The Kashmir Chamber of Commerce & Industry ( KCCI) team had a meeting with the Departmental Parliamentary Standing Committee on Industry chaired by Mr. T. Shiva. The KCCI team comprised of Ashaq Hussain Shangloo Senior Vice President, Faiz Bakshi Secretary General, Umar Nazir Tibetbaqal Jt. Secretary General , Dr. Touseef Ahmad EC Member & Bilal Ahmad Bhat. The Chief Secretary Dr. Arun Kumar Mehta, Commissioner/ Secretary Industries & Commerce Vikramjit Singh , Director Industries Mehmood Shah, Jt. Director MSME and other senior officials were also present. Senior officials of Government The KCCI made a representation at the two and a half hour meeting with the standing members committee. The following presentation was made:

 

PRESENTATION TO PARLIAMENTARY STANDING COMMITTEE ON INDUSTRY BY THE KASHMIR CHAMBER OF COMMERCE & INDUSTRY (KCCI) ON 3RD  NOVEMBER, 2023 AT SRINAGAR- KASHMIR.

 

The Kashmir Chamber of Commerce & Industry ( KCCI ) would like to express thanks to the Chairman and the esteemed members of the Committee for granting us an opportunity for today’s meeting. We believe it will prove to be a path breaking one. The KCCI being one of the oldest Chambers of the Country- 99 years old to be precise- is conscious of the importance of the standing Committees , more so  the Committee on Industry, considered as parliamentary surveillance over administration; and enjoying a privileged position to provide necessary direction, guidance and inputs for broad policy formulations and in the achievement of the long- term national perspective by the Executive. 

 

The Union Territory of Jammu & Kashmir is blessed with incomparable landscape and resources. But sadly it has struggled to establish a potent and diversified industrial base. 

 

The present condition of industry in Jammu & Kashmir can be termed anything but a robust one. It is worth mention that in 2021 when the  Central Scheme for Industrial Development of Jammu & Kashmir  was announced there were about 39500 MSME’s including manufacturing, handicraft and service sector units in organised & un-organised sector with an asset valuation of around 39000 crores. However, only about 5800 units are housed in organised industrial estates whereas the rest operated in un-organised sector. The reasons with possible solutions are discussed hereunder : -

 

 

1) INFRASTRUCTURE CHALLENGES :

The industrial expansion depends upon a robust infrastructure in place vis developed industrial estates, power distribution network , captive water storage, internal roads, connectivity and transport. The Lack of infrastructure hinders industrial expansion. As already mentioned that not more than 20 % are housed in Industrial Estates, and hence a need to identify and develop sufficient number of estates with adequate infrastructure in place before allotment of land to provisionally registered entrepreneurs.

 

 

2) Land Allotment Criteria/ Erroneous Ranking System :

 

Presently, the land is allotted through On-Line Registration system. The allottee is required to make the unit operational within a period of three years after executing the lease deed. At the time of allotment the industrial estate is like a barren/ remote/hilly terrain bereft of any development or infrastructure in place. It takes authorities a long time to develop the estate causing delay to the entrepreneurs in setting up and making the unit operational. Moreover, getting term loan sanctioned by the Bank, power sanction , consent to operate from Pollution Control Committee et el consumes a considerable amount of time. It would require a time bound clearance / sanction for conversion of Provisional to Formal Registration ( EM Part 1 to EM Part 11)  

 

Suggestions : -

  1. The industrial estates be developed before the land is allotted.
  2. The time to start operation of the unit  be extended from 3 to 5 years.
  3. The NOCs / clearances be issued within fixed deadlines. 
  4. The erroneous Ranking policy linking land allotment to employability be modified.

 

 

 

3) Geographical Challenges: -

 

The  adverse geographical location , the difficult terrain , inclement weather conditions, limited working season , short working hours , unreliable Srinagar-Jammu National Highway makes transportation of raw material and finished goods a complex task. All these factors add up to increased cost of and/or loss of profitability. 

 

 

Suggestion : 

The Kashmir Valley with far flung and remote areas requiring industrial development needs a different treatment other than “ Zoning “ for incentives.

 

(4)     MULTIPLE INDUSTRIAL POLICIES :

The Jammu & Kashmir currently has 3 industrial policies on paper : J & K Industrial Policies of 2016-26 : 2021-30 and Central Scheme for Industrial Development 2021-37. The change of industrial policies , Rules & Regulations and Incentive Schemes midway causes confusion and tremendous hardship to entrepreneurs. For example marketing support, price/ purchase preferences, tax exemption have been withdrawn from 2016-26 Policy. Moreover, the existing MSME’s have been kept outside the purview of Central Scheme of 28400 Crores.

 

Suggestion: The New Industrial Policies should be in continuation with and not in suppression of existing Policy. 

