Srinagar: As the Government of Jammu and Kashmir undertakes a review of its Industrial Policy, the Federation of Chambers of Industries Kashmir (FCIK) has sought an immediate reset of the Union Territory’s Public Procurement Policy, warning that large-scale government spending has failed to translate into growth for local manufacturing and employment.
The apex industrial body pointed out that between 2020–21 and 2024–25, the J&K government spent over ₹1.58 lakh crore on capital expenditure, with an additional ₹32,607 crore earmarked for the current financial year. Substantial expenditure is also being undertaken through Central Public Sector Undertakings (CPSUs) and defence and paramilitary establishments operating in the Union Territory.
FCIK said the cumulative public investment, estimated at nearly ₹1.9 lakh crore over six years, has the potential to significantly expand industrial capacity, create tens of thousands of factory jobs, and facilitate the establishment of new manufacturing units across Jammu and Kashmir. However, it noted that local Micro, Small and Medium Enterprises (MSMEs) continue to face an acute shortage of orders.
“Despite this massive public investment, a large number of manufacturing units are either closed or on the brink of closure due to the absence of supply orders,” FCIK said in a statement, adding that the crisis stems not from inadequate spending but from procurement decisions made without assessing their impact on the local industrial ecosystem.
The chamber observed that at least 50 per cent of capital expenditure consists of industrial goods manufactured well before construction activity begins. These goods, it said, correspond precisely to the product segments for which nearly 25 per cent of J&K’s manufacturing units were set up to cater to public procurement.
FCIK maintained that sourcing even 25 per cent of this industrial component from local manufacturers could have prevented the current situation of idle factories, job losses, and underutilised capacity.
Recalling earlier policy measures, FCIK said that until 2017, successive governments had acknowledged the region’s structural disadvantages by providing marketing and procurement support, along with cost-equalisation measures such as tax remissions and toll exemptions.
The subsequent shift towards GeM-based procurement, national-level e-tendering, and large turnkey contracts—combined with the withdrawal of cost-equalisation incentives—has tilted the procurement environment against local MSMEs, the chamber said. It added that increasing reliance on composite and turnkey contracts has further diluted MSME reservation benefits, as contractors independently procure industrial goods, effectively excluding local manufacturers.
As an example, FCIK cited the ₹12,000-crore Revamped Distribution Sector Scheme (RDSS), under which procurement has reportedly been routed entirely through turnkey mechanisms, despite the presence of nearly 200 local MSMEs manufacturing electrical goods in Jammu and Kashmir.
As part of the ongoing Industrial Policy review, FCIK has proposed a three-tier Public Procurement Policy. The suggestions include reviving SICOP as the nodal marketing and procurement agency for MSE-reserved and locally consumed items, reforming e-tendering and turnkey practices to ensure meaningful MSME participation, and mandating segregation of industrial goods from civil contracts.
The chamber has also recommended shifting from price preference to purchase preference, arguing that assured orders for local manufacturers would not impose any additional financial burden on the government.
Appealing to the Omar Abdullah-led government, FCIK emphasised that capital expenditure in Jammu and Kashmir should be leveraged not only for asset creation but also for strengthening local industrial capacity. It warned that continued bypassing of local manufacturing would result in lost jobs, idle factories, and long-term weakening of the industrial ecosystem.
According to FCIK, a well-designed Public Procurement Policy could ensure that government investment retains value within the Union Territory, generates sustainable employment, and delivers durable economic benefits for the people of Jammu and Kashmir.
