J&K’s industrial sector in a crippling situation: FCIK

26 January 2022

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Srinagar, Jan 26: Federation Chamber of Industries (FCIK), the apex representative chamber of leading industries and industrial estates in Kashmir, has expressed its dismay for the public policy formulations, which, according to the industries chamber, has pushed Kashmir’s industrial sector to the wall.

In a statement issued to media today, FCIK said that ‘the policies, orders & guidelines issued from the last one year have proved fatal to the industrial sector and have hampered their growth and even pushing those to closure.’

Ziraat Times here reproduces the full text of the statement in an unedited form:

The commitments made in the Industrial Policy of 2016-26 has been withdrawn during the currency of the policy and new policy 2021-30 has been issued which has made flaws, ambiguity & hurdles to the industry.

The Federation Chamber of Industries Kashmir (FCIK) has urged upon the government to look inwards for saving the reminiscent of local industry from extinction before wooing the investors from outside to venture into the sector.

FCIK is of opinion that these Policies, Orders & guidelines should be redrafted & reviewed so the existing industry can be saved before it will vanish. FCIK has demanded that the measures should be taken immediately to save the industry. Some of the burning issues which needs immediate redressal are mentioned as:

Marketing Policy:

FCIK has demanded that the Marketing Commitments made in the previous Industrial policy 2016-26 has been withdrawn during its currency of operation. Federation Chamber of Industries Kashmir (FCIK) has strongly resented that the Finance department has directed all Administrative Secretaries to send procurement of good & services with Governmnent e-Marketplace (GeM) with the reference to the DO No. 200/CEO-GeM/2020 Dated: 23.10.2020 issued from Ministry of Commerce & Industries, GeM. The Local Industrial units are not registered with the GeM Portal yet and will be left out from the Govt procurement. FCIK has demanded that the GeM Portal needs to be amended as per demands of the Industrial Sector either the Local purchase policy must be introduced.

The Industrial sector has been provided with the Industrial Policy 2016-26 which is pillar for the Industrial Sector and the same policy is protecting the Industrial Sector with Price preference of 20% against their supplies made to government departments. But the government is not endorsing the same and are floating the tenders. The procurement agency of government i.e. SICOP is also kept apart from procurement of goods to be supplied to the departments.

The previous order with regard to the distribution that the Lowest tenderer i.e. L1 will be given the 1/3rd share to the tune of its capacity and rest to be divided among the other tender participants. Now, the government has floated the tenders and the supply orders has been allotted to outside J&K without accommodating other unit holders.

The industrial Sector has already faced a jolt after the implication of GST, Toll Tax withdrawal, Entry Tax etc. The previous Tax regime was providing protection to the Industry but the new laws has made the goods & commodities noncompetitive as the cost equalizing measures has been withdrawn. Further, the unit holder Faith & confidence has shacked as the govt is not supporting the sector.

FCIK has demanded that government should come up with revised Industrial policy particularly with regard to Procurement & Marketing as from last two years the contradictive orders have been issued by government. Marketing is a basic fundamental governing the industrial development and growth of the industries in the valley.

The important incentives which have been excluded from the current industrial policy of 2021 which was acting as stimulus are like Price preference, Purchase Preference, Cost of tender document, earnest money and security deposit, freight subsidy, Income Tax holiday, exemption of stamp duty and court fee & Tax remission as in previous VAT regime.

Industrial Land Allotment Policy:

FCIK has strongly condemned against the land allotment policy and the multiple amendment made in past few months regarding the Land allotment.

FCIK in a statement said that the portal of www.jkinvest.in was launched and the investment guide lines were issued on 22.4.2021 for inviting the applications. Since then the portal was opened and approximately 2500 applications were uploaded, out of which appraisal of nearly 90% applications are already conducted. In the meantime High Level Committee meetings were also held and designated committee has also allotted some huge chunk of land to few Unit holders in Jammu and in Kashmir too. In addition, the Government comes up with the change in committees, i.e. abolishing all Divisional level committees and constitution of a single high level committee for allotment upto 200 kanals of land. Further, Frames guide lines in terms of score points for investment, these guidelines have been made applicable to all applications received on portal and already apprised by the designated District level committee headed by Joint Director Industries. We fail to understand as to why yard stick has been changed, when it comes to the local entrepreneurs. Government must be aware that after guidelines were leaked by some WhatsApp group approximately 800 applications have been uploaded on portal within a shortest period of only 10 days, which becomes very suspicious, but the general applicants were kept in dark and the applicants who have applied post issuance of guide lines by way of points were already in know of these guide lines. Approximately 2500 applications were received in seven months all over Kashmir Zone and 800 applications received within only 10 days. It is worth to mention here that guidelines for allocation of points in investment are different in Kashmir and with the special features for Jammu Division. Whereas Jammu investment points include working capital also, so as to give more points than Kashmir. Taking working capital as part of investment needs introspection as working capital has never been a part of investment globally.