 

(5) SKILL DEVELOPMENT: 

The region faces shortage of skilled labour/technicians  , particularly, in industries applying modern technology. There is a need to establish Skill Development Centres for specific industries within various Industrial Estates/ clusters. These Centres funded by Government or established in PPP Mode can form part of much needed common Facility Centre (CFC) and include Management, Marketing & Services  suitable for large Industrial Estates like Lassipora, Khonmoh, Bagh-i-Ali Mardan, Rangreth, Zakura etc. The skilled youth trained in ITI’s do not serve any purpose because they mostly train them as plumbers, carpenters and other lowly technical fields.

 

(6) Revival of Sick Units :

Many units are sick due to various controllable or uncontrollable factors. The sickness of units is growing by day. A survey of sick units on case to case basis jointly by Government and KCCI/Industry is suggested to be made to determine the causes of sickness and suggest the dosage/ remedial measures. Ironically every Industrial Policy mentioned setting up a mechanism for revival, rehabilitation, or honorable exit for sick or limping units. However, till date there is no clear picture , and the plight of these units and unit holders is pitiable despite a mention of setting up a Corpus for taking care of this problem in Industrial Policies. Moreover, MSME’s are subjected to harsh recovery methodology without any check or intervention by Governments and RBI. 

 

Suggestions:

  1. Approve corpus for revival and rehabilitation of sick Industrial Units
  2. Approve and launch a uniform and non-discriminatory special ONE-TIME SETTLEMENT SCHEME( OTS) through all Banks for J&K SMEs.

 

 

 

(7) ACCESS TO FINANCE: 

The access to Capital is limited and hampers the growth of MSME’s. The Banks often show unwillingness to accept CREDIT GUARANTEE SCHEME dealing a serious blow to the entrepreneurs in general and STARTUP’s in particular because they have no collateral’s to offer. These problems get compounded with higher rate of interest charged for industry compared to other loans ( like housing/ cars etc) .The venture capital and Angel capital are also not available . The Government can provide some incentive for this type of Finance to augment the present funding issues for local industry. 

 

 

(8)    SECTOR SPECIFIC POLICY:-

The Industrial Policy needs to be sector specific. The inherent assumption that all industries are the same and should be treated equally,  is faulty.

What we need is that we have a policy which has small sub-sets for various sectors to take care of these sector-specific issues like floriculture, lavender farming, plantation , organic farming etc.

 

(9) Reduction in Negative List : -

 

The list of negative items  included in the Industrial Policy need to be reduced. The items like Marble, Granite and some other minerals included in the Negative List is not logically relevant because Jammu & Kashmir has a large deposits of these minerals.

 

 

  1. The Hospitality & protocol sector be incorporated under National Index Code( NIC ) . Moreover, the Tourism be included in the organised sector on Demand Basis vis A- 3 Star Hotel cum Conference/Training venue in a large  industrial Estate e:g Lassipora.

 

  1. Condonation of Delay of Time Barred Incentive Cases of IDS & CSS :

 

  1. Land Use Criteria :

The units that have come in to production and granted formal registration be exempted from change in land use since the Act was not in force at the time of allotment. The Neutrality of Land use be applied in the cases of units operating in un-organised sector.

 

  1. Incentive Eligibility Criteria :

The date of Formal Registration be treated as eligibility criteria for the purpose of claim  of incentives instead of 1-4-2019 cut off date fixed under New Policy.

 

  1. Under PMEGP - Scheme three incentives viz CIS -CII- GSTLI are available. But presently only one CII is being offered. 

 

  1. IDS - 2017 - Clarification reg Clause 9.1 needs clarification. Before 2021 - IP under IDS Some incentives were given.

 

  1. IDETIFICATION OF LOCAL LOCAL ITEMS : Identify and reserve products /works  procured/executed by Government Departments/PSU’s for local manufacturers at least for 10 years.

 

 

  1. SINGLE LINE ACTIVITY ESTATES: Explore possibility of developing high potential single line of activity based industrial estates . An example of CA Store/Cold Chain based industrial units catering to the demand of 20000 Crore Horticulture industries could be highly appreciated.

 

 

  1. The Information Technology Sector would require the following specific attention as far as Industrial policy 2020 is concerned.

 

  1. Infrastructure Development: Investment in improving IT infrastructure viz high-speed internet connectivity, reliable power supply, and data centers. Encourage public-private partnerships to accelerate infrastructure development.
  2. Skill Development: Establish training programs in educational institutions and initiatives to develop a skilled IT workforce. Collaborating with industry experts and academia to bridge the skill gap and promote continuous learning.

iii.                Encourage Investment: Offer incentives and tax benefits to attract domestic and foreign investments in the IT sector. Create a favorable business environment and establish technology parks or incubation centers to nurture startups and innovations. 

  1. Streamline Regulations: Review and update regulations to create a business-friendly environment for IT companies. Simplify procedures for setting up and operating IT businesses, and ensure data protection and privacy regulations are in place.
  2. Enhancement of Cyber security: Develop a comprehensive cyber security framework that includes robust preventive measures, incident response plans, and regular security audits. Foster collaboration between government, industry, and academia to address cyber security challenges effectively.
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