‘This time, it is game over’: failing industries in Kashmir

Photograph by Irfan Amin Malik for The Kashmir Walla

Leaving behind a life defined by compromises, discrimination, and inequality, Sarwar Hussain Malik, then a 25-year-old aircraft engineer, quit his job at Air India Company in Mumbai and flew back home to Srinagar in 2014.
“Being a Kashmiri, I was discriminated against on many fronts,” said Mr. Malik. “I did not receive security pass and police verification like other employees. When the challenges mounted, I decided to quit and ultimately return home.” Back at home, he found peace of mind but no job. Searching from post to pillar, he could not find a job suitable for him.

In the absence of a thriving private sector in Kashmir, Mr. Malik decided to create his own space. “No matter what degree you have, there is barely any scope in Kashmir,” he said. “Therefore, I established an industry, where I could work and employ people.”
One evening in March 2014, Mr. Malik received a call from his friend, who suggested him to visit Jammu and Kashmir Entrepreneurship Development Institute (JKEDI), Pampore. Industrial experts at the center gave him technical guidance and market analysis. There, he came up with an idea – a mineral water producing unit.
After five years, riding up and down a rough economic hill in Kashmir Valley, today, Mr. Malik, who is also the general secretary of consortium of young industrialists, sees bleak future for aspiring industrialists in Kashmir.
On 5 August 2019, Bharatiya Janata Party (BJP)-led Central government scrapped the constitutional special status of Jammu and Kashmir (J-K) and divided it into two federally governed territories – J-K and Ladakh.
In his first speech after the decision, the Prime Minister (PM), Narendra Modi, vowed that many industries including import-export, food processing, and health care will flourish in J-K.
The government claims that the land and trading laws – which barred any non-state subject, alias non-local resident, to acquire land for any purposes – was the reason for a very dull private sector in Kashmir; now, abrogation of the special status will encourage investment in private sector in Kashmir.
The data compiled by Department of Industries and Commerce, Kashmir, claims that only 59.18 per cent of industrial units are functional in Kashmir. Director Industries, Kashmir Division, Mehmood Shah, said, “The reasons behind sick industrial units are political unrest and natural calamities in Kashmir.”

I think, the game is over this time. Since we could not produce products we are only bearing losses. On the other hand the bank is again restructuring loans, which means we have to wind up our units.

