Industrial Development in Jammu & Kashmir

The structural transformation of Jammu and Kashmir’s industrial landscape represents one of the most significant shifts in the regional economy since the reorganization of the state into a Union Territory in 2019. For candidates preparing for the Jammu and Kashmir Services Selection Board (JKSSB) examinations, a deep understanding of the policy frameworks, institutional mechanisms, and geographical distribution of industrial growth centers is not merely an academic exercise but a core requirement for mastering the “Economy of J&K” and “Current Affairs” components of the syllabus. The evolution from a land-constrained agrarian economy to an investment-friendly industrial destination is guided by a series of sophisticated government policies aimed at sustainable development, job creation, and equitable growth across both the Jammu and Kashmir divisions.   

The Evolution of Industrial Policy in Jammu and Kashmir

To comprehend the current economic environment, one must analyze the historical trajectory of industrial governance in the region. Jammu and Kashmir introduced its first Industrial Policy in 1995, which was subsequently updated in 1998. However, the first truly comprehensive and detailed framework emerged in 2004, followed by the Industrial Policy of 2016. While these earlier policies established the basic mechanisms for land allotment and industrial incentives, they were often hindered by structural limitations, including limited land banks and inconsistent incentive delivery.   

The turning point occurred with the introduction of the Jammu and Kashmir Industrial Policy 2021-30. This policy was formulated with the explicit recognition that a highly structured industrial land bank is a central pillar for achieving industrial proficiency and competitiveness. It reflects the goals of the national development vision, seeking to forge a diversified and resilient economy capable of competing on both national and international stages. The policy’s duration—from April 1, 2021, to March 31, 2030—provides a long-term horizon for investors, ensuring stability in the regulatory environment.   

The Jammu and Kashmir Industrial Policy 2021-30: Vision and Strategy

The overarching vision of the 2021-30 policy is to achieve inclusive growth and economic prosperity through sustainable industrialization and employment generation. It aims to transform the regional economy from one that is historically land-constrained to a receptive destination for large-scale industrial investments. The policy is guided by the principle of “Tradition, Growth, and Transformation,” emphasizing the need to nurture traditional sectors while aggressively pursuing modern industries.   

Strategic Objectives

The strategic objectives of the policy are multifaceted, focusing on job creation for the youth, the development of backward regions, and the optimum utilization of local resources. By creating both backward and forward linkages, the government seeks to ensure that industrial growth translates into prosperity for every household in the Union Territory. Furthermore, the policy emphasizes ecological stability, incentivizing units that adopt environment-friendly production technologies and pollution control equipment.   

Zonation for Equitable Growth

One of the most innovative features of the 2021-30 policy is its approach to spatial planning. The Union Territory is divided into Zone A and Zone B, with a Community Block, Municipal Corporation, or Municipal Council serving as the basic unit for an industrial zone. This zonation is based on the existing level of industrial development, urbanization, and the centrality of the location.   

Zone A typically includes industrially developed areas or urban centers where infrastructure is already relatively mature. In contrast, Zone B includes blocks that are industrially backward or geographically remote. For example, in the Jammu Division, specific blocks in districts like Doda, Reasi, and Kishtwar are categorized under Zone B to attract investments that might otherwise gravitate toward more developed centers like Jammu or Samba. This categorization ensures that the “equitable spatial industrial growth” envisioned in the policy vision becomes a reality.   

The New Central Sector Scheme for Industrial Development (NCSS) 2021-37

While the J&K Industrial Policy 2021-30 provides the local regulatory framework, the New Central Sector Scheme (NCSS) provides the massive financial scaffolding required to drive large-scale transformation. Notified by the Department for Promotion of Industry and Internal Trade (DPIIT) on February 19, 2021, the scheme carries a total financial outlay of ₹28,400 crore.   

Duration and Scope

The NCSS is effective from April 1, 2021, and will remain in force until March 31, 2037. This 16-year window is unprecedented and is designed to provide long-term confidence to both smaller and larger units. The scheme covers the entire Union Territory and is applicable to both the manufacturing and service sectors. This inclusion of the service sector is a critical evolution, acknowledging its 62% contribution to the J&K economy.   

Core Incentive Components

The NCSS offers four major incentives that form the backbone of the industrial attraction strategy. For JKSSB aspirants, understanding these percentages and caps is essential for objective questions.

