Ease of Doing Business in Jammu and Kashmir

Jammu and Kashmir has been making slow progress in terms of ease of doing business with new incentives and schemes to attract investment.

In 2019, under Article 370 of the Indian Constitution, the Government of India repealed the special status that was given to Jammu and Kashmir and passed the Jammu and Kashmir Reorganisation Act splitting it into two union territories namely Jammu and Kashmir and Ladakh. The reorganisation has led to a lot of changes within the region, in terms or administration and the entrepreneurship market. Since the implementation of the Business Reform Action Plan (BRAP) 2019, Jammu and Kashmir has been making slow progress in terms of ease of doing business. Jammu and Kashmir was ranked 21st amongst 36 states and union territories in the latest data of BRAP.

It is very important for governments to incentivise investors so they invest in businesses in their state. Several steps were taken by the central government to ease business within the union territory and to drive investments inflow in the market. Following changes have been implemented in Jammu and Kashmir:

Udyog Aadhar Memorandum

According to the Administrative Council (AC), there used to be prerequisites like ‘no objection certificates’ (NOC) or allowances that had to be obtained from the government. In order to increase business units in Jammu and Kashmir, these prerequisites have been relaxed. Now only the Udyog Aadhaar memorandum is the only requirement to set up a business unit as compared to 15 clearances which were needed before. The idea is, lesser the clearances, more hassle free it is to establish a business unit, thus increasing the incentive to set up a business. 

New Industrial Developmental Scheme 

Implemented in Jan 2021, the scheme plans to spend Rs 28,400 crore to instill employment opportunities and induce a driving force in Jammu and Kashmir’s economic region. It is a pioneer industrial incentive scheme by the government where a sustainable and balanced block level industrial growth will be encouraged in Jammu and Kashmir union territory. 

The scheme also proposes to emphasise on the growth and development of local small-scale industries. It also makes it easier for such local businesses to set up and expand their businesses. A GST-linked incentive has been provided to encourage such local industries to flourish without compromising on the transparency, thus increasing compliance from the entrepreneurs.  Smaller units with an investment in plant and machinery up to Rs 50 crore will get a capital incentive up to Rs 7.5 crore and a capital interest subvention at the rate of 6 per cent for a maximum of 7 years.

The region needs an impetus to survive and bloom which requires a heightened focus on creation of jobs, skill development for employees as well as attracting newer investments. The scheme plans to build on these areas to reduce unemployment and expand the business market. Such incentives take time to show results, but one can hope that the business landscape in the newly turned Union Territory will augment and diversify with time as investments start pouring in and new businesses establish it selves. 

Smruthi Krishnan
Smruthi Krishnan
Smruthi interviews and writes on inspiring entrepreneurs and the success stories of start-ups. She is currently pursuing Economics major from Delhi University.

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