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Industrial Development & Economic Growth in Jammu & Kashmir

July, 2017

Jammu and Kashmir (J&K) is the northernmost state of India and a global tourist destination. In addition to traditional recreational tourism, a vast scope exists for adventure, pilgrimage, spiritual, and health tourism.

The economy is primarily services based and agri-oriented. Between 2004-05 and 2015-16, the Gross State Domestic Product (GSDP) of J&K increased at a compound annual growth rate (CAGR) of 10.2 per cent to US$ 17.73 and the Net State Domestic Product (NSDP) increased at a CAGR of 8.3 per cent to US$ 12.5 billion.

A vast natural resource base has enabled J&K to develop land for cultivating major fruits. With varied agro-climatic conditions, the scope for horticulture is significantly high in the state. Food processing and agro-based industries (excluding conventional grinding and extraction units) thrive in the state. J&K has an ideal climate for floriculture and an enormous assortment of flora and fauna. The state has Asia’s largest tulip garden.

J&K’s handicrafts are world famous and the traditional handicraft industry has emerged as a large industry. Due to its large employment base and exports potential, the industry has been receiving priority attention of the government. The state is also famous for its small-scale and cottage industries such as carpet weaving, silks, shawls, basketry, pottery, copper and silverware, papier-mâché and walnut wood.

The following are some of the major initiatives taken by the government to promote Jammu & Kashmir as an investment destination:

  • J&K’s handicrafts are world famous, on the back of which, handicraft industry of the state witnessed huge growth. A total of US$ 0.086 million funds were released under the handicraft schemes in J&K during 2015-16 (up to November 2015).
  • As per state budget 2016-17, Government of Jammu & Kashmir proposed to set up a Water Resources Department in the state for planning and managing various water resources present in the state including rivers, lakes, etc. Further, for this purpose, an allocation of US$ 305.43 thousand has also been made by the state government during 2016-17.
  • J&K has an industrial policy that offers attractive incentives along with a single-window clearance mechanism. Land is allotted at concessional rates in industrial areas on lease for 90 years.
  • J&K has an industrial policy that offers attractive incentives along with a single-window clearance mechanism.
  • In order to boost infrastructure, the government is planning to build two highways in order to provide all-weather connectivity from Jammu to the Kashmir valley. The first project of four-laning of Ramban-Banihal section of National Highway-1A (now NH-44) in Jammu & Kashmir will cost US$ 271 million.
  • Another project is related to four-laning of Udhampur- Ramban section of National Highway. The 40.07-km road project will cost US$ 293 million.
  • The Department of Industrial Policy & Promotion (DIPP) has extended a Special Incentive Package. This includes 100 per cent premium reimbursement under Central Comprehensive Insurance Subsidy Scheme to all units on expansion over the next five years. The DIPP also allowed capital investment subsidy of 15 per cent on investment in plant and machinery; the subsidy is applicable for five years from the date of commencement of production
  • Under the ‘Apple Insurance Scheme’, the state government has decided to construct a chain of compressed air stores in each district of the state in order to introduce modern pre- and post-harvest technologies.
  • The state has established the Jammu & Kashmir Handicrafts Sales & Export Promotion Corporation and Jammu and Kashmir State Handloom Development Corporation to promote development and growth of the handicraft sector.
  • In 2015, Handicrafts Expo was organised by the Department of Handicrafts, Jammu & Kashmir to promote the handicraft exports in the state.
  • In an effort to boost tourism in three regions, J&K’s government is planning to construct several ropeways in the state.

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