1. Capital Investment Incentive (CII): This is available to new units and existing units undertaking substantial expansion. In Zone A, units receive 30% of the investment in plant and machinery (manufacturing) or building and physical assets (services), with a maximum limit of ₹5 crore. In Zone B, this increases to 50%, with a maximum limit of ₹7.5 crore.   
2. Capital Interest Subvention (CIS): This provides interest support at an annual rate of 6% for a maximum of 7 years on loan amounts up to ₹500 crore for investments in plant and machinery or physical assets.   
3. GST Linked Incentive (GSTLI): A performance-linked mechanism equal to 100% of the gross GST paid for 10 years, capped at 300% of the eligible value of the actual investment. This incentive is particularly attractive as it measures eligibility through gross GST to offset the structural disadvantages faced by the region.   
4. Working Capital Interest Subvention (WCIS): Existing units registered under GST prior to the scheme’s notification are eligible for 5% interest support on working capital loans for 5 consecutive years, with a maximum cap of ₹1 crore.   

Performance and Demand Disparity

The NCSS has seen overwhelming demand. By August 2024, the scheme had attracted registrations from 918 units (347 new, 520 existing, and 51 expansions). However, this demand has created a projected financial liability of over ₹71,000 crore, which is more than 2.5 times the original ₹28,400 crore allocation. This supply-demand mismatch highlights the massive entrepreneur interest but also suggests that future extensions or budget augmentations may be necessary to sustain momentum.   

Institutional Architecture: SIDCO, SICOP, and the JKIDC Transition

The operational implementation of industrial policies is managed by several key government agencies. Understanding the roles and the ongoing restructuring of these bodies is a frequent topic in administrative exams.

J&K State Industrial Development Corporation (SIDCO)

SIDCO is the premier agency for the development of medium and large-scale industries in the Union Territory. It is responsible for establishing large Industrial Growth Centers (IGCs) and Export Promotion Industrial Parks (EPIPs). SIDCO provides essential infrastructure, including internal roads, effluent disposal facilities, water, and power. Notable SIDCO estates include IGC Samba and IGC Lassipora.   

J&K Small Scale Industries Development Corporation (SICOP)

SICOP, established in 1975, focuses on the promotion and development of small-scale industries (SSIs). It provides financial assistance, marketing support, and manages smaller industrial estates tailored for MSMEs. SICOP currently manages 58 industrial estates, including several under development.   

The Merger into JKIDC

In September 2021, the Administrative Council approved the creation of the Jammu and Kashmir Industrial Development Corporation (JKIDC) through the merger of SIDCO and SICOP. The rationale behind this move is to create a singular, legislative-backed entity that can assist in the “rapid and orderly establishment and organization of industries”. Unlike the current corporations, JKIDC will have the power to acquire and hold property, both movable and immovable, and will be governed under the amended J&K Development Act.   

However, the merger has faced administrative delays. As of late 2025, while the accounts of both corporations had been audited up to the financial year 2020-21 (after a gap dating back to 2012-13), the transition to JKIDC remained in a state of “limbo” due to differing bureaucratic opinions on the transition of human resources and assets.   

Industrial Growth Centers and Specialized Parks: The Geography of Investment

The physical footprint of J&K’s industrial ambitions is concentrated in several key growth centers and specialized parks. These locations are the “engines” of the regional economy, providing the necessary infrastructure for diverse sectors.

Major Industrial Growth Centers (IGCs)

1. IGC Samba (Phase I & II): Managed by SIDCO, this center is a hub for manufacturing. Phase II is currently seeing the establishment of a 1 MLD Common Effluent Treatment Plant (CETP) to ensure environmental compliance for the industrial units operating there.   
2. IDC Lassipora (Pulwama): The primary industrial hub in South Kashmir, focusing on food processing, cold storage, and manufacturing.   
3. IGC Ghatti (Kathua): This location has gained prominence with the inauguration of North India’s first Industrial Biotech Park. Kathua is strategically positioned as a “StartUp destination” due to its resource richness and geographical location near the borders of Punjab and Himachal Pradesh.   

Specialized Biotechnology Parks

Under a joint initiative by the Department of Biotechnology (DBT), the Ministry of Science & Technology, and the J&K Science, Technology & Innovation Council, two major biotech parks were initiated in 2019.   

• Ghatti, Kathua (Jammu): This park provides facilities for herbal extraction, fermentation, micro-propagation, and plant tissue culture. It is designed to act as a hub for agri-entrepreneurs and scientists, with the potential to produce 25 startups per year.   
• Handwara, Kupwara (Kashmir): Currently under establishment, this park will focus on the unique biodiversity and medicinal plant resources of the Kashmir Valley.   

The 7 New Industrial Estates Approved in 2024

In February 2024, the administration approved the development of seven new industrial estates spread over 5,290 kanals of land at an estimated cost of ₹304.51 crore. This move is expected to attract ₹8,700.16 crore in investment and generate over 28,000 jobs.   

Special Economic Zones (SEZs): Legal Framework and J&K Status

For candidates, it is crucial to distinguish between a general “Industrial Growth Center” and a “Special Economic Zone” (SEZ) governed by the SEZ Act of 2005. An SEZ is a specifically defined duty-free enclave and is deemed to be foreign territory for the purposes of trade operations, duties, and tariffs.   

