Course: J&K Economy Instructor: Dr.

Hamid Mir
Course Code: ECO1530-DCE Semester-3rd
Tutorial: 2
Unit-3: Agriculture, Industry and Trade

1. Industrial Sector in J&K State

2. Public Sector Units (PSUS) IN J&K State

Industry Sector J&K State

The Industries Sector is now playing its due role in the economic development of the State
and in generating employment opportunities for the unemployed youth. Previously it used to
be only the Handicrafts, Handlooms and Cottage Industry providing livelihood to a large
population at different stages of production, sale and export.

OBJECTIVES
1. To create infrastructural support for facilitating the growth of industry and commerce in
the State.
2. Mobilize new investment and support the MSME sector.
3. Facilitation and promotion of new Industrial units.
4. Skill development and up-gradation for the Handloom, Handicrafts Sector, carpet,
Craft development and Entrepreneurs Development Programmes.
5. Marketing support & Sales promotion.
6. Exploration & sustainable Mining of Minerals.
7. Rehabilitation of Sick Units and action against defaulting units.
8. Promotion of Cottage / Traditional Industries.

FUNCTIONS
1. To disseminate information about various industry related schemes of both GoI / State
Govt. and area of operations to entrepreneurs.
2. To identify new areas/sectors in the State where Industrial infrastructure could be created.
3. To develop new Industrial Estates and maintaining & upgrade existing industrial estates.
4. To hold periodical meetings for Single Window Clearance for Micro/Small, Medium/large
units for grant of provisional registration, allotment of land, power sanction, clearance from
PCB in a time bound manner.
5. To rehabilitate potentially sick units.
6. To facilitate providing of State / Centre Govt. incentives/subsidies to the eligible units as
per the package of incentives.
7. To improve working conditions of the artisans for enhancing their production capacity by
taking advantage of various development/welfare schemes launched by State/Centre
Governments create skilled manpower in the industry by revamping the existing training
programme, introduce new designs in-tune with the preferences of the buyers, work for
preserving and protecting the exquisite handicrafts by obtaining certificate/registration from
appropriate bodies and facilitate financial support /hand holdings to the artisans.
8. To carry detailed Geological Investigations/ Drilling / Mining, for assessment and
exploitation of mineral deposits to setup of mineral based Industries.

This programme of the State Government is administered by Department of Industries and

Commerce through- five (5) Directorates of Industries, Handicrafts, Handlooms and Geology
& Mining,- Four (4) Corporations viz SIDCO, SICOP, Handloom Dev. Corp. and
Handicrafts (Sales & Exports) Corp.- Public Sector Undertakings of JK Industries Ltd., JK
Minerals Ltd., JK Cements Ltd.- Training & Research Institutes like CDI, IICT, EDI and
KVIB.
A glance at investment made by the entrepreneurs in industries sector over the years.
Table No 1 (Rs in Crore)
Period Up to 2008-09 2009-10 to2013-14 2014-15
(ending Nov. 2014)
Investment 2827.09 4654.27 134.54

Abstract Position:
Small Scale Units: 29102
Large & medium Units: 83
Total Investment: 7615.90 Crores
Total Employment: 152651

INCENTIVE REGIME
A comprehensive State Industrial Policy came into being in 2004 which facilitated provision
of Incentives to attract private sector investment for the industry in a big way. The incentives
are aimed at overcoming the constraints of remoteness, poor connectivity, high transportation
cost and erratic power supply faced by the Industry. It focuses on private sector
industrialization in backward blocks of the State and modernization of the existing units.
Prior to State incentives the Central Government in 2002 announced its Package of Incentives
which has been extended for further five years up to 15 July 2017 on its expiry of ten years
period in July 2012. Therefore two sets of incentives are available to the entrepreneurs- one
from the Centre Government and the other from the State Government.
These incentives are as follows

State Fiscal Incentives

100 percent subsidy on purchase of new Diesel Generator sets.

100 percent subsidy on project report preparation and quality testing equipment.
75 percent subsidy on Research and Development.
3 percent interest subsidy on working capital.
5 percent rebate on interest on term loan for technocrats.
Special incentive for brand promotion and modernization.
Land and Power at concessional rates.

