Historically, non-local investors have been coming to state as fortune hunters. Now J&K government is again inviting them. KASHMIR LIFE examines if the investors, with no local long term stakes in the state, should be wooed by the state at the cost of local entrepreneurs.
Since 1996, when the prolonged spell of gubernatorial regime was replaced by civilian government, successive chief ministers have been keen to keep their date with two sections of people in mainland India – Bollywood producers and Industry CEOs. The objective is obvious; if celluloid biggies come shooting their films in Kashmir, the resultant message would get hoards of visitors. And if honchos in the India Inc would invest, state government may find some more space to manage its unemployed.
Following the tradition, chief minister Omar Abdullah flew with a group of his aides and officers to attend the Confederation of Indian Industry (CII) meeting in Delhi on June 15. “Our main objective is to generate gainful employment for the educated and skilled youth as well as their skill up-gradation in various types of industry,” Omar told the trade leaders. He promised quick approval to the projects that investors will submit almost on the same lines as that of Essar Group which was allotted a building for operations within 48 hours.
But the industry in Kashmir and Jammu and Kashmir is restive. They see no logic in government’s efforts in roping in outsiders when local entrepreneurs willing to invest are discouraged. “It would have been better that the policy makers could brief the chief minister about our bitter past experiences (on outside investment) and the grim situation of the local entrepreneurs,” says Shakeel Qalander, president of the Federation Chamber of Industry Kashmir (FCIK).
Qalander’s former Jammu counterpart, Anil Suri, agrees. “They (outsiders) have a national agenda and they do not fit in Kashmir perspective. But who will tell them (the policy makers)?” he says. And the apprehensions are not unfounded. Kashmir has had a very bitter experience of ‘imported’ investment.
In November 2002 Atal Behari Vajpayee government announced an incentive package for setting up industries in J&K. The package that could be availed by fresh investments and significant expansions (25%) of the existing units for 10 years envisaged a set of concessions. Apart from 100 percent excise duty refund, the package offered capital investment incentive of 15 percent within three million rupees ceiling; full reimbursement of insurance premium on capital investment; and three percent interest subsidy on capital investment. This was in addition to a set of 24 incentives that state government offers routinely under J&K’s industrial policy.
The package was a major turnaround. Over the next couple of years, all the major manufacturers in pharmaceuticals, paints, textiles and white goods, started setting up new units. Some of the entrepreneurs also opted for substantial expansions and soon the industrial estates started reporting shortage of space. Since Kashmir remained troubled, most of the investment took place in the industrial estates of Jammu, Kathua and partly in Udhampur. No outside investment came to Kashmir, not even in sunrise sectors like IT. Most of the locals opted for copper units manufacturing wires. There was enormous growth in menthol units that would ‘import’ extracts from UP and ‘process’ them in Jammu. By the end of March 2008, the package led to Rs. 3231 crores investments in medium and large scale units. Out of 137 industrial units approved for production after the introduction of industrial package, only 74 are in production while the rest are in different stages of implementation.
Apart from creating an environment viable for investments, J&K government thought the new investments had opened up thousands of jobs for unemployed skilled youth. Once the state government started enquiring about employment generated after the introduction of the policy, the results were dismal. In certain factories, local employment was barely 20 percent. Industry leaders said they are unable to get skilled workers. But sources within and outside the government said the manufacturers were engaging workers at low wages that generated little response in J&K. It triggered a crisis. In December 2005, manufacturers in J&K were asked to ensure they have 90 percent local employees by December 2007. But industry insiders tell Kashmir Life that local employment is still very low.