Professor Nisar Ali, who was formerly teaching economics at University of Kashmir and ex-director of J-K Bank, argues that industrial development and revocation of J-K’s special status are irrelevant to each other. “[For the development of industries] we don’t need to make or unmake certain laws but we need the government’s futuristic industrial policies,” noted Mr. Ali. “Only such policies would attract both local as well as non-local entrepreneurs to invest in the Valley.”
In a television interview in August 2019, the former Finance Minister of J-K, Dr. Haseeb Drabu, also refuted the idea that removal of Article 370 for industrial development. “Unless the political situation in Kashmir becomes stable there cannot be industrial development,” said Mr. Drabu, who is also a renowned economist. “No entrepreneur or investor would want to start his unit in a conflict torn place like Kashmir.”
According to a report by Business Today in October 2017, the erstwhile state’s industrial policy in 2016 admitted that Kashmir has failed to draw sufficient investment and asserted it will try to obtain 2,000 crore rupees every year and create about 15,000 to 20,000 new job opportunities. On ground, however, achieving this target seems to be a distant dream.
A Severed Bridge
Before the idea of India could grab Kashmir after the abrogation of the special status, in the initial spillover, many bridges have been severed and affecting the functionaries of the industrial sector.
Within a week following the Centre’s decision, most of the labourers, who had come from outside, were keen getting out of the Valley by the earliest. Mr. Malik, 30, too had to shed the laborers.
“I think, the game is over this time,” said Mr. Malik. “Since we could not produce products we are only bearing losses. On the other hand the bank is again restructuring loans, which means we have to wind up our units.”
Mr. Malik believes that his industrial journey has been full of agonies, odds, and challenges; from the documentation process to manufacturing of the product.
“I think, the game is over this time,” saidSarwar Hussain Malik. Photograph by Irfan Amin Malik for The Kashmir Walla
As Mr. Malik submitted the documents for registration, he had to face the devastating 2014 floods. Due to that, he could not procure timely bank finance. In 2015, after making rounds to officials, he started his unit in State Industrial Development Corporation (SIDCO) estate, Lassipora, Pulwama, south Kashmir.
A year later, in 2016, the government forces killed a Hizbul Mujahideen commander, Burhan Wani, and the following six months civil uprising hit his business badly. Before Mr. Malik could find his feet, the following Central government policies like Goods and Service tax (GST) and demonetisation “obliterate industries in the Valley.”
In 2017-18, a group of local entrepreneurs shut their units in different estates of SIDCO and Small Scale Industries Corporation (SICOP) Kashmir. Many industrialists claim to have survived this tough period and didn’t call it a quit; Mr. Malik being one of them.
Source: Department of Industries and Commerce (Kashmir)
After 5 August, many smaller decisions too are having a negative impact on the already sorry state of the private industries. For instance, the recent decision of removing Lakhanpur toll plaza, as Mr. Malik explained, has facilitated the path for non-local industrialists to send their products to J-K. “This move has broken the backbone of the local industry,” he said. “This had made the sustainability of local units even more complex.”
While reviewing the progress of land transfer for new industrial estates, on 7 January 2020, the Divisional Commissioner, Kashmir, Baseer Ahmad Khan, said that these fresh establishments would open a new window for unemployed youth and raise the economic graph of Kashmir.
The Lassipora estate, which was established in 1985, is managed by SIDCO. The estate has about 5,450 kanals of land and had allotted 581 units – today, 280 units out of it are either sick or what department categorises as, “units under establishment, cancelled units and units that did not take effective steps.”
Directorate of Industries and Commerce. Photograph by Irfan Amin Malik for The Kashmir Walla
In the adjacent district, Shopian, south Kashmir, the single industrial estate –SICOP Gagren, the department reveals that out of twenty-six allotted units, not one is functional.
Besides the gloomy picture of functional units in Kashmir, another issue is the bank restructuring loans after months-long civil uprising. “[After 2016] the bank decision came as if sky had fallen on me,” said Mr. Malik. “Our liabilities had doubled in terms of repayment of restructuring loans.”
Talking to The Kashmir Walla, a senior J-K Bank official, who does not wish to be named, said, “There is a big list of these defaulters almost in every bank.” Thence, the banks over the years have modified the rules of issuing loans to industrialists. Before sanctioning the loan, the bank looks for multiple things in an entrepreneur: a good character, mortgage, at least two guarantees, and more.

Till there is unrest, industrial units are bound to suffer. Due to continuous business lockdown and internet blockade, the units here have only increased their liabilities. In coming times, fifty per cent industrial units in Lassipora can turn dysfunctional.