Tax Incentives

Toll tax exemption on import of raw material and export of finished products.
CST exemption
VAT remission.
Stamp duty exemption.

Central Package Fiscal Incentives

15 percent subsidy on capital investment on plant and machinery.

3 percent interest subsidy on working capital.
100 percent insurance cover to Industrial units.

Tax Incentives

100 percent excise refund.

Total income tax exemption.

Make in India

The J&K State under the Make in India programme is looking forward to attract
domestic investors to invest in the State. Ease of Doing Business has rightly been
recognized as the most important factor in achieving the goal of Make in India. The
State Government has initiated the process for playing its role as the interface of
enterprises
The existing State Industrial Policy is expiring on 31st March, 2015 and the new
Policy is going to come into effect from 1st April 2015. Committee constituted for
drafting the New Industrial Policy has been properly sensitized to deliberate on the
issue of easing out the procedures for the entrepreneurs/ industrialists to invest in the
 State. The Government is simultaneously working on drafting Trade Policy and
Manufacturing and Export strategies of the State.
In order to initiate concrete action on the recommendations of the Department of
Industrial Policy and Promotion DIPP, GoI, the State Government has constituted two
high level committees viz Monitoring Committee under the chairmanship of Financial
Commissioner, Industries & Commerce Department and Apex Committee under the
chairmanship of Chief Secretary.

Industrial Infrastructure
Infrastructure development serves as an engine for industrial development and calls for
continuous attention of the Government. Development of Industrial Estates / Infrastructure is
the major function of the Industries and Commerce Department. The State has 53 existing
industrial estates spread over an area of 31335Kanals of land as per position ending
November, 2014. Profile of these Industrial Estates is as under:-

Table No 2: Existing Industrial Estates in the State ending Nov. 2014

Managing agency Industrial Estates Area Units Established / Under
(No.) (Kanals) Establishment (No.)

Directorates of Industries 32 2517 1175

& Commerce

J&K SIDCO 12 24201 2307

J&K SICOP 9 4617 1209
Total 53 31335 4691
Source: Economic Survey, 2014-15

To promote industrialization in the remote and backward areas of the State, the Industries and
Commerce Department is developing Industrial Estates in the rural and industrially backward
areas which are at various stages of development/implementation.
2. PUBLIC SECTOR UNITS (PSUS) IN J&KSIDCO, SICOP;

SIDCO

Jammu & Kashmir State Industrial Development Corporation (J&K SIDCO) was
established in 1967 to act as a catalyst to inspire and accelerate the industrial developmell1t
in the State. The promotion of industries is by way of identification and formulation of
techno economically viable projects and tie up of appropriate technologies and collaborations
for the requirement of industries.

J&K SIDCO with a view to encourage modification of existing small scale industrial units, to
enable it to achieve higher productivity, energy efficiency and better environment protection,
and thus improve its sustainability in the competitive environment, capital investment
subsidy of the state government will be applicable to such units all over the state subject to a
limit of Rs.30 lakhs. Units availing incentives under the definition of 'substantial expansion'
shall not be entitled to this. Application for modification must be submitted to the Director,
Industries and Commerce, in the prescribed forn1, obtainable from his office and only after
the scheme is approved by a committee consisting of Principal Secretary (Finance), Principal
Secretary (Planning) and Principal Secretary (Industries and Commerce), the applicant shall
commence work thereon. Approval and disbursement of the incentives will be done on the
same pattern as the CIS of the state government.

ACTIVITIES

J&K SIDCO is the nodal agency for promotion & development of medium and large scale
Industries in the State. It have been entrusted with the following important assignments
development of industry in the State.

To conduct work for promotion of industry in J&K state by conducting Scammers,

helping entre entrepreneurs in obtaining LOL, etc.

Identification of technically feasible and financially viable projects for the state of
Jammu and Kashmir

Development of infrastructural facilities for medium/ large scale industrial projects.

