KCCI submits pre-budget suggestions to FinMin Drabu

KL News Network


The Kashmir Chamber of Commerce and Industry (KCC&I) on Saturday submitted a list of suggestions to Finance Minister Dr Haseeb Drabu for inclusion in the budget for the year 2016-17.

“It is believed that your good-self being a son of the soil know the intricate nature of the problems and sufferings of the people of the state and the measures that need to be taken to resolve such issues, as has very often been reflected in the articles contributed by you in different English dallies from time to time in the past,” said a statement issued here.

Here is the list of suggestions:


KCC&I will support any kind of taxation regime which will not effect the financial autonomy of the state. the extension /application of Central laws to the State  aimed at diluting the special status enjoyed by us under Article 370. Same applies to the proposed Goods & Services legislation (GST) recently enacted by the Parliament. KCC&I believes that the application of GST Act will infringe upon the powers of the State legislature. Apart from the legal ramifications which you would be more aware of, we would also draw your kind attention to certain ambiguities in the Bill regarding exports from our State, tax exemption under prevailing VAT Act being provided to the handicraft/industrial sector. The effect of the proposed Bill on important sectors of our State like the Handicraft Sector, Wood Based Industry, Leather and the Horticulture Sector is not clear. Another concern would be the capacity of our State to adopt this Bill which requires a lot of internet and computer based work. KCC&I would therefore  like to know the position taken by the government on implementation of GST in the state.

  1. Amnesty provided under GST Act which was provided by the State government, benefited most of the traders and affected assesses and was hailed by KCC&I through print media. However the exemption be extended to the assesses who have the similar problem under  VAT Act 2005.

The KCC&I seeks attention of the government to the plight of Lacs of artisans, weavers in the handicrafts sector. This sector proved to be the spine of the state economy during most trying times. Handicrafts being  environment  friendly, a dependable  contributor to the state economy   and  employment generator  needs urgent attention  of the government  to not only to  nurture  and  preserve it, but also to carry forward our sacred tradition nurtured over ages by hundreds of  thousands of our Artisans who with their master craftsmanship  skills created  artifacts that earned the name and  fame for the State and in the process created “Brand Kashmir”.  Having failed to get due credit and returns for his work, the artisan is dissuaded and looks for other alternatives. The biggest impediment they face is non- availability of finance on soft terms. Attractive incentive schemes like availability of required materials on subsidize prices, availability of soft loan with subsidized interest rates creating ancillary processing facilities around the existing artisan cluster areas such as mentioned here in below  need therefore be introduced to motivate the artisans and their progeny to keep up with their ancestral profession.

The areas and localities in Kashmir valley which are artisan concentrated  and where people are traditionally involved with different types of handicraft production.

District Srinagar/ Ganderbal

Iddgah surrounding area downtown to                                         For Pashmina weaving/sozni work

Ganderbal including the localities Hawal,                          and other types of needle work.

Nowshera,Soura and so on.

Sazgri Pora, Almgari Bazar, Madin Sahib

Zadibal, Lal Bazar, Baghwan Pora and adjoining                           For Papier Machie.

localities up to Ahmda Kadal

Bahau-din Sahib and adjoin localities                                                 For Namdha Sazi.

Noor Bagh, Safa Kadal,  Nawa Kadal,

Rainawari  and Bota Kadal For Wood Carving/ Khatambandh  ornamental  joineries.

District  Budgam/ Baramullah

Soibugh, Narbal, Kanihama, Pattan

and adjoining  areas For Kani Shawls and Carpet weaving.

South districts of Kashmir For Gabbha  Sazi Crewel And Chain     Stitch works.

It needs to be mentioned here that the Artisan Credit Card Scheme earlier introduced provided  for interest subsidy  of 10% on availing a loan of Rs.1.00 Lakh from J&K Bank. The Scheme proved more harmful than beneficial for the following  reasons :-

  1. i) That the amount of Rs.1.00 lakh is too small an amount that could help an Artisan to buy  raw material  and to  keep simultaneously  his  pot  boiling till  he is ready  with his  product to market and  be in a position to plough back  the  investment and pay back the bank finances at the same time.
  2. ii) That government failed to pay its share of subsidy component of 10% to the Bank in time which hampered their further disbursements. The loan accounts have as a consequence turned into NPAs.

The Kashmir Chamber of Commerce & Industry (Inc)  has  been pleading for loan amount   under Artisan Credit Card Scheme be raised upto 3.5 Lakhs as per requirement and nature of activity on the same analogy as applicable  to  Kissan Credit Card holders.

