The Missing Industrial Policy in J&K

Jammu and Kashmir has long been seen as a region with untapped economic potential. With its natural resources, scenic tourism value, and centuries-old artisanal heritage, it’s not short of assets. Yet, for decades, the region’s economy has remained dependent on government spending, tourism, and a few traditional sectors like handicrafts and horticulture. After the abrogation of Article 370 in 2019, the narrative shifted sharply. Industrial investment was declared a top priority, with promises of large-scale capital inflows, employment generation, and economic transformation. A dedicated New Industrial Development Scheme (NIDS) was launched in 2021 with a big number attached—₹28,400 crore in incentives for investors.

But three years on, the question that quietly hangs in the air is: where is the industrial revolution that was promised? Why does the region still not have a strong industrial base?

The vision, as laid out in policy announcements, was ambitious. The government held multiple investment summits. In 2022, it announced that MoUs worth over ₹70,000 crore had been signed with companies from across India. Reports and press releases repeatedly spoke of “transforming the industrial landscape” of Jammu and Kashmir. The J&K administration said it had received investment proposals of over `66,000 crore, especially in sectors like food processing, pharmaceuticals, IT, and logistics.

Sounds promising on paper. But dig a little deeper and things appear more complicated.

According to RTI responses and official data accessed by media outlets like The Wire and Indian Express, only a fraction of the proposed investment has actually materialized. As of late 2023, just around `2,000–2,500 crore had been grounded—meaning investment that had started taking shape on the ground in the form of land allocation, construction, or setup. That’s less than 5% of what was claimed in proposals.

Infrastructure remains a major bottleneck. Industrial areas in Kashmir valley, like Lassipora in Pulwama or Khonmoh near Srinagar, still struggle with issues like erratic electricity, poor road connectivity, and delayed land allotment processes. In Jammu, although there’s relatively better infrastructure, industrialists have raised concerns about water supply, corruption in allotment processes, and lack of skilled manpower.

This leads to a bigger problem. The policy is focused too much on bringing in outside investors, big players from Maharashtra or Gujarat or Delhi, while local entrepreneurs continue to feel overlooked. Several small and medium businesses in JK say they aren’t getting the same level of policy support or ease of doing business that the newcomers are promised.

A local manufacturer in Samba, quoted in a report by The Quint last year, said, “We’ve been running this factory for 15 years. Now all of a sudden the land next to us is given to a firm from Gurgaon with faster clearances. We don’t get even 10% of the benefits they do.” There’s growing concern that the industrial push might become another version of uneven development—favoring outsiders with capital and connections over local enterprise that has weathered difficult conditions for decades.

One can’t talk about industrial development without looking at the state’s fiscal ecosystem. According to the RBI’s “State Finances: A Study of Budgets” report (2023), Jammu and Kashmir continues to have one of the highest revenue expenditures as a proportion of its total spending—meaning the majority of its budget goes to salaries, pensions, and administrative costs, rather than development or capital expenditure. For 2023–24, around 78% of the UT’s budget was allocated to revenue expenditure.

So, even as industrial schemes are announced, the actual funds available for building the ecosystem—be it vocational training, logistics hubs, or local R&D units are limited. Combine that with a sluggish bureaucratic system, and the pace of industrialization naturally slows down.

Another issue is the mismatch between what is being proposed and what the region actually needs or excels at. Most of the investment proposals that have come in are for logistics, cement, or manufacturing units that don’t align with JK’s unique strengths. The region has a high comparative advantage in horticulture (especially apples, walnuts, saffron), in handwoven goods like Pashmina, and in eco-tourism. Yet these sectors aren’t getting the kind of policy focus they deserve under the current industrial push.

For example, food processing could have been a game-changer. The valley produces tons of apples each year, much of which is wasted or sold raw. A robust food processing cluster in Baramulla or Shopian could reduce post-harvest losses and create thousands of jobs. But little has been done in that direction, even though it is mentioned in the NIDS.

Moreover, education and training aren’t aligned with industrial goals. There’s little investment in vocational training institutes or curriculum changes that reflect what the emerging industries in JK might need. According to data from NSDC (National Skill Development Corporation), JK has among the highest youth unemployment rates in India—above 20% as per CMIE data in early 2024. Yet a large part of this potential workforce remains untrained or unemployable in the sectors where investment is being planned.

Let’s not ignore the psychological aspect either. A history of conflict and disruption has made both local entrepreneurs and potential investors cautious. While security conditions have improved in many parts, the unpredictability of political and administrative decisions still haunts long-term investment planning. Policy needs to address these trust deficits with consistency and transparency, not just press releases.

And finally, there’s the risk of repeating past mistakes. This isn’t the first time Jammu and Kashmir has seen announcements about industrial growth. In 2002 and 2015 too, there were policies that promised tax holidays and capital subsidies. Some investment came in. But once incentives expired or conditions changed, many firms exited or shut down operations. This time, if the policy is to be sustainable, it has to move beyond big numbers and MoUs.

What’s needed is a realistic, ground-up industrial strategy. One that’s regionally balanced—so that Baramulla and Kulgam don’t miss out while Srinagar and Budgam develop. One that includes the voices of local business associations and small manufacturers. One that leverages JK’s strengths instead of trying to fit it into an industrial mold it was never designed for.

Above all, the policy needs time, clarity, and follow-through. No investor wants to enter a zone where land disputes, power shortages, or bureaucratic opacity dominate. Nor do locals want to be passive observers of an industrial parade where they’re left behind.

It’s not about rejecting investment or outside firms. It’s about ensuring that industrial development in JK is rooted in the soil of the region, not just dropped in from above.

If Jammu and Kashmir truly wants to move from a subsidy-dependent economy to one that is job-generating and self-sustaining, it has to get the basics of industrial policy right. That means looking beyond headline numbers and addressing the slow grind of execution, capacity building, and policy credibility.

Because the real cost of a missing industrial backbone isn’t just economic—it’s the cost of wasted potential, of a generation waiting for opportunity, and of a region that deserves more than just announcements.

 Malik Daniyal studies economics at University of Delhi.