FCIK seeks 10% environmental cess to protect J&K revenues, industry

Srinagar, Sep 5: The Federation of Chambers of Industries Kashmir (FCIK) has urged the J&K Government to impose a 10% Environmental Cess on all goods imported into the Union Territory as the most urgent step to protect local industry and mitigate revenue losses arising out of GST rationalisation.

In a meeting of the Advisory Committee, the Chamber stressed that this cess is essential not only to provide the government with fiscal space after reduced GST collections but also to discourage excessive imports, stimulate domestic production, generate employment, and safeguard artisan livelihoods.

FCIK cautioned that while the GST Council’s rationalisation of tax rates and compliance procedures has been hailed nationally as a watershed in the indirect tax regime, the reforms will remain meaningless for J&K unless the UT government rises to the occasion with bold and corrective policy action. It warned that the reduction of GST rates, though a relief for consumers, has simultaneously intensified the threat to Kashmir’s micro and small enterprises, which are already struggling for survival. By opening the market wider to corporate giants without protective safeguards for local units, the reforms risk accelerating the decline of J&K’s fragile industrial sector.

The Chamber further warned that unless the government urgently provides purchase preference in public procurement, formulates a credible revival programme for sick and stressed units, and restores easy access to institutional credit, thousands of MSMEs, along with tens of thousands of artisans and craftsmen, will be pushed to the brink of extinction.

While acknowledging the uniform five percent GST rate on handicrafts and simplified compliance measures, FCIK made it clear that these limited reforms alone cannot rescue Kashmir’s industry.

“The GST Council has done its part by reforming the national tax regime. The onus now lies squarely on the J&K Government to complement these reforms with bold local initiatives. Any further delay will reduce our MSMEs and artisans to irrelevance, and with them, the backbone of Kashmir’s economy will collapse,” spokesperson  said.

The Chamber stated that the reduction in GST rates will yield real benefits only if demand for locally manufactured goods and services picks up. Otherwise, the relief remains notional. A case in point is the hospitality sector, where hoteliers were forced to slash tariffs by more than half after the Pahalgam incident, yet tourist inflow has still not revived.

The Chamber demanded that the J&K Government treat this as an inflexion point and act without hesitation to introduce purchase preference policies, revive distressed units, ensure smooth credit flow, and realign procurement and industrial policies with the new GST framework.

“This is not the time for symbolic measures, but for decisive action to protect local industry, safeguard livelihoods, and ensure that Kashmir’s economy is not written off in the name of reform,” FCIK cautioned.

FCIK declared that the choice before the government is stark and urgent—act now with strong protective policies or preside over the collapse of Kashmir’s industry.