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J&K: A Year After Article 370 Move, Sick Industries Still Have No Hope of Revival

When revoking Jammu and Kashmir's special status, the Centre claimed that it would help the region's industrial development. That has not proved to be true.

Srinagar: “If you are an aspiring industrialist and you want to set up an industry in Jammu and Kashmir, you should know that you are inviting trouble,” says industrialist Aamir Abbas of Lal Bazar, Srinagar.

Marred by a lack of government attention, outdated industrial policies, political conflict and increasing bank liabilities, Abbas (29) had to finally wind up his business unit which manufactured chocolate almond dates in July last year.

“During all these years, political leaders from the Peoples Democratic Party (PDP) and Bharatiya Janata Party (BJP) lured young people under the false hope of entrepreneurship,” lamented Abbas, while talking to The Wire.

He added that the repeated failures of the government to create a vital infrastructure and formulate an attractive policy has pushed J&K’s industrial sector into the worst condition, making thousands of industrial units financially sick. “These leaders give preferential treatment to a few influential entrepreneurs. They have ruined the careers of others like me and made us bank defaulters,” said Abbas.

A bleak future for aspiring industrialists

Abbas is not the only entrepreneur whose unit has turned sick in the valley. The data compiled by the industry and commerce department, Kashmir, claims that 40.82% of the industrial units in Kashmir are currently sick. “Many of my friends who were lured by the government to start an industrial unit in J&K are now suffering from mental stress. During all these years they have only increased their bank liabilities.”

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In the Lassipora industrial estate of Pulwama, 30-year-old entrepreneur Sarwar Hussain Malik told The Wire that almost 90% of the units in one of the biggest estates of Jammu and Kashmir are under stress and on the verge of turning sick. “Due to regular lockdowns and curfews, our businesses instead of growing have turned into non-performing assets (NPAs) and more than 30% unit holders have become totally bankrupt in the estate since August 2019.”

Malik, who is also the general secretary of a consortium of young industrialists in Kashmir, sees a bleak future for aspiring industrialists. “Our economy has suffered a loss of Rs 40,000 crore since August 2019. The government had last year promised to provide a Union Territory package for industrialists in Jammu and Kashmir, but so far there is no such package. It seems the government is only making hollow promises,” said Malik.

Security personnel stand guard as civilians walk on the street. Photo: PTI/Files

He suggested that the government, instead of giving loans to industrialists, should provide capital infusion and relief packages to revive sick industries in Jammu and Kashmir.

Shakeel Qalandar, former president of the Federation Chamber of Industries Kashmir (FCIK) told The Wire that the government has so far failed to give a fillip to the industries despite forming multiple committees to study their shortcomings. “In 1999, the government had asked the Entrepreneurship Development Institute of India (EDI), Ahmedabad, to create a data of sick units in Jammu and Kashmir. It revealed that 87.13% of industrial units in Jammu and Kashmir were sick.”

The 58-year-old industrialist argued that no industrialist would want to set up an industry in a conflict-torn place like Kashmir. “When the local unit holders are desperate and are unable to run their units properly then how come an outsider will come here and make investment. No one would come here and make investment when curfews, lockdowns and encounters between security forces and militants are happening regularly.”

Representative image. Credit: Reuters

‘No interest to revive sick units’

Last year on August 5, the BJP-led Central government revoked the special status of J&K and divided it into two federally governed territories – J&K and Ladakh. The decision also allowed outsiders to purchase property in the newly created Union Territory.

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In his first speech after the decision, Prime Minister Narendra Modi promised that many industries, including import-export, food processing and healthcare, will flourish in J&K, but so far no one from outside the Union Territory has shown any willingness to invest.

The government earlier claimed that the laws which barred non-local residents from acquiring land for any purpose were reasons for the bleak state of the private sector in Kashmir; it claimed that the revocation of the special status will encourage private investment in Kashmir.

According to sources in the J&K State Industrial Development Corporation (SIDCO) and Industry and Commerce Department, Kashmir, no migrant entrepreneur has yet shown any interest to revive the sick units lying inside different industrial estates across J&K.

The former finance minister of J&K during the BJP-PDP coalition government, Haseeb Drabu, last year in a television interview rejected the idea that dilution of Article 370 would encourage industrial development. “Unless the political situation in Kashmir becomes stable, there cannot be industrial development,” said Drabu, who is also a renowned economist.

“No entrepreneur or investor would want to start his unit in a conflict-torn place like Kashmir.”

Hundreds of sick industrial units belonging to non-local and migrant industrialists have not only occupied acres of industrial land but have hampered the industrial sector in the valley since the last three decades.

Sources in the Kashmir industries department informed that about 10,000 kanals of land is now being acquired under 18 land acquisition cases to develop new industrial estates or to expand the existing industrial estates across the state.

Indian security personnel stand guard along a deserted street during restrictions in Jammu, August 5, 2019. Reuters/Mukesh Gupta

Sick units are mostly located inside SIDCO complex in Khonmoh, Rangreth area of Srinagar outskirts and South Kashmir’s Lassipora industrial area in Pulwama district. These units are left with damaged buildings, defunct machinery and spoiled raw material. These units have uselessly occupied hectares of land.

Hundreds of local employees were working in these sick units in the 1980s, but the political turmoil and insurgency forced the unit owners to pack their bags, leaving behind machinery worth crores of rupees. According to the security guards of these units, the owners were mostly from Kolkata, Delhi, Haryana and other states of India.

“They could not revive their units since then due to the militancy and political unrest.”

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One of the giant units which has occupied almost 40% of the land of the SIDCO complex in Khonmoh is Ess Emm. “Due to lack of any activity during the last three decades, the unit is now home for wild animals, particularly leopards. The unwanted grass and dense trees have turned this unit into a dense forest,” said an elderly security guard at the entrance.

The government had claimed multiple times that sick industries will be revived but nothing has happened so far. “Young aspiring entrepreneurs knock the doors of the industries department and SIDCO to start a unit, but there is a dearth of land. The sick units have occupied industrial land which should have been given to local entrepreneurs to start their business venture,” said an MBA graduate Adil Ahmad of Pulwama.

Talking to The Wire, general manager of SIDCO, Kashmir, Aga Syed Aijaz admitted that currently there is no land available for industrial activities in J&K. But he quickly added that 13,000 kanals of land has been identified for the purpose.

The data available with J&K SIDCO, a copy of which lies with The Wire, reveals that it possesses 27,229 kanals of land, out of which 15,708 kanals have already been allotted and 10,869 kanals is under the control of government forces, or facing encroachment and litigation.

The data also shows that there are seven industrial estates in the valley: three phases of the estate in Khonmoh, followed by a food park; an industrial estate in Shalteng, Srinagar; Rangreth and Ompora in Budgam; an industrial estate in Lassipora, Pulwama; and a food park in Doabgah, Sopore. The total number of units registered with J&K SIDCO is 2,887, out of which only 1,576 are functional.

Kashmir’s director of industries Mehmood Shah, told The Wire that land identification to establish new industrial units in Kashmir is going on. “Land identification is a continuous process and the department is currently identifying land for further industrial activities,” he said.

When asked if the department is going to revive sick units in the valley, Shah claimed that the department does not have a revival policy and the mandate of reviving sick units lies with the financial institutions.

Irfan Amin Malik is a journalist based in Jammu and Kashmir and he tweets @irfanaminmalik.