KL Desk


Considering that Jammu and Kashmir (J&K) has not been able to attract even half a per cent of the total live investments made by both government and private sectors across India, apex industry body ASSOCHAM has therefore suggested an annual special package of Rs 10,000 crore per year for five years from the central government to give boost to the small and medium enterprises (SMEs), food processing, horticulture, tourism and hospitality, IT/ITeS (information technology enabled services), BPO (business process outsourcing) and other potential industries.

“Constant flow of private investments and large industries is imperative to bring about sustainable growth, development, jobs and the long-lasting peace in the valley,” said D.S. Rawat, national secretary general of The Associated Chambers of Commerce and Industry of India (ASSOCHAM) while jointly releasing the chamber paper along with Babu Lal Jain, chairman, Entrepreneur Development Council at a press conference held in Jammu on Thursday.

“J&K has attracted live investments worth just over Rs one lakh crore out of the total live investments worth over Rs 140 lakh crore in India as of December 2012, according to a strategy paper titled ‘Special Assistance for Development in J&K,’ prepared by the ASSOCHAM Research Bureau.

Government is the major investment source in J&K evidently as 1.3 per cent of the total investments made by the central government across states was put in J&K while the state attracted a meager 0.3 per cent of the total investments made across India by the private sources.

“Out of the total 7,109 live investment projects worth about Rs 58 lakh crore from all government sources across India, J&K attracted 187 projects worth over Rs one lakh crore and of the total 9,950 live investment projects worth about Rs 83 lakh crore from private sector, J&K attracted 28 projects worth just over Rs 27,600 crore,” according to the ASSOCHAM paper. “While the frontline states in India are competing to attract domestic and foreign investors, J&K on the other hand could not attract any foreign investment as of the aforesaid period.”

However, J&K has clocked a year-on-year (Y-o-Y) growth rate of over 10 per cent as the value of live investments increased from about Rs 1.1 lakh crore with 212 projects as of December 2011 to 216 projects worth over Rs 1.3 lakh crore as of December 2012, highlights the ASSOCHAM

The services sector accounts for the highest share of over 55 per cent in the total live investments attracted by J&K followed by electricity which has garnered a share of over 42 per cent while share of rest of the significant sectors like manufacturing, mining, irrigation and real estate has remained below one per cent. Investments in irrigation, electricity and services sectors have registered a Y-o-Y growth rate of over 56 per cent, 18 per cent and four per cent respectively.

While about 105 investment projects worth over Rs 94,000 crore i.e. about 72 per cent of the total live investments are being actually implemented, about 77 projects worth over Rs 35,000 crore i.e. over 27 per cent live investments are in the announcement stage. There is no information about the implementation status of 32 projects worth about Rs 267 crore and the implementation of two projects worth about Rs 30 crore has been stalled.

While analysing the growth scenario of J&K’s peer hilly states of Uttarakhand and Himachal Pradesh, it was observed that state economy of J&K grew at the lowest growth rate of just over six per cent between 2004-05 and 2011-12 as against over 12 per cent in Uttarakhand and over eight per cent in Himachal Pradesh. India as a whole clocked a growth rate of over eight per cent during the same period, according to the ASSOCHAM paper.

“The unfriendly investment climate in industrially backward J&K portrays the inhibitions of the private sector because of low supply and demand linkages apart from security and geographic concerns,” said Rawat. “Locational disadvantage owing to hostile terrain and climatic conditions are certain major problems as main consumption markets of the country are way too far from the production centres in J&K.”

In its paper, ASSOCHAM has stressed upon the need to improve the socio-economic infrastructure, physical infrastructure such as roads, power, telecommunications and others. There is also an urgent need for the state government to formulate policies, prepare a strategy and create a policy framework that shall encourage industries with potential to earn foreign exchange and generate huge employment.

Considering that J&K has only small and medium scale industries in traditional sectors, ASSOCHAM has recommended that policy initiatives must be proposed to incentivize MSMEs to expand the production capacity of the sector including handlooms, handicrafts and others which hold ample of export potential. Besides, access to finance must be made easy so that industry can undergo constant innovation and adopt aggressive marketing and increase its target market size.

J&K must consider exploiting the growth potential in the sunrise industries like electronics, pharmaceuticals, food processing, and gems and jewellery apart from developing the traditional industries to bridge the development deficit in the state, highlights the ASSOCHAM paper. Besides, there is also a need to develop basic infrastructure like proper road, rail connectivity, electricity and upgrading the skills of traditional craftsmen.

The apex chamber has also made a request to the central government to announce budgetary support to J&K in forthcoming central budget as the same would spur job opportunities thereby inducing a productive ambience in the valley.


  1. We have had several attempts in the last three decades or more to drive the investment into different sectors through incentives and subsidies. Latest such attempt was the PMs package that came to end in 2012 march. The package gave concessions on excise and income tax etc. it drove in hordes the fly by night entrepreneurs with investments in the processing of menthol and metals. The formor to avail of excise concession and the latter for excise concessions and the cheap power. At one stage the investment in menthol and the copper came under scanner and the ministry of finance drastically modified the scheme to check the loot. Simmilarly lot of investment in pharma was experienced and some very good names in the Indian pharmaceutical industry made investments. These essentially were toll manufacturers and not the ones manufacturing basic drugs.Pesticides and chemicals was another polluting sector that reacived investments in the state. However post modification of the excise incentive the pharma industry started having second thoughts. There have been large scale shut downs of menthol, copper , ferrous ,pesticides and small clinker crushing units post withdrawal of the incentives as these ceased to be attractive any more. The whole approach of incentive driven investment promotion therefore calls for a review and a shift of the policy approach from incentives to infrastructure modernisation. We need a better road, rail and air connectivity, bonded whatehouse with facilities of customs Clarence , investment in industrial area with a focus on development of services and annicilliary facilities. We need to provide incentives to attract mega investment around which a network of annicilliaries in the form of SMS will come up. Investments as big as 5000 crores to give a fillip and drive the growth in the sector .real big ticket investment. Than our labour force has to adjust to the requirements of the industry. Industry does not work on single shifts and the 10 to 4 regiment. The whole govtal structure has to orient itself to a industry friendly approach rather than act as sahibs out to regulate and throttle. And last of all our lakhanpore check post needs huge reforms from the industrialist nightmare to place of smooth passage of goods in and out of the state.


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