‘Industry should be exempted from curfews and strikes’

Shaqeel Qalander has been head of Federation Chamber of Industries Kashmir (FCIK) from 2005, first as a caretaker chairman then as elected one for next two biennial terms. In a freewheeling interview with Ikhlaq Qadri he talks about the health of state’s industry and his tenure.

KL:  What were the achievements of FCIK during your tenure?

SQ: When I took over as the caretaker president, the organisation was suffering a minor internal crisis besides it was not proactive in taking up the problems of enterprises. So my first task was to restore its (FCIK’s) credibility as an apex organisation that could work in the interest of enterprises. I got five past presidents in my team and assigned them various positions in the organisation. They showed the magnanimity to work under my leadership. The Executive Council (of the organisation) also extended their full support.

The list of issues confronting industrial growth and working was large and we started taking up these issues one by one. The department of commercial taxes had issued demands against enterprises for recovery of more Rs 450 crore that was calculated merely on procedural defaults like non-filing of timely returns etc. Although the industrial units were exempted from payment of sales tax and had not recovered any tax from their customers yet this issue was being raised. The FCIK convinced the government and got issued as many as five amnesties one after another that reduced these demands by 99 percent.

Second was the exemption granted to the industrial units that would end in 2005 before implementation of VAT. But we, along with other chambers, were successful in our deliberations with the government and got remissions, which are still continuing.
The main issues FCIK focussed on were policy interventions, deficiencies in infrastructure, rehabilitation of sick industry and building faith and confidence among the entrepreneurs.

In one such case, after initially failing to convince the central government to remove riders and discrepancies in central industrial policy extended to state in 2002 the FCIK dared to return the package to prime minister of India. I remember that we wrapped the policy in a gift paper and presented it to the PM in our meeting with him at Jammu in 2008. We told him that this package had only bred inequality to opportunities and are useless for enterprises in Kashmir. Probably this act had some effect. Subsequently central government included FCIK president as one of the group members in the PM’s task force on MSME formed in 2009. The riders and deficiency in the policy were discussed threadbare in the task force meeting which helped in creating consensus and recommended certain measures and corrections to the PM who later approved the same, it was through these recommendations that the package has been extended for 10 more years till 2020 with removal of riders and asymmetries, largely, with the Northeast states.

Now the units would get 30 percent of capital investment of subsidy subject to the ceiling of Rs 3 crore instead of 15 percent subject to a ceiling of Rs 30 lakh provided in the earlier package. The capital investment subsidy on plant and machinery would also be available to the (existing) units on their expansions till they attain the maximum limit of subsidy provided under this head besides the units would be entitled for exemptions on excise duty, income tax for five years, 3 per cent interest subsidy, reimbursement of insurance premium, transport subsidy for five years, besides other normal incentives provided for MSME’s in the country. On the recommendation of task force a corpus of Rs 100 crore is being created for rehabilitation of sick industrial units. And a support of over 100 crore is being granted to J&K state financial corporation in order to get it in positive net worth. This is big achievement.
The FCIK also successfully worked for getting a separate directorate for industries for Kashmir besides making it mandatory for many wings of PDD and other departments to move to Kashmir during Darbar move.

The RBI and directorate of MSME also reopened their offices on Darbar move basis in the valley.
Many activities, which were not there earlier, have been started in the valley including many hydel projects, steal rolling plants, and plastic based industry. The efforts made by FCIK for abolition of entry tax on day old chicks and imposition of entry tax on grown chicken gave the local poultry industry a boast.

KL: What is the future strategy of FCIK?

SQ: The FCIK shall continue to focus on industrial development in order to achieve self sufficiency through import substitution. In the three pronged strategy the FCIK has to strive for more and more enterprises by prospective entrepreneurs besides up gradation of existing units and rehabilitation of sick units. The FCIK has a role to facilitate all theses units in getting timely and adequate credit required, infrastructure, raw material and marketing besides protecting them from harsh and anti-industry laws, and orders that may be imposed by the government from time to time.

KL: What is the current status of our economy?