The performance of export of Handicraft has shown alarming decline touching 35% as   following statistics show:-

2013-14      2014-15      2015-16         2016-2017

Handicrafts Exports        1695.65       1287.04       1059.41       around 600 crores

In order to give boost to the exports/manufacture of Handicrafts special financing schemes need to be evolved by the government whereby finances be made available to the exporters/ manufacturers on minimum rate of interest against confirmed export supply orders.

Again with a view to give boost to the Handloom Sector  the KCC&I would suggest that facilities for processing the wool  produced within the valley be created to help reduce the cost of raw material used for carpet making  Gabbha Sazi, Crewel and Chain Stitch and also for Namdha Sazi. Creating of such facilities will help simultaneously generating  employment avenues.



It is an undeniable fact that the J&K is the only state which has suffered because it has not so far come out with a long demanded Tourism Policy.  The absence of Tourism Policy has resulted in a free for all situations, whimsical decision by authorities, un planned and mushroom growth, loss to local habitat and culture, damage to sustainable tourism and development of lop sided infrastructure.

The KCC&I demands that a robust tourism policy beneficial for the people of the state is formulated at the earliest.


The Tourism sector had been declared as an industry in the year 1995 but the  benefits and incentives applicable to the Industries still elude this important sector. The industry is hardly entitled to any benefits under any other policy .The KCC&I suggests that tourism industry be treated at par with SSI/MSME and given such benefits as would help in the growth of this industry with a potential to contribute to the SGDP and generation of employment.


The State Government in 1998   levied 12.5% services tax to be charged from  tourists by the hoteliers on lodging  bills. Right then the tourism fraternity could realize and accordingly pleaded with the then State Government the negative impact of such tax on  the already sunken level of tourist inflow in the State. Convinced with the tourism fraternity view point the then government agreed to grant exemption from charging  the said Service Tax. Ever since  the practice of granting exemption continues to be repeated  year after year  at the time of  approval of annual budget of the state. More so because the signs of the recovery of the tourism inflow continuously showing low figures over the years have further drastically  declined since September 2014 floods and the unprecedented unrest that followed recently. Therefore, continuity of the said exemption is imperative and justified until the tourism activity improves fully to contribute to the economic health of the State.


Least but not  the last it may be submitted that the tourism, that has already been declared as an industry be treated in equality with other industrial sector for the purpose of  application of power tariff and other relevant incentives and benefits in the case of hotels and tourist lodges etc.


Under the Prime Minister’s economic package an amount of Rs.2000 Crores is understood to have been sanctioned to be spent over a period of 5 years for development of new tourism projects in the State. The amount thus provided could be rather better utilized for up -gradation and refurbishing of the existing tourism infrastructure more particularly  the hospitality sector which has the capacity to cater to 15 to 20 lakh tourists but stands incapacitated  having  suffered colossal loss of fixed assets, costly  equipment, furniture and fixture in floods with the consequential  enormous business losses. It may be appreciated that the tourism trade is an essential but highly fragile element of the state’s economic activity  and therefore warrants upkeep matching  the  higher order of  infrastructural standards. The KCC&I  would  suggest that a suitable part of the package may please be diverted to help modernize the existing tourist properties i.e.  hotels/ lodges in order to make them match the international standards while simultaneously keeping up with the environmental requirements of the valley. The modernization shall involve introduction of lifts/elevators, facade and the kitchen and catering facilities.


While the horticulture sector is yet under revival after the damages caused to it due to 2014 deluge it has gone through a sever marketing  crunch trough the recent unprecedented unrest in the valley. With a view to make good the losses thus suffered there is a need for plantation of hybrid variety of Apple which grow to bear fruit manifold comparatively  in a  shouter duration of time with due quarantine case. It is therefore requested  (i) necessary  motivational incentives be provided to  the orchardists to procure  the required  saplings in large quantities in collaboration with  the Horticulture Department to encourage large scale hybrid Apple plantation and (ii) Tree Spray Oil be  provided subsidized prices to ensure  maintain good quality  of fruit for better off take n the domestic and international market.


Kashmir has significant potential for development of food processing industry as the raw material is locally available in abundance. However the industry is face with critical problems/ challenges in its growth. More so with the implementation food safety and standards act 2006 the sector is in the eminent danger of facing closure. The Act. requires fulfillment of various provisions some of which are to be established by the government such as a modern laboratory for testing of food products, technical and qualified staff, hygienic conditions around food processing units. In the absence of any solution for these issues which food processing industry/ food business operators can not undertake on their own, the industry is faced with prospect of closure if these issues are not addressed.

Food Processing sector  fall in a negative list at the Sales Tax Department. While as other line of activities are availing all the benefits.

As manufacturers we are liable to various taxes rather than of those who import finished products of spices because of less price retailers here prefer to make purchase from them. Therefore it is all the more necessary that to make our product cheap in price therefore plead to take out our products from negative list.