Grant of financial assistance to industrial projects having investment up to 300 lacs

abd participation in the equity of selected joint/assisted sector projects
 J&K SIDCO has established 7 industrial estates to provide infrastructure facilities a
identified locations suitable for industrial development throughout the length and
breadth of the State. Within each Estate developed land is available at a very
subsidized rate

The Corporation also offers a variety of financial assistance for setting up new units
and for expansion! Diversification! modernisation of existing projects. For medium
and large scale projects including tourism related and micro hydel power projects, the
assistance can be availed in consortium arrangement with central and state level
institutions or banks.

Industrial Growth Centres and Export Promotion Industrial Parks are being set up in
both Jammu region and Kashmir valley separately, by way of acquiring land,
constructing internal roads, affluent disposal facilities, providing water and power in
the industrial estate. Amenities like fire stations, restaurant, bank, post offices,
housing, schools, hospitals, shopping centres, convention centres etc. are the main
infrastructure facilities. J & K SIDCO is also developing product specific industrial
estates to fulfil the functional needs of certain industries like Textiles, Electronics and
Software development etc.

J&K SIDCO has also promoted projects in joint and assisted sectors.
J&K SIDCO 's scale of operations cover fields as diverse as engineering, electronics,
software dev. pharmaceuticals, hotels, textiles, and power generating projects etc.
Infrastructure and supports services

The government will strive to improve general infrastructure of the state. In respect of
infrastructure for industries, the policy emphasises the following.

Development of modem industrial areas and estates, growth centres, Integrated

Infrastructure Development Centres (lID) etc. will be done in a time bound manner.
These focal points of industry will meet all the basic requirements of a competitive
industrial environment. An action plan with specific implementation model and time
frame will be adopted.

Operational management of the major industrial estates will be rationalized, involving

local industrialists through a suitable local self managed model both for development
works and management of the estates including regulation of power and water supply.

The State Government will encourage private sector participation in infrastructure

 development and such private sector participation will be treated as an industry for the
purpose of availing incentives. The Government will also facilitate acquisition of land
for such private sector initiatives.

Efforts will be made to ensure that the power supply within industrial areas, estates,
IIDCs, etc. is regular, reliable and of good quality.

Private sector investment in generation and distribution of regular power supply in

industrial areas, estates, IIDCs etc. will be actively encouraged. The government will
provide necessary support for such ventures on a case-to-case basis to assure their
sustainability

Micro- hydel projects are already open for private sector investment. A separate
policy on the subecthas been announced and implemented by the Power
Development Department of the government
Single Window Clearance System
With the objective of facilitating a new entrepreneur in getting necessary clearances within a
short time, a Single Window Clearance System, for registration of the Industrial Unit,
allotment of land, clearance of pollution control Board for commencing construction and
certificate of power availability, at the State and District levels, has been set up. A separate
notification in this regard will be issued.

Institutional/Commercial Bank funding

Industrial Policy 2004 recognizes that Financial Institutions/Commercial Banks have to play
an important role in the industrial development of the State. An environment has to be created
to arrest the present trend of flight of capital from the State. The procedures presently
followed have not withstood the test of time. There have been glaring instance of delay and
under financing of projects resulting in cost and time over run. It will also be necessary to
strengthen the state owned Financial Institutions. Moving in this direction, the government
will adopt the following course of action.

The present arrangement of credit flow monitoring through State Level Banker's
Committee (SLBC) and State Level Inter Institutional Committee (SLIIC) forums will
be actively utilized.
State owned development financial institutions shall be reoriented to facilitate
availing of refinance facilities from national level institutions optimally; and,
encouraged to raise finance from the market.
 Divisional and district level co-ordination committees will be constituted to monitor
expeditious settlement of the loan cases within prescribed time limit.
SICOP

The J&K SIOP limited was established in November 1975 with an authorized share capital of
Rs 5OO.OO lac and paid up capital of Rs. 311.85 lac as a fully owned J&K Government
undertaking to aid, assist and promote SSI sector in the state. The undertaking has to provide
Facilities to Small Scale and Tiny Industrial units by way of development of industrial areas,
arrangement of raw material, financial assistance for purchase of raw material, to meet
Government orders for manufactured goods etc.

