Jammu and Kashmir : Investment and Challenges

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When Article 370 was abrogated in 2019, the citizens of the country were divided into 3 segments. The one, who was optimistic about the future of Jammu and Kashmir, the second who felt it stripped its special status, and the third who was oblivious to the implications. We are two and half years ahead of that date now and it is time to look back and wonder upon what all has happened since in Jammu and Kashmir to improve the overall well-being of its people. 


After Article 370 was revoked the government wanted to present Jammu and Kashmir as potential places for investments. However, the security situation in the state along with a few infrastructural issues have so far stalled the process. In this context, the government has come up with the New Central Sector Scheme for Industrial Development of Jammu and Kashmir. The scheme has been allotted a total of 28,400 crores. The scheme's main intent is to present J&K as a lucrative place for investors from the country and abroad with enticing provisions of capital investment incentives, capital interest subventions, and goods and services tax-linked incentives. The scheme aims to enhance the ease of doing business in Jammu and Kashmir. 

But the question arises what is the present status with regards to investments ?. The answer to it is both positive and negative. Positive, because several industrialists from the country and abroad are keen to invest in the state. JSW Steel for example wants to establish a 150cr facility to produce color-coated steel. This would give an immense boost to employment opportunities for the youth in the state. In the healthcare sector, an important development to note is Apollo Hospital's offer to build a hospital at the cost of 200 crores. They also hope that with that establishment in place they can possibly scale up their capacity. This would indeed benefit the poor health care infrastructure in the state. TATA and Reliance group share an interest in the field of IT, skill development, and horticulture. The impact of their investment shall be manifold since the skill development not only open formal job opportunities but potential to create value. Lulu Group has offered to establish a food processing and logistics unit. International interest is also brewing, given the fact that last year Dubai based groups signed MoUs to invest in Jammu and Kashmir. 

However, the offers have so far been unable to translate into something meaningful. The challenges being faced are both infrastructural and security-related. To begin with, the owners of the enterprises have constantly pointed out the impact of frequent power outages. It is understandable that for any project to take off on the ground a stable power supply is a prerequisite. Besides this, the mountainous terrain of the region has posed challenges in transporting raw materials. The difficult terrain combined with the threat of terrorism makes the final product costs due to increased transportation costs and hence less competitive. One more factor which has contributed to less competitive products is the implementation of GST. This is since with GST entry tax was abolished and therefore, now products being produced outside the state are entering the markets at a cheaper price. This is also a reason why small enterprises are upset.

This brings us to a question, what is the government doing? The government has taken multiple steps to improve the situation of infrastructure. Most of the transmission lines are in poor condition which is contributing to the frequent power outages. These transmission lines along with power substations are being upgraded. Besides this to improve the power situation, 52 new power projects have been inaugurated. To address the situation of high transportation costs, the government inaugurated 4 new national highways and a new 356-kilometer railway line. To reduce the logistics cost and increase the overall inefficiency of production 6000 acres of land to construct 292 industrial zones in the state. 

The steps and initiatives taken by the government are positive, in long term, these basic concerns need to be addressed for a flourishing Jammu and Kashmir. Besides this, we must act on improving the security situation further. We also must focus on the tourism and hospitality industry given the cues from increasing tourists in Jammu and Kashmir. These steps shall surely make Jammu and Kashmir a lucrative place for investors and a booming economy for its people.

Source: The Mint



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