates in Jammu Division and Kashmir Division and subsequently Industrial Estates has been established in Gangyal, Bari Brahmana, Samba, Kathua and Udhampur and also in Kashmir Division to provide the Land to Local as well as to Outside Investors to Invest in the Industrial Sector of Jammu and Kashmir to create Job Opportunities for the Local people with the grant of Fiscal Incentives for New Units and Existing Units under Substantial Expension by State/ Central Government from time to time Keeping in mind the locational Disadvantages, Landlocked State, additional cost of incoming raw material and dispatch of finished goods to other parts of the country, limited marketing avenues, being surrounded by hostile Neighbours like Pakistan and China, and other factors on the basis of which Micro, Small, Medium and Large Scale Industrial Units has been established and at present around 4 to 5 Lacs local people employed directly and indirectly in the industrial sector, which is equivalent to state government employees, and the industrial units were running smoothly till July 2019, with the Price and Purchase Preference for Local MSME Units for the supply of Goods to the State government. Departments.
After the abrogation of Article 370 on 5th August 2019, and Jammu & Kashmir State has been bifurcated into a Union Territory by Govt. of India, and the industrial sector of Jammu has welcomed the move with the hope that massive industrial investment will come to the Union Territory of Jammu & Kashmir for economic growth and providing job opportunities to local youths.
It is pertinent to mention here that the Government. Of India notified an Industrial Package in 2021 by the virtue of which Gross GST Reimbursement Incentive under the New Central Sector Scheme 2021 is applicable for the New units, but the said Incentive is not applicable to Existing Units as on 31-3-2021 on the Substantial Expansion/ Additional Items/change in the line of Activity whereas in all the previous Notifications issued by the Government of India in 2002, 2012, 2017 the Fiscal Incentives has been granted at par with the new units that opt for the Substantial expansion with the Additional Items /Change in the Line of Activity but due to denial of Gross GST on the Substantial Expension to Existing Units, the viability of the old working units as on 31-03-2021 at stake due to stiff competition with New Units resulting in future the such units may opt for clouser due to uncertainty prevails in the mind which may be resulting into the mass scale retrenchment of Workers in near future.
In respect of the J&K State Govt. Turnover Incentive notified in 2021, the pending claims of existing working units, grant of budgetary allocation, are only 50 Crores subject to availability of funds against the submission of Claims amounting to Rs. approx. 210 Crores but the Claims of 2021-22 settled with the grant of only 15% of liability, which is approx. Rs 30 Crores. In respect of pending claims of 2022-23 and 2023-24 till date not even a single penny has been released till date which shows the least priority of the Industries Department towards the working industrial units of J&K.
As far as GST reimbursement claims of working MSME units, the release of funds by the Finance Department is the least priority, as it will take months by the Government. Treasuries to release the payment of sanctioned claims duly forwarded by the State Tax Department.
All is not well for the for MSME Units supplying Goods to J&K UT Govt. Department suffering very badly due to the applicability of GFR Rules of Govt. of India with the abolishing of Price and Purchase preference which was applicable to MSME Sector previously as all the purchases has been routed through the GeM portal, resulting in a drastic decline in the sales graph of local MSME units that supply the Goods to state government departments through SICOP for the items reserved for the SSI sector. Further in respect of purchases made by the Departments directly as the tendering process has been changed with the introduction of supply, Installation and Commissioning of projects of the State Govt. as the Small Scales manufacturers not able to participate in the said tenders due to conditions imposed with the requisite experiences in the project work, resulting in the majority of the Units supplying the Goods to State Govt. Departments not able to participate in the tenders, and the majority of orders have been placed with outside suppliers.
For the survival of the existing MSME Sector of Union Territory of Jammu & Kashmir, it is the need of the hour to provide the gross GST Incentive on the Investment of Plant and machinery to Existing Units who opt for the substantial expansion of additional items/changes in the line of activity and to restore the purchase and price preference to local MSME units for the supply of Goods to State Govt. Departments for the survival of existing units, which will also generate additional Employment Opportunities for the Local Youths.
We urge Sh. Manoj Sinha, Hon’ble Lt. Governor, JKUT, Jenab Omar Abdullah, Hon’ble Chief Minister, JKUT and Sh. Surinder Kumar Choudhary, Deputy Chief Minister, JKUT, to kindly intervene in the matter for the grant of State Budgetary allocation for Existing Units as on 01-04-2021 and Units under Substantial Extension after 01-04-2021 as Fiscal Incentives for the next 10 Years for their survival as follows:
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- Enhance the budgetary allocation for turnover incentive on the actual turnover basis without any capping.
- Ensure timely Turnover Incentive & GST Reimbursements by the State Industries/Finance Department.
- Reimbursement of Gross GST Linked Incentive (CGST/SGST) to Working Industrial Units & Units under Substantial Expansion after 01-04-2021 in respect of Additional Line of Manufacturing for New Products/Diversification and Modernization.
- Marketing support in the shape of price/purchase preference.