SRINAGAR: The Federation of Chambers of Industries Kashmir (FCIK) has expressed concern over the possible economic impact of the ongoing tensions involving Iran, the United States and Israel, warning that prolonged instability in West Asia could affect several sectors of Jammu and Kashmir’s economy.
In a response to queries from the Ministry of Micro, Small and Medium Enterprises through its Development and Facilitation Office in Jammu, the Federation said businesses in the region—particularly MSMEs engaged in handicrafts, horticulture, agriculture, tourism and small-scale manufacturing—could face disruptions if the geopolitical situation persists.
FCIK said instability in West Asia could disrupt trade flows, energy supplies and remittance channels, potentially affecting the regional economy.
The Federation noted that Kashmir’s handicrafts sector, which sustains a large artisan population and depends significantly on exports, could face difficulties due to disruptions in international trade routes and delays in remittances from overseas buyers. Delayed payments, it said, may lead to liquidity constraints for exporters and traders and eventually affect artisans and small producers dependent on timely settlements.
The Federation also pointed to the likelihood of rising logistics costs due to higher fuel prices and disruptions in global supply chains.
According to FCIK, the horticulture sector—one of the main pillars of Jammu and Kashmir’s economy—may be particularly vulnerable. Higher transportation costs could make the movement of perishable produce to distant markets across the country more expensive and, in some cases, economically unviable, affecting growers, controlled atmosphere storage operators and traders.
FCIK further highlighted potential challenges for the hospitality sector. Reports of supply constraints and price volatility in LPG and other fuels could affect the functioning of hotels, restaurants and catering establishments that rely heavily on commercial LPG.
The Federation said the tourism sector could also be affected as global uncertainty may influence travel sentiment, with concerns that prospective visitors could defer or cancel travel plans. Any decline in tourist inflows would impact hotels, houseboats, transport operators, tour agencies, handicraft retailers and other service providers dependent on tourism activity.
Highlighting the vulnerability of small businesses, FCIK said MSMEs operating with limited working capital are particularly exposed to external shocks such as rising input costs, higher freight charges, delayed export payments and fluctuating demand.
The Federation urged the Government of India to consider temporary relief measures to help MSMEs manage the potential economic impact. These include extensions in statutory compliance deadlines such as GST filings and income tax obligations, deferment or rescheduling of statutory contributions including EPF and ESI, and moratorium or restructuring options for bank loan instalments and working capital servicing.
It also sought temporary suspension of recovery actions by banks under the SARFAESI Act.
FCIK additionally called for ensuring uninterrupted availability of LPG and other fuels for sectors such as hospitality and food services, and measures to mitigate rising logistics costs affecting the transportation of horticultural produce to national markets.
The Federation said timely policy support and regulatory flexibility would be important in helping businesses navigate the uncertainties arising from the geopolitical developments.
