A year of promise followed by economic distress
This year began with optimism, as business stakeholders across Jammu & Kashmir expected to build upon the record-breaking year. With historic highs in tourism, trade, and revenue generation, the business community had benchmarked new expectations and hoped for continued economic growth. However, within days, this optimism turned into deep concern following the Pahalgam incident. Business activity nosedived, and the entire region was in mourning.
J&K, which had only recently regained economic confidence after years of shutdowns and restrictions, was again pushed into uncertainty. The Pahalgam incident, followed by the India–Pakistan war and the subsequent Delhi and Nowgam blasts, left people distressed and fearful, severely affecting the state’s economic environment.
The hotel industry, tour and travel operators, transporters, house-boat & shikara operators, and other tourism-dependent businesses suffered immediate, and severe, setback. The shrinking footfall impacted industries connected to tourism indirectly, creating a widespread ripple effect across the economy.
Adding to this distress was the unprecedented closure of the Jammu–Srinagar National Highway at the peak of horticulture dispatch season. Growers watched their produce rot as timely transportation became impossible. Despite maximum efforts by CA stores, storage capacity fell far short of the sudden surge in demand. The horticulture sector, a major pillar of J&K’s economy, thus suffered massive losses and a sharp drop in expected revenue.
The industrial sector is equally distressed. The introduction of GeM for nationwide procurement has sidelined local procurement agencies such as SICOP. As a result, local manufacturers now compete directly with national-level players, a battle heavily skewed against them. Although a draft J&K Procurement Policy was prepared after public consultation, it remains to be finalized, leaving the local industry vulnerable. Procurement orders that traditionally supported local units have increasingly been cornered by outside manufacturers. This has led to loss of business, job cuts, and the flight of capital from J&K. With J&K importing goods and commodities worth nearly ₹1 lakh crore annually, the burden on local industry has intensified.
Land allotment through the Single Window System has also failed to meet expectations. Many eligible entrepreneurs have not received land, while some have been allotted plots far smaller than required. The exhaustion of the ₹28,400-crore New Central Sector Incentive Scheme has left new entrepreneurs with no incentives to establish units.
Confidence within the industrial community was further shaken when the Pollution Control Committee issued deregistration notices to units operating for over 50 years. Prospective entrepreneurs, witnessing such uncertainty, feel discouraged about starting new ventures.
Recent floods in parts of Srinagar have caused additional damage to businesses. Despite visible losses, the government did not declare the event as a natural calamity, depriving affected businesses of relief assistance. Annual flood threats have become a recurring challenge, yet the absence of a long-term risk mitigation strategy continues to expose businesses to repeated losses.
State GST collections have dropped significantly despite government-led GST rate cuts. The decline clearly reflects the larger economic slowdown; without active trade and industry, revenue generation cannot improve.
The business community has received little support from the government. The only intervention so far is the J&K Bank’s rehabilitation scheme for disturbance-hit borrowers. However, the scheme primarily defers interest and adds additional 15% working capital loan burdening borrowers further. With no increase in real revenue, businesses are forced into more debt just to stay afloat. Meanwhile, commitment charges on unutilized working capital continue to be deducted, worsening the financial stress.
Earlier crises saw timely intervention from both the government and banks. In 2016, following prolonged disturbances; a 5% interest subvention was provided to the entire business community. In 2020, the government formed a committee that consulted 35 business associations, recorded 199 demands, and accepted 137 of them as part of a revival package. These interventions provided significant relief and helped restore confidence across sectors.
Today, J&K finds itself at another critical juncture. The business environment has been under persistent strain for several years. To prevent long-term damage and ensure sustainable growth, the government must once again intervene with a comprehensive support package.
A thorough sector-wise study covering tourism, horticulture, manufacturing, transport, handicraft, trade, services etc., must be undertaken to assess losses and design financial and administrative relief measures. Support will be essential for strengthening government–industry partnership, improving regulatory frameworks, and restoring economic momentum.
The key areas requiring immediate attention include financial assistance and interest relief, industrial and administrative reforms, banking interventions, infrastructure development and connectivity improvements, support from central government schemes. Without prompt action, J&K risks deeper economic stagnation. The business community is united in its appeal: the government must act now to prevent further collapse and initiate a process toward recovery.
Ovees Qadir Jamie is an entrepreneur and currently serves as the Secretary General of the Federation Chamber of Industries.
