Srinagar, Sep 16: Federation of Chambers of Industries Kashmir (FCIK), the apex organisation of Kashmir region’s industrial enterprises, today alarmed the Central Government that 85 percent of industrial units will close operations by next March in case the present PM package of Rs 28400 cr is not extended to the existing industry and in case marketing support is not provided to these struggling industries.
FCIK delegation led by its president Shahid Kamili, Sr Vice President Ghulam Jeelani and Secretary General Owais Jamie expressed the grave concerns of Kashmir based industry to Som Prakash, Minister of State for Commerce during an interaction in Srinagar today.
The delegation informed the Minister that the industrial policies and schemes launched by the central and state governments, particularly during the past three decades, have miserably failed both in mitigating the growing problems of existing enterprises or attracting prospective investments in the sector.
FCIK laid stress upon the implementation of present industrial policy 2016-26 in letter and spirit and also give opportunity to hotel industry to file their incentive claims during the currency of 2012-2017 where they have missed it because of flaws in guidelines.
“The Central Industrial Package which was launched in 2002 by then Prime Minister Atal Bihari Vajpayee, mainly with an intent to bring severely affected industrial sector of Kashmir back on the rails besides motivating new investors to venture into the sector, neither brought any succour to the ailing existing enterprises nor attracted any substantial new investments. On the contrary, it led to inequalities in industrial development across 22 districts of the erstwhile state as whatever new investment as an outcome to this package was made only in 3 districts of Jammu leaving 19 other districts high and dry and accordingly more than 95% of the total of 1120 Crore incentives disbursed under this policy were afforded to these enterprises,.” the Delegation informed.
The Central Industrial Scheme launched recently has generated a new hope amoung both existing and prospective entrepreneurs keeping in view the assurances that the new scheme aims to give fresh thrust to the industry and services-led development of Jammu and Kashmir with emphasis on job creation, skill development and sustainable development by attracting new investment and nurturing the existing ones, it added, “However, we observe some shortfalls in the scheme which may act as severe impediments to meet the target if these shortfalls were not addressed well in time. It would be fruitful to provide some more incentives under the scheme besides taking a slew of other measures to comfort the existing ailing industry and bring it back to the rails.”
Regarding the marketing support, FCIK President Kamili said that more than 60% of the industrial units in Kashmir are engaged in manufacture and processing of goods mainly required by the government departments and as per the policy 2016-26 industrial policy most of these goods had been identified for purchase through J&K Small Scale Development Corporation Ltd. (SICOP). “With a sudden change in the procurement policy early this year, the finance department, on the instructions of central government, has directed all departments to make their procurements through GeM portal under an open competition. This has resulted in joblessness of the local units as almost all purchases by the departments for past two years have been made from outside units. Kashmir based units operate in most unconducive atmosphere with frequent road blockades, harsh climatic conditions and number of other disadvantages which make it impossible for them to compete with their counterparts operating from most advanced states having zero inventory mechanism and cheap labour,” he informed.
FCIK demanded that GOI exempt government departments in J&K from compulsory procurement through GeM portal and instead allow these to continue their procurement of required goods from local enterprises through SICOP or any other suitable mechanism for a period of 10 years till the capacity building of enterprises is enhanced to make them capable of competing nationally.
The delegation also demanded compensation of Business Losses incurred by the Industry in Kashmir since 1989.
It would be quite interesting to note that the central government came up with an interest subvention package for the Covid lockdown period but no such package was approved for J&K for several months’ lockdown post abrogation of Article 370 on September 2019, he miantained.
FCIK demanded constitution of a high level committee to work out the perpetual business losses incurred by enterprises because of forced interruptions during imposed curfews and strikes in past three decades.
The delegation also sought applicability of Central Industrial Scheme to existing MSMEs.
“All the incentives provided in 28400 Crore new Central Industrial Scheme need to be made applicable to the existing MSMEs before these are extended to new enterprises. Any discrimination between new and old MSMEs may not augur well on ground with the existing enterprises that have suffered the most for a number of reasons.,” FCIK President informed the Minister.
We demand that the rules for “substantial expansion” be relaxed and made at par with those made applicable under CIP-2002 enabling existing enterprises to take benifit from the new Central Industrial Scheme, he said.
To address the issue of business interruptions on account of curfews, strikes, natural calamities etc cause huge losses to the enterprises J&K is in dire need of a tailor-made insurance product that takes care of the establishment expenditures including bank interest, statutory taxes, idle wages and salaries besides margin of the enterprises during the days of such interruptions.
“We demand that a provision for reimbursement of the premium on such insurance policy payable by enterprises be incorporated in the newly launched CIP of 2021 in order to provide a safeguard to the investment made by existing and prospective enterprises.,” he said.
It is worth mentioning here that the CIP of 2002, amoung other incentives, also provided for reimbursement of insurance premium on fixed assets which stands withdrawn under the new scheme for unknown reasons, he added.
Regarding the rehabilitation of sick units, the delegation said that due to unfavorable working environment, a huge number of enterprises in J&K have been rendered sick.
The FCIK, while perusing the matter of rehabilitation of sick units with the central government had been successful in seeking approval of Hon’ble Prime Minister for establishment of a corpus of Rs100 Crores on the recommendations of PM’s Task Force on MSMEs in 1999. However, it is ironical to note that the said amount has not till date been released by the ministry of MSME on one or the other pretext.
Twelve years down the line, we have increased number of sick units that need to be rehabilitated or provided an exit route and this facility needs to be kept open for enterprises falling sick anytime in future also. The simplest way of rehabilitating sick units would be to pay an amount equivalent to 30% of their “approved revival project report” as grant-in-aid . The same percentage of 30% of bank liabilities could be approved in favour of the sick units seeking an exit route under OTS., he said.
For revival and rehabilitation of sick enterprises, FCIK demanded establishment of a corpus fund of ₹1000 Crores with matching contribution of ₹500 Crores each by the Central and UT governments.
The industrial amlagam also informed the Minister that consideration the weak communication infrastructure in place as well as the topography of J&K , all previous industrial packages provided for a freight subsidy to and fro rail head at Jammu.
“We not only demand for restoration of this incentive by incorporating it in the Central Industrial Scheme but also wish that the fraight subsidy be paid to and fro the actual destination wherefrom the raw material is being procured and finished goods are send to by the enterprises,.” he said.
The delegation also demanded reimbursement of CGST and Income Tax Holiday for a period of 10 years initially besides reimbursement of EPFC and ESI Contributions.
FCIK also demanded One-Time waiver of all CP Fund and ESI contributions including administrative charges, interest and penalities pending with the Private and Public enterprises for any period of default. This will more be in the interest of employees who continue to suffer more on this account.
The delegation also raised issue of delayed Payments ; resulting in their monetary losses besides affecting their credibility.
The Delegation led by Shahid Kamili also demanded a “Debt-reduction package” of 30% to all MSME accounts, NPAs or inching towards stress. The incentive be also provided to enterprises seeking OTS from banks on their settled amount.
