As demand drops, Kashmir industry leaders fret business sentiment

19 April 2021

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Srinagar: The announcement of a week-long curfew in Delhi, a downslide in stock market and more potential restrictions in J&K, demand in manufacturing and horticulture’s value added sectors in J&K continues on a downward spiral.

While the manufacturing sector continues to struggle due to the changes made in toll tax and preferential government order systems, industry leaders in Kashmir today say that demand has begun to get even worse due to a subdued market sentiment owing to the renewed pandemic concerns.

Even as the production in the agriculture sector, including the Rs 11,000 crore horticulture sector, is largely immune from the immediate pandemic disruption, experts believe any prolonged lockdowns in the rest of the country, in the light of the latest Delhi curfew, would have a negative impact on fruit demand and prices as well.

Ziraat Times spoke to some of the leaders in manufacturing and horticulture to understand the current market sentiment and the future prospects. Here are the excerpts:

Baldev Singh (MD, Peaks Auto Ltd – Chairman PHDCCI, Kashmir chapter)

There will be no immediate and direct impact of the recent share market crash on J&K’s economy. Last year, there was also the market crash but, we observed, it didn’t impact J&K’s economy to any large extent.

However, with the returns of lockdowns and the business conditions of the last two years, there is an overall unhealthy business environment. A lot of manufacturing units are struggling to survive. Newer lockdowns would naturally result in more negative market sentiment.

When it comes to the stick market crash, the fact is that people in J&K invest really less in shares. That is good for our investors since the cost of some of the shares has gone down. Lockdown rumors/fears have made some investors sell off, but such fluctuations keep happening in the share market and would come back to normalcy in a few weeks.

Shahid Kamili (President, Federation Chamber of Industries, Kashmir-FCIK)

The ongoing crash sentiment in the stock markets will have an overall impact on the economy as Sensex is directly dependent on the economy of the nation. If a market crashes for one single stock it has an impact on the overall share markets with prices of other shares either positively or negatively. Investors are presently confused due to a number of reasons like fear of Covid lockdown and its impact on the economy and a number of state elections.

Kashmir has witnessed worse business situations since 2009 and its industrial working has a different scenario which it is beyond Sensex. So, one loan account has been destroyed multiple times ever since which in turn has raised interest rates to 5% of the initial rate of interest. In 2017, GOI devised a rebt structuring policy but it was focused mainly on small borrowers of J&K. This debt structuring policy was in its final stages when the abrogation of the Article 370 happened in 2019, resulting ina. freeze a freeze on that policy.

Government has to understand the challenges of large borrowers also as they have 50 times more employee strength than the small borrowers. In the case of J&K, large borrowers need more hand holding as they invest a lot.

In Kashmir everything dips every day and the concept of “everyday profit” is a dream. It is the passion of the industrialists which is running the businesses here. Now, GOI has come up with various measures wherein companies can overcome their previous debts providing homogeneity across the industrial sector of J&K.

With these steps companies now have 6% subsidy on work term loan and 5% subsidy on the working capital. These steps have been taken up for the future industries and not for the industries currently functioning in J&K which might have serious repercussions on the existing companies.

“Future is not known. What we have is our present and past. Learning from previous drawbacks and saving the future of industries in J&K is a need of the hour. Industries of today are industries of the future, they need to be handled carefully. If all industries in J&K are to pass from the same fate then there can be no future.”

Izhan Javed (CEO Fruit Master Agro Fresh Kashmir)

Fruits & vegetables sector operates in a perfectly competitive market. Rumors play a significant role in determining the market prices so currently there are lockdown rumors/fears. In the fruits & vegetables industry, customers are apprehensive about buying the fruits & vegetables from the wholesale market. Demand has already been affected. There is uncertainty, the confidence has gone down. Farmers are apprehensive about storing their produce and they are ready to sell fruits at a lower price.

In this situation, Fruit Master is also considering selling the produce at lower prices at this moment in order to finish the produce before lockdown is imposed. We can’t take the risk of keeping the produce since there was a loss of around Rs 2000 crores of value from fruits stored in CA stores. If the whole scenario is repeated, it would be a disaster for the fruit industry.

The whole supply chain would be disrupted if the lockdown takes place. Farm to fork value would be lost overall. It has shaken the buyer confidence; the demand has been hit drastically. Buyers and sellers are equally apprehensive. Expenditure on packaging and storing was not covered by market prices due to COVID lockdown last year. Things were going good due to less imports but due the rumors about the lockdown has hampered the supply chain, and shaken the investor’s market confidence- buying & selling. In 2019, when the lockdown was imposed, farmers were unable to sell their produce at a decent price and there are apprehensions that this would get repeated if we don’t sell our produce at the earliest.