The official said that many industrialists opened their units in different SIDCO estates of Valley, but they eventually turned sick. “These unit holders apply for bank loans and finally start their units,” he noted. “In those cases, if any challenge erupts, these unit holders become bank defaulters and eventually pack their bags to return home.”
The general manager SIDCO, Kashmir, Syed Aijaz Aagha, said, “There is no retrieval policy with SIDCO for sick units but a scheme for its holders, where the unit owners can get a loan and repay it through Easy Monthly Installments (EMI).”
Mr. Malik, who did not pack his bags yet, while driving his car around Lal Chowk, Srinagar, in January 2020, smirked and highlighted that after all these years, he only had been able to buy a car, and is yet to tie a knot.
Internet blockade, Power Crisis, and Institutional Friction
Much like Mr. Malik, one can find ample amount of industrialists facing different challenges in Kashmir. Majid Wafai, who is the president of Cold Store Association, Lassipora, owns a cold store unit, Shaheen Agrofresh, believes that peace in Kashmir is imperative for industrial activity.
“Till there is unrest, industrial units are bound to suffer. Due to continuous business lockdown and internet blockade, the units here have only increased their liabilities,” he said. “In coming times, fifty per cent industrial units in Lassipora can turn dysfunctional.”
For instance, the ongoing internet blockade – the longest in any democratic setup – in the Valley has obstructed entrepreneurs to even generate an airway bill, pay GST, and check mandatory mails.
A 30-year-old industrialist, who was manufacturing plastic utensils in Lassipora, called out power crisis a major factor for failing the industrial growth in the Valley. “Due to power shortage and fluctuations I eventually shut my unit,” he said. “The expensive injection molding machines repeatedly got damaged, due to which I was only losing.”
On any other day, the Lassipora industrial estate witnesses daily power curtailments of about four hours a day: from 6 pm to 10 pm.
A 35-year-old laborer in the same estate, Mohamamd Ashraf Malik, doesn’t understand who would invest in Kashmir, “where the industrial estate has power crisis.” “Will [Anil] Ambani establish an industry here?” he wondered.
On the other hand, there is a cumbersome procedure of getting permissions for starting an industrial unit in Kashmir, including a No Objection Certificate (NOC) from the Power Development Department (PDD) for an electric connection or a construction permit and pollution control certificate.
With SIDCO, there are 1,368 small scale industries and merely twenty-four medium and large scale industries.
A small-scale entrepreneur, Dawood Ahmad, 40, runs a roof sheet laminating unit in Rangreth Industrial Estate, Budgam. While setting up his unit in 2012, he explained how he had a hard time in getting pollution certificates. “The government promises to grant permissions in time, but it needs to deliver on the promise,” he said.
Lack of Available Land
Director Industries, Kashmir Division, Mr. Shah, claims that the government gave away 10,000 kanals of land to entrepreneurs for setting up of twenty-six industrial estates. However, right now, the department is looking for 10,000 more kanals of land for aspiring entrepreneurs.
The land shortage is another mounted challenge for the aspiring entrepreneurs in Kashmir. The general manager SIDCO, Kashmir, Mr. Aagha, affirmed the lack of land for setting up of new industries in the Valley. “The SIDCO is facilitator for industrialists but currently there is no land available for entrepreneurs,” said Mr. Aagha.

It is an uphill task to run an industry when uncertainty is hovering around you. When highway blockade is usual and each process is marred by corruption.

The data with SIDCO Kashmir reveals that there is a total of seven industrial estates in J-K, comprising three phases of industrial estate Khunmouh, followed by a food park; industrial estate in Shalteng, Srinagar; Rangreth and Ompora in Budgam; an industrial estate in Lassipora, Pulwama; and a food park in Doabgah Sopore. The total number of industrial units registered with SIDCO is 1,392 out of which only 763 are functional.
In total, SIDCO possess 10,133 kanals of land; out of which, 350 kanals are left and 1,734 kanals is under the government forces encroachment and litigation.
In Kulgam, south Kashmir, only one industrial estate was established under SICOP in 1962. It possesses 19.40 kanals of land and five units were allotted by the government – although, since 1990 the entire estate was put under the hold of government forces.
Established in 1979-80, SIDCO industrial estate in Rangreth possesses 1,159 kanals of land; out of 202 allotted units only 148 are functional, while remaining fifty-four units have either turned sick or are under establishment.
Another 40-year-old entrepreneur in Lassipora, Pulwama, Tanvir Ahmad Dar, left his job at a renowned bank in 2005 – procured bank loan and credit from his friends – and started a walnut processing unit.
His decision proved to be a difficult one. “It is an uphill task to run an industry when uncertainty is hovering around you,” he said. “When highway blockade is usual and each process is marred by corruption.”
For him, the biggest concern is non-local dealers tapping the local market; luring by advance payments, the home-grown production is traded outside the Valley, and as Mr. Dar noted, “These things have destroyed Kashmir’s walnut industry.”
He wishes the government to form a policy that could filter this process and help local processing units to flourish, ultimately leading to a better local economy.
Like everyone, Mr. Malik looks back at his life, he realizes that the life of an industrialist in Kashmir isn’t a bed of roses, but full of hardships. “Instead of saving money and getting married, I only increased my bank liabilities,” said Mr. Malik, as he burst into laughter.
Mr. Malik’s fate, as he said, relies on the government’s policies and “it won’t change unless the government comes up with a futuristic industrial policy.” “[In Kashmir] instead of having success stories, we have unfortunately produced Non-Performing Accounts (NPA) and sick unit holders.”

Irfan Amin Malik is a Reporting Fellow at The Kashmir Walla

The story appeared in our 20-26 January 2020 print edition.

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