STREAMLINE MSME SUPPORT PROGRAMS

The industrial community of Jammu has expressed a pressing need for comprehensive reforms and policy changes aimed at strengthening the micro, small, and medium enterprises (MSME) sector under the new administration led by Chief Minister Omar Abdullah. The significance of this appeal lies in the critical role the MSME sector plays in the economic landscape of Jammu and Kashmir. Often referred to as the backbone of the region’s economy, MSMEs provide employment to thousands of locals and are a driving force behind economic growth, innovation, and regional development. However, in recent years, the sector has faced a series of challenges that have weakened its foundation, resulting in the need for immediate government intervention to restore its strength and sustainability.

MSMEs in Jammu, largely run by local entrepreneurs and families, have suffered from a dilution of fiscal incentives, particularly under the new Central Sector Scheme (NCSS). The introduction of this scheme has attracted new industrial units with attractive benefits, which has created an uneven playing field for the existing MSMEs. These long-established businesses, unable to compete with the newly incentivized units, have seen their growth prospects diminish, leading to stagnation and, in some cases, closures. The need for the government to address these disparities is urgent, as these MSMEs not only provide economic opportunities but also ensure that the benefits of industrial growth reach the grassroots level of society, promoting inclusive development. It is against this backdrop that the industrial community in Jammu is advocating for a fresh approach to policymaking, one that focuses on protecting and enhancing the capabilities of existing MSME units. A primary concern raised by the industrial community is the dilution of fiscal incentives that MSMEs in Jammu used to receive. The withdrawal or reduction of these incentives has left many units in a vulnerable state, unable to compete with the newly established industries benefiting from more favourable schemes under the NCSS. Industrialists argue that without restoring these incentives, the MSME sector will continue to face immense pressure, potentially leading to closures and a significant loss of employment. The call for a review of the current fiscal policy is not merely about seeking financial relief; it is an urgent appeal to create a level playing field for local businesses that have been the foundation of the region’s economic structure. Furthermore, the FOI and other industrial bodies have emphasized the need for a marketing support system that prioritizes local businesses in government procurement. Ensuring that MSMEs receive a preference in supplying goods and services to various government departments could offer a much-needed boost, helping them stabilize their revenues and maintain operations. Such an approach aligns with global best practices, where governments often support local industries through procurement policies that favour domestic suppliers. This is particularly crucial in a region like Jammu as well as Kashmir where MSMEs are often small-scale operations lacking the resources to compete with larger firms in a liberalized market. By implementing a structured support mechanism, the government can not only promote local entrepreneurship but also contribute to the overall economic growth of the Union Territory. A significant point of contention is the competition posed by new units established under the NCSS. While the scheme has undoubtedly attracted investment and stimulated economic activity, local MSMEs have expressed concerns about the unfair advantage these new entrants have received. The industrial community argues that while it is important to encourage new businesses, the existing enterprises must not be neglected. The success of new industrial units should not come at the expense of the survival of traditional businesses that have weathered years of economic and political uncertainty in the region. Therefore, the call for comprehensive reforms includes a re-evaluation of the NCSS to ensure that its benefits do not undermine the viability of local MSMEs. One of the major appeals from the FOI is for the revival of the Industrial Advisory Committee. This committee, comprising various stakeholders, including representatives from the business community, plays a vital role in ensuring that policies are not only well-informed but also inclusive. The absence of such a platform has created a communication gap between the government and the industrial sector, making it difficult for local businesses to voice their concerns and offer insights based on their operational experiences. By reviving the committee, the new administration can facilitate a participatory policy-making process where stakeholders work collaboratively to identify issues and propose solutions that are both effective and practical. The FOI’s suggestions go beyond just fiscal incentives and marketing support; they extend to the very structure of the policy framework governing the industrial sector in Jammu and Kashmir. The organization has called for a thorough revisitation of the Jammu and Kashmir State Industrial Policy 2021. The current policy, as it stands, does not adequately address the challenges faced by existing MSMEs, particularly in light of the competitive landscape shaped by the NCSS. A reform policy must be designed to provide long-term stability and predictability, which are essential for businesses to plan and grow. It is not enough to simply offer short-term relief; the government needs to establish a policy that guarantees extended support over the next decade to allow MSMEs to thrive. Central to the FOI’s proposals is the extension of fiscal incentives for the next ten years. Such a long-term commitment would provide the necessary assurance that businesses need to invest, expand, and innovate. In an era where economic uncertainty is rampant, having a stable policy environment is crucial for the health of the MSME sector. The government’s role is not just to provide financial aid but to create an ecosystem where businesses can operate with confidence, knowing that their efforts will be supported and their contributions valued. The extension of fiscal benefits should also include specific provisions that address the unique challenges faced by businesses in Jammu, such as logistical difficulties and market access issues. Another critical aspect of the FOI’s advocacy is the demand for a streamlined reimbursement process for the State Goods and Services Tax (SGST), Central Goods and Services Tax (CGST), and Integrated Goods and Services Tax (IGST). Currently, the reimbursement process can be cumbersome and time-consuming, discouraging businesses from claiming the benefits they are entitled to. By simplifying this process and tying reimbursements directly to each unit’s turnover, the government can ensure that businesses receive the support they need in a timely and efficient manner. This, in turn, will enhance the cash flow of MSMEs, enabling them to reinvest in their operations and contribute to the broader economic development of the region. The industrial community’s appeal for reforms is not only an economic concern but also a social one. The MSME sector in Jammu is largely composed of local entrepreneurs, many of whom employ workers from the region. The survival and growth of these businesses are essential for maintaining employment levels and ensuring that the local population benefits from economic opportunities. Without adequate support, the decline of MSMEs could lead to job losses, further exacerbating economic challenges in the Union Territory. Therefore, the government’s response to these demands will have far-reaching implications, not just for the business community but for the socio-economic well-being of Jammu as a whole. The industrial community of Jammu is pushing for a comprehensive set of reforms aimed at strengthening the MSME sector under the new administration. The focus is on creating an inclusive and supportive environment where existing businesses can compete fairly and grow sustainably. The government’s role in addressing these demands is critical; it must take decisive action to restore the confidence of the business community and pave the way for long-term economic prosperity in the region. The new administration has the opportunity to build a partnership with the industrial sector, ensuring that the economic policies of Jammu and Kashmir are not only growth-oriented but also equitable and sustainable.

