Withdrawal of incentives to J&K threatens one lakh jobs, says ASSOCHAM
Vivek Suri | 14 Apr 2008

Withdrawal of incentives to J&K threatens one lakh jobs, says ASSOCHAM VIVEK SURI JAMMU,APRIL 14:

Withdrawal of incentives to J&K threatens one lakh jobs, says ASSOCHAM

Midway sudden withdrawal of excise incentives in Jammu & Kashmir has totally shaken the confidence of the investors and, if not reviewed immediately, may lead to closure of large number of industrial units and retrenchment of over one lakh workers in the state.

Urging the Centre and the state governments, the President of The Associated Chambers of Commerce and Industry of India (ASSOCHAM) Mr Venugopal N Dhoot said, “the Chamber has been sounded by several business houses indicating to put on hold all future investments and some industries already in production canceling their orders as suddenly their products have become expensive as compared to goods from other neighboring states.”

Mr. Dhoot who was in Jammu few days back and met the Chief Minister had announced that ASSOCHAM shall be creating a special cell to help the state attract fresh investment particularly in food processing, pharma, tourism, handicrafts and infrastructure areas.

He lamented that the government decision to suddenly withdraw the
benefits notified on November 14, 2002 for a decade for curbing the surging unemployment will severely hit the profitability of majority industrial units and even pushing some companies into the red.

Apart from 100% excise duty fund for new ventures and substantial expansion of the existing ones; the package offered by the government include capital investment incentive of 15% within Rs 3 million ceiling; full reimbursement of insurance premium on capital investment; and 3% interest subsidy on capital investment. This is in addition to a set of 24 incentives that state government offers under J&K’s industrial policy.

According to ASSOCHAM, the expansion plans of several industrial units and even the existing set-up in Jammu & Kashmir are under threat from the recent government notification that has withdrawn the excise exemption earlier offered by the state as part of its industrial development initiatives. This move by the central government is not only hurting established companies, but is also hitting the local industrialists who have expanded the industrial base in the state recently

There is already an increasing apprehension among industries in the state as this fresh notification and the sudden withdrawal of excise benefits is a big betrayal to those investors who had stepped forward to set up an industrial base in the militancy – hit state of Jammu & Kashmir. It has already severely affected the business sentiments in the state

ASSOCHAM study has revealed that following restoration of normalancy and peace in the state J&K, the investment flow has started registering and went up by 10 times from US$200 million in 2001 to US$ 2300 million in 2007, which is expected to further accelerate in next 5 years.

In view of drastic improvements in the law and order situation of J&K, the ASSOCHAM President Mr. Venugopal N Dhoot has urged the central government to extend a special package of Rs. 5000 crore to improve the necessary infrastructure so that investments flow towards K&K fastens both in value and volumes from domestic and overseas industries.   

"The state has the potential to export Rs. 13,000 crore worth of goods in the next five years. The potential sectors for export  include Processed food, fruit juice concentrate , leather products, handicrafts, silk and silk, herbs and herbal products , honey, welding electrodes, pesticides, floriculture, sports goods, forest based prodcts, gems & jewellery and electronics," said ASSOCHAM Secreatry General Mr. D S Rawat adding 'nothing should be done to send conflicting signals to disturb the current phase of development'.

Jammu and Kashmir stands amongst the top five smaller states in various development and infrastructural indicators and holds 3rd rank in electricity generation, labour cost per worker and the number of technical institutes. It has also 4th rank in infrastructure expenditure amongst the smaller states and has 5th rank in FDI inflows and number of primary schools in the state. Whereas the state has the 6th rank in the female labour participation, it has 7th rank in fiscal deficit, total investments in the state (8th rank), industrial workers (8th rank), per capita SDP growth (11th rank), and growth in manufacturing employment (13th rank).