SQ: Our economy is in very critical shape and state is debt trapped. We are spending 2200 crore on debt servicing each year. The mobilisation of resources is meagre when compared to the expenditure side. The decisions of absorbing more and more employees in government sector will make the state more and more dependent and entangled in crisis in the future. The assets are being absorbed for paying salaries and the autonomy of various departments is being sold away for getting some monetary benefits. The natural resources of the state are being exploited by outside agencies without benefitting the state. However some of the recent decisions in power sector seem to be futuristic and we need to support government on initiating establishment of new power projects.

KL: How have the frequent uprisings during the last few years affected the state’s economy?

SQ: Continuous uprising has affected development of enterprises because no investor within or outside state is ready to make substantial investments despite best industrial policy available. Industry needs to be exempted from imposition of curfews and general strikes by the government and leadership. The economic independence is required and will help the state under present and future political dispensation whatever it may be. Each day of curfew or strike, costs the industry about Rs 100 crore and in past 20 years we have had 1900 such days, that has cumulatively cost the economy Rs 190000 crore.

KL:  What immediate measures should be taken to save economy?

SQ: The micro and small service sector units holds the key for eradication of unemployment and economic development and as such need to be promoted in all potential sectors –  agriculture including horticulture and livestock, mineral based industry, handicrafts, tourist related enterprises and information technology besides need based manufacturing units.

KL: You are the member of Prime Minister’s expert group on employment. What is your role?

SQ: I maintain that I was surprised to hear my name in the expert group when PM announced as they never contacted me or sought my consent. Later on many of civil society members convinced me to be part of the committee saying that I can contribute for betterment of economy in the state that is required for self reliance. May be I have been included to give feedback from ground.
So far we have had many rounds of meetings and recommendations are being concluded in near future.

KL: How do you see the J&K Bank controversy, I mean the government’s move to appoint RBI as the banker to the state?

SQ: If I have to react on J&K Bank controversy in one sentence I would say that this is a wrong decision taken by state government.
To elaborate I may say that for mere 1000 crore rupees awarded by the finance commission for liquidity of part over drawings the commission has in fact tagged this award with a bigger price that will change the position of J&K Bank from principal bankers to state government to mere agent of RBI. Although RBI will understandably continue with collecting revenue through J&K Bank yet they are at liberty to put riders on in future. The state government even after getting 1000 crore is not in a position to liquidate the entire over draft and shall have to raise the balance from the market after issuing bonds. Even if the state saves 1 or 2 percent interest then charged by the J&K Bank.

On the contrary the state government shall lose the control on J&K Bank and can never think of raising any loan from it in future. The proposition is also not workable as the government revenue both on tax and non tax front is too low to take a substantial support under Ways and Means mechanism of RBI. In the circumstances it would be advisable that the government revisits this agreement and impress on the central government for release of awarded amount of 1000 crore without any riders. The government can also have a concrete mechanism in place to liquidate or substantially reduce the remaining over draft on year on year basis.

KL: What is your assessment of the cross-LoC trade? What are its prospects and the problems associated with it?

SQ: The LOC trade is likely to benefit the traders of Kashmir as it alters their tail end position. However the impediments in fixing the modalities including the mechanism for remittances and expanding the tradable items has limited this trade.

KL: Looking back, do you think you came up to the expectation of people related to trade?

SQ: I think we have to work on sustained basis. And no business leader can claim to have in fact accomplished the task entirely as per the expectation of fraternity and society.

KL: After your term is over, in what way you will contribute to the welfare of traders?

SQ: The immediate past president remains member in the executive council, I shall be delivering the duty in that capacity and any other capacity assigned to me by the fraternity.

KL:  Being president how many times you succumbed to the pressure from various quarters?

SQ: In fact I had lot of pressures. When you have 56 members of executive council and thousands of members, they have their own view points for a particular situation. At times I found it very hard to take the decisions that would annoy one or other segment of society. But I have tried to have balanced view always and also kept FCIK away from politics as far as possible.

KL: What is your message for the entrepreneurs?

SQ: My Message to entrepreneurs is that the future belongs to entrepreneurs as such they need to work hard and upgrade their existing units in order to stay in the competition. My message to youth will be to take entrepreneurship and contribute not only to earn livelihood but to society as well.

To the civil society I would say; come forward and help to create more and more enterprises that would lead the state to achieve the goal of self sufficiency My message to establishment is to desist from making unnecessary recruitments at national cost and instead frame policies for making the youth entrepreneurs.

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