New Delhi: In a bid to improve Jammu and Kashmir’s business engagement with the rest of the country, industry lobby Federation of Indian Chambers of Commerce and Industry (Ficci) will set up an office in Srinagar.
The industry chamber’s move to facilitate its members’ expansion in the state comes at a time the geographically challenged state is making a major push to boost its Rs1.2 trillion economy by reforming labour laws, building industrial infrastructure in rural areas and cutting logistics costs.
“This will help local businesses in networking with businesses outside the state. Their concerns will get a bigger and better platform nationally to get articulated. Otherwise the local businesses are isolated and their problems ignored," Jammu and Kashmir finance minister Haseeb Drabu said in an interview.
Drabu, who last week proposed a uniform employment code in his 2018-19 budget, also announced steps to move the state economy to “a frontier of lower logistics costs."
“To begin with, the industry partnership initiative will focus on three key areas—tourism, food processing and skill development. We will handhold the industry in doing business in the state. The case for strong industry participation was made by the J&K finance minister who invited us," said secretary general Sanjaya Baru.
Ficci has about 60 teams working on specific industry sectors, the heads of which will discuss opportunities in the state with business leaderships, said a person familiar with the development who asked not to be named.
Agriculture accounts for about a fourth of the Jammu and Kashmir economy which is also strong in horticulture and floriculture and houses the largest tulip garden in Asia. It also accounts for about three-fourths of the apples and about 97% of walnuts produced in the country. Hydropower generation and information technology (IT) and IT-enabled services are the other areas that businesses have identified for possible investments.
With the economic integration of the country as a result of the goods and service tax (GST) roll-out and withdrawal of tax incentives prospectively, businesses are expected to make investment decisions taking into account the reforms credentials and the ease of doing business in states rather than tax breaks that so far distorted markets.
State governments have been competing with one another for investments by offering single-window approvals, facilitating land acquisition and deferring state levies. An enterprise survey of ease of doing business in states by federal policy think tank NITI Aayog and IDFC Institute last year pointed out that in spite of the reform initiatives by Union and state governments, the perception of most business enterprises is that little has changed on the ground, warranting better communication by state administrations about the facilities they offer businesses.
“The success of states in attracting investments will depend on how quickly they are able to bring reforms that are business friendly," said D.K. Joshi, chief economist at credit rating agency Crisil Ltd. Joshi said land and labour reforms as well as macroeconomic stability of the state will play a role in their quest for attracting investments.
For Jammu and Kashmir, the biggest challenge, however, is militancy. The valley continues to report sporadic episodes of militant activities and ceasefire violations by Pakistan along the Line of Control (LoC). Security forces —the Indian Army, Jammu and Kashmir Police and the Central Reserve Police Force—are carrying out cordon-and-search operations in several villages.