Regulatory Jurisdiction

Jammu and Kashmir falls under the instruction of the Noida Zonal Development Commissioner (DC). This zonal office also oversees Uttar Pradesh, Madhya Pradesh, Rajasthan, Delhi, Punjab, Haryana, Chandigarh, Uttarakhand, and Himachal Pradesh.   

Current Status and Potential

While Jammu and Kashmir has identified numerous industrial zones (292 in total: 150 in Jammu and 142 in Kashmir), its participation in the formal SEZ structure has been limited compared to states like Andhra Pradesh or Gujarat. Most “SEZ-like” benefits in J&K are delivered through the New Central Sector Scheme rather than through the formal notification of SEZs under the 2005 Act. However, there is a strong push to develop sector-specific SEZs in IT, Horticulture, and Handicrafts to provide tax-free exports and world-class infrastructure. For example, an IT SEZ in Srinagar or Jammu could leverage the region’s talent pool by providing incubation hubs and 5G-ready zones.   

The IT and Digital Economy: STPI and IT Towers

The J&K IT Policy 2020 outlines the blueprint for a digital and innovation-driven economy. Central to this are the facilities provided by the Software Technology Parks of India (STPI).   

STPI Srinagar (Rangreth)

STPI Srinagar was established in January 2001. To meet the growing demand for incubation, it expanded its facility by 23,960 sq ft in 2020, bringing the total built-up space to 28,960 sq ft across three blocks. STPI provides essential services like high-speed data communication, incubation for startups, and statutory services for software exporters.   

Twin IT Towers in Jammu and Srinagar

In January 2021, an MoU was signed between the J&K IT Infrastructure Development Company and NBCC for the establishment of IT Towers in both Jammu and Srinagar at a cost of ₹50 crore each. These towers are designed to offer raw incubation space, plug-and-play facilities, data rooms, and “finishing schools” to prepare local youth for the tech industry. The goal is to make J&K an attractive destination for top national investors in IT and Enabled Services (ITES), potentially bringing back local talent currently working in hubs like Bangalore and Gurugram.   

Sectoral Focus: Agriculture, Horticulture, and Handicrafts

Despite the push for modern industry, the traditional sectors remain the “backbone” of the J&K economy. The industrial policy aims to create high-value additions in these areas.   

Horticulture: The “Apple Economy”

Jammu and Kashmir produces over 75% of India’s apples. This sector is vital for rural livelihoods, particularly in districts like Shopian and Baramulla. The current strategy involves expanding cold storage facilities and fruit mandis to reduce post-harvest losses and improve market linkage.   

Handicrafts and GI Tags

The handicraft sector is a major source of revenue and employment, particularly in the Kashmir Valley. Srinagar was recognized as a World Crafts City by the World Crafts Council in 2024 and is part of the UNESCO Creative Cities Network. The UT has also pioneered a QR-based certification system to ensure the authenticity of its craft products. Key GI-tagged products include:   

• Kashmir Saffron: Pampore is the primary production hub for this world-famous spice.   
• Pashmina Shawls: Renowned for their intricate weave and quality.   
• Hand-knotted Carpets: A major export item that has seen a significant boost in international trade.   

The Holistic Agriculture Development Programme (HADP)

Launched to double farmers’ income, HADP focuses on promoting organic farming, reviving saffron cultivation through modern techniques, and expanding dairy and sheep husbandry schemes. The programme is a key component of the 2025-26 budget and aims to create sustainable livelihoods in the primary sector.   

Macro-Economic Profile and Budgetary Trends (2024-2027)

For JKSSB aspirants, the “Economic Calculations” of the Union Territory provide a fertile ground for examination questions.

Gross State Domestic Product (GSDP)

The economy of J&K has seen a significant increase from ₹1.64 lakh crore in 2019-20 to ₹2.45 lakh crore in 2023-24.   

• 2024-25 (Projected): Growth rate of 7.5%.   
• 2025-26 (Projected): GSDP is estimated to reach ₹2,88,422 crore, a growth of 10% over the previous year.   
• Per Capita GSDP: In 2024-25, this was estimated at ₹1,92,898, an increase of 10% from the previous year.   

Sectoral Contributions to GSDP (2024-25)

The structural composition of the economy highlights the dominance of the service sector.   

Budget 2025-26 Highlights

The first budget of the elected government in seven years, presented by Chief Minister Omar Abdullah on March 7, 2025, emphasized self-reliance and inclusive growth.   

• Total Expenditure: ₹1,06,641 crore.   
• Revenue Surplus: Estimated at 3.8% of GSDP (₹10,826 crore).   
• Fiscal Deficit: Targeted at 5.6% of GSDP (₹16,107 crore).   
• Mission YUVA: A flagship entrepreneurship programme aiming to create 1.37 lakh enterprises and 4.25 lakh jobs over five years.   
• Free Transport for Women: Granting free ridership on government-owned e-buses starting April 2025.   

