As Chief Minister Omar Abdullah prepares to present his second budget of the Jammu and Kashmir Union Territory for 2026–27 on February 6, it is worth pausing to examine the ground realities of industrialisation in the region.
Budgets often arrive with new schemes, incentives, and policy language. What is missing, year after year, is a sober reckoning with why industrial recovery in Kashmir has remained fragile despite repeated announcements.
Debates on industrialisation in Jammu and Kashmir resurface periodically, usually framed as new insights about subsidies, incentives, import dependence, or weak exports. For those of us who have worked within Kashmir’s private sector for decades, these debates are neither new nor abstract. They reflect structural failures that were identified, documented, and formally conveyed to governments long before today’s policy narratives took shape.
As Secretary General of the Kashmir Chamber of Commerce and Industry in the mid-1980s, and later as its president from 2006 to 2009, I was part of sustained institutional engagement with both the state government and the Government of India. The concerns raised were not academic. They emerged from an economy battered by prolonged conflict, where otherwise viable enterprises were rendered sick by forces entirely beyond their control.
The first reality that must be stated without ambiguity is this: the sickness of industry and the reluctance to set up new enterprises in the Kashmir Valley are largely situational, not structural or managerial. Tourism, handicrafts, transport, retail trade, and small-scale industries suffered repeated shutdowns, collapsed markets, occupation of commercial assets, and an abrupt drying up of credit. A brief economic recovery in the 1980s could not compensate for the devastation of the 1990s and the uncertainty that followed.
Local entrepreneurs were compelled to service loans despite prolonged closures. Unlike migrant industrial units protected under special legislation, Kashmiri enterprises had no institutional shield. Many business owners sold assets at distress prices to avoid social stigma, while banks resorted to public recovery drives. This process broke the backbone of private initiative in the Valley and left a deep psychological scar that policy incentives alone cannot heal.
One intervention, proposed years ago and still relevant today, is a comprehensive one-time debt relief package for the Valley. This relief should apply in totality to hotels and houseboats, transport operators, handicrafts and handloom units, retailers and wholesalers, and small-scale and MSME industrial units. The estimated financial outlay for such a measure would not exceed Rs 500–600 crore.
This is not a bailout. It is a reset necessitated by extraordinary circumstances. A single decisive step of this nature would restore confidence, revive local private initiative, and salvage generations of Kashmiri entrepreneurs who stayed back and continued to employ people under impossible conditions.
Debt Relief Alone Insufficient
Debt relief alone, however, is insufficient without a structured revival mechanism. The Kashmir Chamber of Commerce and Industry had proposed a dedicated corpus fund of at least Rs 50 crore for the rehabilitation of sick MSMEs. The proposed structure was practical: 60 percent as an interest-free loan from central or state sources with a five-year moratorium, 30 percent as a capital investment subsidy, and 10 percent as the beneficiary’s contribution.
Past rehabilitation efforts failed because promoters, already financially exhausted, could not arrange contributions or access soft loans. The sickness of these units is not due to non-viability but due to prolonged disruption. A separate rehabilitation cell within the Industry Department, backed by clear instructions that no coercive recovery action be taken once rehabilitation begins, would make a tangible difference. District-level committees involving banks, government departments, and industry representatives could ensure coordination and accountability.
The deeper constraint, however, is the investment climate itself. Kashmir’s problem is not the absence of policy announcements but the absence of confidence. After the Sheikh–Indira Accord, local enterprises invested heavily in tourism and small industries. The collapse that followed in the 1990s wiped out those investments. The psychological and financial damage has never been adequately addressed.
In a conflict-affected economy, investment insurance, risk-sharing mechanisms, and realistic credit margins are indispensable. Without these, incentives merely subsidise failure. Budgets that ignore this reality may look ambitious on paper but will fail to catalyse durable growth.
If industrialisation in Kashmir is to be taken seriously, it must be treated at par with other structurally disadvantaged regions. For years, the chamber demanded that Jammu and Kashmir be extended benefits on the pattern of the North-East Industrial and Investment Promotion Policy, with explicit investment insurance, incentives applicable to existing units and not just new ones, and tax and excise benefits that are location-neutral within the Union Territory. Without such parity, Kashmir will remain a peripheral market rather than a production base.
Cluster-based development was identified long ago as the only viable industrial pathway for the Valley. Proposed clusters included gems and jewellery in Srinagar, information technology clusters in Srinagar, Baramulla, and Anantnag, marble and granite in Kupwara, food processing for apples and other fruits across relevant districts, and handicraft, handloom, and silk parks in identified areas. These ideas failed not because they were unsound, but because of a lack of land acquisition, funding, and follow-through.
On the eve of another budget, the message is simple. Kashmir’s private sector never demanded charity. It asked for fair risk-sharing, realistic finance, infrastructure before incentives, and dignity in ownership. Many of the critiques being voiced today were raised decades ago, when timely action could have altered outcomes. Industrialisation cannot be built on hindsight or recycled policy language. It must begin by listening to those who invested, employed, and endured.
Until that happens, industrial policy in Kashmir will continue to impress in documents and remain fragile on the ground.
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