Salient features of Sicop

Source: Economic Survey, 2014-15 Source: Economic Survey, 2014-15

Source: Economic survey, 2014-15

In addition, the projects under implementation of J&K SICOP with assistance from
Government of India are:

Silk Tech Park at Zakura, Sriagar

Integrated Infrastructure Development (lID) Centre, Govindsar, Kathua

Yearly turnover of SICOP

Yearly turnover of SICOP for the last 6 years in succession is showing impressive growth
rate. D ring the financial year 2008-09 the total returns of the company were valuing
Rs.393.43 crore a little lower as compared to the previous year. However this is an
achievement in itself as these returns have been achieved despite loss of about 60 working
days due to disturbance in the state that adversely effected working of the organization.
Yearly turnover of the company is given hereunder:-

The above table gives us a picture of how the raw material usage has increased over the years
due to which the yearly turnover has also seen an increasing trend.

Financial results of SICOP

Source: Economic survey, 2014-15

Financial results of the undertaking have recorded net negative results of Rs. 1.02 crore and
Rs.0.12 crore for the years 2001-02 and 2002-03.Thereafter, the company has shown positive
Result and is providing surplus generation. During the year 2008-09, the undertaking have
achieved a composite turnover of Rs.393.43 crore that generated total income of R /.10.19
crore. After accounting for the total expenses of Rs. 8.05 crores during this period the net
cash surplus generation to Rs.2.14 crore. Yearly financial results of the Company are given
hereunder:-

Source: Economic survey, 2014-15

The above table clearly signifies how the turnover has increased over the years from the
inception of this corporation. The increasing trend is also being noticed in terms of income.
And with the increase in income, the investments and hence the expenditure increases.

Jammu and Kashmir Entrepreneurship Development Institute (JKEDI)

The main objective of the Institute is to create awareness and facilitate entrepreneurship in
Jammu and Kashmir by imparting entrepreneurship education, skill up-gradation trainings,
disseminating knowledge and bringing about behavioural changes towards the concept of
entrepreneurship at the social level.

The Institute also develops linkages with national and international organizations working in
the field of enterprise creation. 26.53 Established in 1997, the JKEDI started its regular
activities in February 2004 and has already set up three regional centres one each in
Kashmir, Jammu and Ladakh divisions of the State. The Institute has placed its officers in all
the 22 districts of the State to facilitate entrepreneurship creation by conducting awareness

programmes in collaboration with various district level departments, educational Institutes

and grassroots Institutions.

Besides, JKEDI implements a host of government sponsored employment schemes, which

inter-alia include Seed Capital Fund Scheme (SCFS) of the Sher-e- Kashmir Employment
and Welfare Programme for Youth and the Youth Start-up Loan Scheme. It also implements
Education and Term Loan schemes of the National Minorities Development and Finance
Corporation (NMDFC), Ministry of Minority Affairs.

References
1. Singh, J. 2004. The Economy of Jammu and Kashmir.Radha Krishnan Anand & Co.
Jammu

2. Khan J. I. Jammu and Kashmir Economy (2012). The Directorate of Distance

Education, University of Kashmir. ISSN NO: 978-938209-7-655.

3. Government of Jammu and Kashmir (2008-09): Performance review of Jammu and

Kashmir. Published by DOES.

4. Government of Jammu and Kashmir (2013-14): Economic survey. Issued by

Directorate of Economics and Statistics department of planning and development.
5. Government of Jammu and Kashmir (2014-15): Economic survey. Issued by
Directorate of Economics and Statistics department of planning and development.

6. Government of Jammu and Kashmir (2005-06): Digest of Statistics. Issued by

Directorate of Economics and Statistics department of planning and development.

7. International Institute for Population (1998-99): National Family Health Survey.

Jammu and Kashmir.

8. Government of India (2005-06), Jammu and Kashmir National Family Health

Survey (NFHS-3), Ministry of Health and Family Welfare International Institute for
Population Sciences, Deonar, Mumbai-400088.

Disclaimer: The material as presented above is for illustration and has been taken from
various sources (both printed and electronic). It as such should not be considered unique
and original.