Youth, Employment, and Entrepreneurship

With an unemployment rate of approximately 18.3%, the J&K administration has pivoted toward “Mission Mode” for job creation.   

Mission YUVA (Yuva Udyami Vikas Abhiyan)

Launched in June 2025, Mission YUVA is designed to shift the focus from government employment to youth-led entrepreneurship. It is built on the 4Cs framework:   

1. Culture: Promoting an innovation mindset.
2. Capital: Providing access to finance and venture capital.
3. Capacity: Organizing skill development and training programmes.
4. Connectivity: Improving market linkages for new enterprises. Early results show strong engagement, with over 1.59 lakh registrations and ₹594 crore disbursed by early 2026.   

MSME Support and RAMP

Access to finance for small industries has been enhanced under the Raising and Accelerating MSME Performance (RAMP) programme. This includes stronger linkages with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and the establishment of “MSME Health Clinics” to identify early signs of industrial stress and provide customized revival measures.   

Infrastructure and Connectivity: The USBRL and Tunnels

Industrial growth is limited by physical accessibility. The massive investment in road and rail infrastructure is designed to integrate J&K more closely with the national market.   

1. Udhampur-Srinagar-Baramulla Rail Link (USBRL): This project includes the Chenab Bridge, the world’s highest railway bridge, which is a marvel of engineering. The completion of this link is expected to revolutionize the transport of apples and handicrafts.   
2. Z-Morh and Zojila Tunnels: These projects aim to provide all-weather connectivity between Srinagar and the Ladakh region, essential for both strategic and commercial purposes.   
3. Daily Parcel Train: Indian Railways has launched a daily parcel service between Badgam and Delhi (Adarsh Nagar) to improve agri-logistics for Valley farmers.   

Recent Trends and Challenges: FDI and Investment Realization

While policy intent is strong, the “on-the-ground” realization of investment has faced headwinds.

Foreign Direct Investment (FDI)

Despite global roadshows in Dubai and Singapore, J&K recorded the lowest FDI inflows in India over the past five years. Since 2020, the UT attracted a meagre ₹10.52 crore in FDI equity, which is token compared to states like Maharashtra (₹5.54 lakh crore). Security concerns, bureaucratic red tape, and fragile connectivity are cited as primary deterrents for foreign investors.   

Investment Disparity by Division

Data indicates that the Jammu Division has emerged as the frontrunner in industrial investment.   

The higher surge in Jammu is attributed to its proximity to established supply chains and the relative stability of its industrial hubs like Samba and Kathua.   

Current Affairs for JKSSB: High-Yield Facts (2024-2026)

To support the rapid revision needs of aspirants, the following facts represent the most current and relevant data points for upcoming exams:

• Lithium Discovery: 5.9 million tonnes of lithium reserves found in the Reasi district, a first for India, positioning J&K in the “Blue Economy”.   
• Darbar Move Status: The biannual shifting of government offices between Jammu and Srinagar, halted in 2021 to promote e-offices, was revived in late 2025 due to its historical and symbolic importance.   
• Operation Mahadev: A successful counter-terror operation in Srinagar that saw several J&K Police officers receive the Kendriya Grihmantri Dakshata Padak 2025.   
• Operation Sindoor: A precision strike operation targeted at terrorist infrastructure, highlighted by the Army Chief as an example of ethical warfare.   
• Mall of Srinagar: A major project by the Dubai-based EMAAR group, featuring Lulu Hypermarket, scheduled for completion by 2026.   
• World Highest Railway Bridge: The Chenab Rail Bridge.   
• GI Tag for Saffron: Kashmir Saffron received the Geographical Indication (GI) tag in 2020, facilitating its global trade.   

Synthesis: Navigating the Industrial Transition

The industrial landscape of Jammu and Kashmir is in a state of flux, characterized by ambitious central schemes and evolving local policies. While the New Central Sector Scheme (NCSS) has successfully ignited entrepreneur interest, the challenge lies in the “grounding” of these investments and the provision of high-quality infrastructure across both divisions. The planned merger of SIDCO and SICOP into JKIDC is a crucial step toward creating a professional, statutory body capable of managing the region’s complex land and investment needs.   

For JKSSB aspirants, the key to success lies in understanding the interplay between these policies and the regional geographical strengths. Whether it is the biotechnology potential of Ghatti, the IT ambitions of Rangreth, or the traditional “apple economy” of Sopore, each element forms a piece of the larger economic puzzle. By focusing on the quantitative data (budgets, GSDP, incentive percentages) and the qualitative narratives (policy vision, institutional changes, current affairs), candidates can build a nuanced and comprehensive understanding of the Union Territory’s path toward sustainable industrial growth.   

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Sahil Digra

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