Removal of Items from the Negative List for Industrial Sector in respect of Edible Oil, Roasted Ground Nuts and other  Products being manufactured by the Industrial Sector.


Besides the strategy envisaged in the State   Industrial Policy  there is a need for holistic development of our thrust industries which have been even recognized by Government of India in their   Policy Declaration.

  1. Food Processing and Agro Based Industries.
  2. Leather Processing and Leather Goods.
  3. Tissue Culture.
  4. Silk Reeling Yarn and yarn Spun from Silk Waste.
  5. Wool & Woven fabrics of Wool.
  6. Woven fabrics of cotton.
  7. Floriculture.
  8. Medicinal Herbs, processing
  9. Green House Only ladakh
  10. Computer Hardware/Electronics (Integrated Circuits and micro assemblies)
  11. Sports goods and articles and equipment for general physical exercise.
  12. Auto Ancillaries.
  13. Eco-Tourism.
  14. Handicrafts.
  15. Precision Engineering.
  16. Exploration of minerals.

Besides the above there is a need to include the following in the thrust areas.

Bio- Technology

Nano- Technology

Milk and Milk products

Fish processing

Poultry & Meat processing

Hotels, Resorts, Tourist Villages, Adventure Sports and


We suggest that all present Incentives as provided by the State as VAT Remission under VAT Regime, Toll Tax Exemption and other Incentives shall be extended   to Industrial Units till the adoption of GST.


We are thankful to you for implementing the decision for 24X7 clearance of goods at Lakhanpur Checkpost with the Green Channel for Industrial Sector resulting great relief to the Industrial Sector.

Since the On Line Data is available with the Toll Tax and Commercial Tax Department in respect  of Industrial units, It is the need of the hour to introduce the  Single Window System for the  clearance of Industrial Goods by Toll Tax and Commercial Tax Department under Single Window for the speedy clearance of goods.

We request you to provide sufficient staff to  the Commercial Tax and Toll Post at Lakhanpur to implement the Single Window System for the clearance 24X7 of Industrial goods.

  2. We submit that if a unit is closed due to any reason and its connection is disconnected by PDD, as per present policy for Disconnection/ Reconnection, the unit holder is supposed to pay minimum demand charges for six months & payment of arrears along with up to date interest as surcharge.
  3. In the month of August 2015 Govt. provide relief to domestic sector only with a one time opportunity to clear the outstanding dues of PDD without interest & penalties where as no such benefit is given to Tourism/Industrial Sector in spite of the assurance given by the Govt.
  4. c) We suggest that the Amnesty Scheme of PDD of 2015 should be extended to the Tourism/Industrial Sector also to provide relief to clear the old outstanding without Interest & Penalty for the working as well as closed Units.
  5. d) This initiative will help in faster recovery of Dead Arrears enabling better liquidity and allow release of blocked power capacity to be allocated to other units against the pending Power Connections.
  6. Stamp Duty/ Registration Fees

At present the MSME’s Sector bears the additional burden in shape of Stamp Duty/Registration Fees for availing loans from the banks/ Financial Institutions on the mortgage deeds.

We suggest that MSME sector be exempted from the preview of the Stamp Duty & Registration Fees.


The State Government had recommended Rs. 19241 Crores for revival and rehabilitation of business activity in different sectors.

It is ironical that in place of Rs. 8640 Crores as recommended by the State Government for interest subvention a paltry sum of Rs.800 crores only has been allocated for interest subvention. There is no mention about other heads for which the above said amount of Rs.19241 Crores was recommended to be granted under the relief package. Earlier on enquiry from the government, this Chamber was informed that the said  recommended amount include Rs. 4500 Crores for ex-gratia financial support  for such flood affected traders who had no insurance cover against their fixed assets and stocks. But  to over dismay  as per the details  of the package no amount  appears to have been earmarked for such traders.  Request was accordingly made in the meeting regarding   grant of a reasonable amount of ex-gratia to  the duly identified affected traders for revival of their business. His  Excellency has very kindly agreed to have the issue looked into.

  2. a) For Intra Kashmir Trade it may be appreciated that the  to just 21 item restriction,   holds the  entire  business in  clutches giving  no chance for growth. With a purpose and intention of growth of LOC Trade the restriction on items of merchandise on trade be  lifted to  help rake up  the real benefit of such trade.
  3. b) As earlier also brought to your kind notice the cross LOC visit of  trade delegation which  is awaited  clearance  for  the past  nearly seven years needs to be facilitated as it  is essential  to study  and gather  the  first hand trade intelligence about the  future chances of growth of the Intra Kashmir business.


The stress needs to be laid on allowing LOC Tourism which will prove to be a major confidence Building Measure between India and Pakistan.


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