Rescue Struggling Existing Industrial Units
The industrial units, many of which have been functioning steadily since the 1960s, have not only supported local entrepreneurship but also provided livelihoods to thousands of families across the Union Territory. However, this vital sector is currently facing a deepening crisis brought on by a series of policy gaps, delayed fiscal support, and a growing sense of marginalization in the post-reorganization economic framework.
Since the abrogation of Article 370 and the subsequent reorganization of the erstwhile state into two Union Territories, the people of Jammu and Kashmir has looked forward with hope to a new era of growth, investment, and employment opportunities. The promise of enhanced industrial development and economic integration was welcomed, especially by those in the private sector who anticipated a fresh wave of incentives and support to both attract new investments and sustain existing ones. Yet, what has followed instead is a troubling drift in policy that appears to have overlooked the needs of established industrial units that have weathered decades of regional and logistical challenges. The new Central Sector Scheme of 2021, aimed at promoting industrial investment in the region, has introduced a framework of incentives such as Gross GST reimbursement. However, these benefits have been largely reserved for new units set up after March 31, 2021, leaving out existing MSMEs that are undertaking substantial expansion or diversification. This exclusion has created a structural imbalance, where newer units enjoy competitive advantages while older, functioning units struggle to remain viable in the absence of similar support. For these legacy units, the lack of fiscal parity has placed them at a serious disadvantage, raising existential questions for many small and medium-scale manufacturers. Adding to their woes is the delay in the disbursement of UT-level turnover incentives and GST reimbursements. With pending claims in crores, many MSME units find themselves unable to manage routine operations, let alone plan future investments or upgrades. The limited budgetary allocation of merely Rs. 50 crore for these claims has compounded the problem, with only a fraction of the 2021–22 liabilities cleared and no payments released for subsequent years. Such delays not only strain the financial health of these enterprises but also threaten job security for thousands of local workers employed directly and indirectly in this sector. The procurement practices of government departments have also shifted in a direction that further alienates small-scale industries. The transition to the Government e-Marketplace (GeM) platform and the abolition of the long-standing price and purchase preference for local MSMEs have restricted access to public contracts that once formed the backbone of sales for many local units. In such a scenario, what is urgently required is a recalibrated approach from the administration. The existing MSME units, many of which have invested significantly in plant and machinery and have proven track records of contribution to the local economy, must be brought under the umbrella of fiscal support. A comprehensive incentive structure that includes Gross GST reimbursement for substantial expansion, support for diversification, and restoration of purchase preference in public procurement could offer a level playing field and encourage sustained industrial activity. Moreover, timely disbursement of incentives and clear communication from the Finance and Industries Departments can restore confidence among entrepreneurs. Delays and uncertainty not only disrupt business planning but also fuel discontent in a sector that is otherwise eager to contribute to the development goals of the Union Territory.
It is essential to recognise that industrial growth cannot thrive solely on the influx of new investments; it must also be built on the solid foundation laid by existing players who have endured and evolved through the years. Preserving Jammu and Kashmir’s industrial legacy is not just a matter of economic policy—it is a commitment to equitable growth, inclusive development, and long-term employment generation for the local population. The government’s timely intervention in the form of policy reforms, equitable fiscal treatment, and supportive procurement mechanisms will not only safeguard this sector but also reinforce the broader vision of sustainable development for the region.