FCIK in a statement said that entrepreneurs who have applied for land without any defined parameters are unnecessarily been put to valuation method of newly introduced investment points. Whereas major chunk of land has been allotted to few blue eyed entrepreneurs in J&K on the same previous system of first come first service basis alongwith appraisal basis surprisingly parameters now devised for rest of the applicants, which means the large industrial units are getting preference and small prospective unit holders are not given any weightage in land allotment as they could setup more numbers of industrial units by providing them small plot size of land. The department has called for second and third preferences of industrial estates from the applicants now after seven months by calling for preferences, the department is dropping out entrepreneurs in as estate, who had applied there. It seems that committee wants to pool estates and call for preference/choice of estates when it has not been envisaged by the industrial policy and was not made known to the applicants during submission of applications. FCIK queries that how the parameters are devised now, when 90% appraisal has been completed without the marking system in place now, then what’s the role of recommendations of Appraisal Committee.

Further, Prospective Unit holders recommended by the District Industries Centre to the SIDCO have paid 10% of land premium since 2016. These applicants are awaiting for land allotments and the guidelines to be adopted for such cases are pending.

The amendments in the Land allotment policy continues as the High Level Land Allotment Committee in its meeting held on 30.12.2021 reserved the maximum of 05 marks for the category of women entrepreneur/ Foreign Direct investment/ SC/ ST Ex-servicemen with different breakup of marks for each category. Further, the Government Order No 261-JK (IND) of 2021 dated 22.12.2021 IE Sempora was declared as Medicity and separate merit list for the applications/ projects appraised for the same. What will be the fate of unit holders who have applied in General category & as they were not knowing that it will be declared as Medicity.

FCIK demands that the government should made land allotment to all those bonafide prospective unit holders, who have applied with their proper applications on the same parameters by way of which the Government has earlier allotted huge chunk of l and at J&K.

FCIK demands revocation for cancellation and eviction process of the Industrial Land

FCIK had taken strong note for the cancellation and eviction process of the allotted Industrial plots in the J&K. The Industrial Sector in Kashmir have gone through the tough time since last decade where the series of unprecedented events has taken place which has jolted the industrial sector. The government should note that unconducive atmosphere has made the Reserve bank of India (RBI) to introduce the Rehabilitation and restructuring schemes for the business community five times since 2014 after floods, unrest & twin Covid Lokdown. The enterprises have dried up their capital by paying off towards their establishment cost during the lockdowns. On the other hand the UT government is issuing such orders which are against principle slogans for promotion of Industrial sector by government.

FCIK has expressed serious concern in respect of Govt order 233-Ind of 2021 dated 22-11-2021 issued by the Industries and Commerce Department for the nomination of General Manager, JKSIDCO, Jammu and Kashmir Division as Member for eviction process with regard to cancellation of lease deed and eviction of allottees in Industrial Estates Managed by J&K SIDCO.

It is unjustified to cancel the lease deeds of such closed units which are having Permanent Registration with Industries Department closed since last few years due to unforeseen circumstances. The constraints faced by units are non- availability of supply orders, Change of constitution, financial constraints, transfer to legal heirs on death of the promoters etc.

FCIK referred to the Govt Order No.214-IND of 2021 dated 02-11-2021 for the constitution of Sub-Committee for examining the proposal for the grant of extension in the validity of provisional registration in respect of units which were provisionally registered prior to the notification of J&K Industrial Policy 2021-30 in accordance with the directions issued in the meeting of 47th Apex Project Clearance Committee held on 02-09-2021 with the directions to submit the report and to be followed by the 48th APCC scheduled on 8.12.2021. The renewal cases of provisional registration of Industrial units, who has already taken effective steps in respect of installation of machinery, construction of factory building and placed orders for the machinery, are now awaiting the approval of the Apex Committee. Another order passed by the government vide No.:- 269-IND-OF-2021 Dated:- 30-12-2021 for auction of Industrial plots just after 10 days of extension was granted, “in which an Auction Committee has been formed for auction of Industrial plots which have been retrieved after cancellation of provisional registration”.

FCIK has demanded that the eviction order should be immediately kept in abeyance and government should look into the problems of such units & redressal of same.

