Industrialists flag severe economic strain in J&K

Srinagar, Apr 5: Leading industrialists in Kashmir have sounded a strong warning over the rapidly deteriorating economic situation in Jammu and Kashmir, stating that the prolonged West Asia conflict has begun to inflict serious and widespread disruptions across key sectors.

Represented by the Federation of Chambers of Industries Kashmir (FCIK), the industrial community has urged the government to step in with urgent policy interventions to stabilise the region’s fragile economic ecosystem.

In a formal communication to the Industries and Commerce Department, FCIK said that over five weeks into the conflict, its cascading effects are now being felt across the entire economic spectrum.

They said businesses are facing rising input costs, supply chain disruptions, delayed receivables, and tightening liquidity conditions, collectively creating an increasingly challenging operating environment.

The export sector, particularly Kashmir’s handicrafts industry, has emerged as one of the worst-hit segments.

Industrialists pointed out that a significant volume of export consignments remains stalled at various stages, leading to missed delivery schedules and strained commitments with international buyers. Delays and deferment of payments have further disrupted remittance inflows, triggering a liquidity crunch that is affecting exporters, artisans, and associated stakeholders.

“The horticulture sector is also under pressure, with escalating transportation costs – driven by rising fuel prices – eroding margins and undermining the competitiveness of Kashmir’s produce in national markets. Given the perishable nature of these goods, delays and higher logistics costs are directly impacting growers’ incomes and threatening the sustainability of allied sectors, including cold storage infrastructure,” they said.

The industrialists said that the tourism stakeholders are witnessing early signs of a slowdown.

Increased airfares and prevailing uncertainty have led to cancellations and weaker forward bookings, adversely affecting the hospitality and services sectors.

In addition, disruptions in remittance flows from Gulf countries have compounded the situation by impacting household incomes and local consumption demand.

The industrial community emphasised that the cumulative impact is most acute on MSMEs, which are already operating under constrained conditions.

Many units are struggling to meet operational expenses, service existing debt, and sustain employment, raising concerns over potential business closures and job losses if timely intervention is not undertaken.

Describing the situation as an “economic exigency,” industrialists have called for coordinated action involving the Government of India and the Reserve Bank of India.

Key recommendations include regulatory forbearance for financial institutions, enhanced credit access for MSMEs, and targeted liquidity support measures.

They have also proposed sector-specific interventions such as logistical and freight support for exporters, transport subsidies for the horticulture sector, and urgent rationalisation of airfares to revive tourist inflows.

On the financial front, industrialists have sought a uniform interest concession on loans, enhancement of working capital limits, and a temporary moratorium on repayments. They have further called for suspension of coercive recovery proceedings under the SARFAESI Act, alongside the introduction of a transparent one-time settlement mechanism for stressed accounts.

Additionally, the industrial body has recommended deferment of statutory obligations including GST, PF, and ESI dues, relief in power tariffs, and immediate clearance of pending payments owed to MSMEs, contractors, and suppliers to ease liquidity pressures.

Warning of serious consequences, industrialists stated that the crisis, though external in origin, poses a significant threat to the stability of J&K’s industrial ecosystem and requires swift, decisive, and coordinated policy action to prevent long-term economic damage.