The Jammu and Kashmir government should urgently focus on implementing reforms that prioritize the growth and stability of local entrepreneurs, particularly those who are sons of the soil and have demonstrated their commitment by investing in government industrial land within various government estates. To kick-start this process, the government must expedite the allotment of land to those who have already paid either 10% or the full premium, ensuring that their investments translate into tangible business opportunities. Delays in land allotment hinder economic development and discourage local entrepreneurs from pursuing new ventures, ultimately impacting job creation and economic growth. Additionally, the government should frame a comprehensive purchase policy for industrial goods, prioritizing locally produced products in its procurement process. Such a policy would provide an assured market for local manufacturers, incentivizing further investment in the MSME sector. By granting preference to local units, the administration can foster a self-sustaining industrial ecosystem that not only boosts the regional economy but also aligns with the principles of ‘Vocal for Local’ and Atmanirbhar Bharat. The government should also consider revisiting and updating existing policies to ensure that they are aligned with the current needs and challenges faced by industrialists. Introducing these measures would help restore confidence among local businesses, encouraging innovation, expansion, and job creation, while also ensuring that the sons of the soil play a pivotal role in the economic development of Jammu and Kashmir. Furthermore, to address the concerns of the MSME sector effectively, it is crucial for the Trade and Industrial wings of both Jammu and Kashmir to be activated promptly. These wings should engage extensively with industrial bodies and entrepreneurs, gathering comprehensive feedback on the challenges they face. By holding consultations and discussions with stakeholders, the government can formulate informed strategies that align with the needs of the business community, ensuring that the government’s policies effectively support industrial growth and economic development in the region.

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