Issues in change of constitution, line of activity, Inclusion of Partner & Transfer, Merger, Substantial Expansion:

The Director industries and commerce Kashmir vide:- DI&C/dev/circular/2021/3050-64 dated:- 25.11.2021 which has made the Cumbersome the change of constitution, line of activity, Addition of Partner, Transfer. The major issue in this circular is that a unit holder intending to change the constitution needs to get permission from the General Manager DIC for execution and for registration of deeds such as partnership deed, dissolution deed/ retirement deed, transfer deed or relinquishment deed. The Director Industries has also directed to sub-registrar not to register any deed without permission/NOC from the concerned GM DIC’s. Procedural Guidelines of Checklist or Documents required for making change in line of activity says “Any other document that is as notified by the government of J&K” which has created confusion and Procedural wrangling for the unit holder.

Further those units going for substantial expansion does not need to execute supplementary or fresh lease deed as nothing has been changed in the basic lease deed i.e. the terms and conditions and the constitution of the unit. The only change that has occurred is the investment in plant and machinery.

The government should allow and facilitate the existing disinterested & tired entrepreneurs to transfer their units to new breed of entrepreneurs with fresh blood and mind. Further, provide an exit route to the sick unit by allowing transfer of its ownership/lease hold rights to another entrepreneur if the revival & rehabilitation is not possible.

Extension of relief in Regulations and Taxation:

A review and revisit of all regulation and taxation policies concerning MSMEs need to be initiated in due consultation of stakeholders. In the short run following issues need to be addressed:

Amnesty for all defaults for the pre GST period be announced and any recovery process in this regard be dropped.
Amnesty in renewal of all obligatory certificates be announced and any penalty for any default be waived off.
The clean slate for VAT regime should be provided as the benefits of this tax exemption was being extended by the industry and no tax collected from them. Before introduction of GST regime, industry was promised of a clean slate for VAT regime.

Revival and Rehabilitation of Industrial Sector:

A robust revival and rehabilitation policy regarding sick MSMEs need to be framed after taking cue from Government order No 1558-Ind & 47 of 1999 and after due consultation with the concerned stakeholders. The government first issuing the order vide No:-215-IND-OF 2021 Dated :-02/11/2021 that the Soft loan Margin & Principle both will be provided by the J&K bank and government will provide interest portion to bank, but simultaneously after few days the same order has been withdrawn. The Procedural Guidelines needs to be issued for disbursement of soft as the matter is pending from last one year despite being included in new Industrial Policy.

The GOI had already approved a corpus of 100 crores on the recommendations of PM’s Task Force on MSMEs in 2009 which needs to be pursued and a matching sum can be added by the local government.

Conversion of Lease hold rights to Free hold rights:

The Delhi State Industrial Infrastructure Development Corporation Board has decided to transfer or regularize leasehold rights into free hold of Industrial plots on nominal charges.

FCIK demands that Conversion of Lease Hold Right to Free Hold Right to the existing unit holders, for the land allotted by J&K SIDCO and J&K SICOP in the notified Industrial Estates/Areas. With the grant of free hold rights to the unit’s holder will enhance it is credit facilities from the financial institutions. It will also provide the facility for the transfer of property by General power of attorney, time barred lease deed, change of constitution, change of shareholding etc.

Promotion of Entrepreneurship by Safeguarding Interests:

The Fundamental requirement of the Industrial Sector is to have a legally correct and safeguarded “Standard Bidding Document” ( SBD )covering protection of Bidders as per governing Law. We face hardships due to the absence of such legally correct SBD. Thus it is to be demanded from the Govt. to frame a committee of experts comprising a team of Technical/ Engineering, Legal, Planning & Procurement experts along with FCIK representatives.

The government is forecasting infrastructure development & projected it as the prime focus of the current Government, but it lags capacity building measures for the current infrastructure developers of J&K. Special Conditions to handhold & build capacities are to be demanded by way of seeking relaxed eligibility / qualification Criteria and to make special Provisions for Joint Venture & strategic Tie-ups, Consortium, Partnerships and so on.

Pending Payments & Delayed Payment Act:

Our Industry is facing hardships due to the Clandestine approach of Govt towards burning issue of ‘Non Payment of work done Dues” this requires special attention. Payment Schedules as per Law governing the contracts need to be implemented and release of payments along with financial charges are required to be implemented.

Despite “Delayed payments Act” in force, the due payments to the enterprises are not being made in time resulting in huge losses incurred by the unit holders besides undermining there reputation with creditors and bankers.