The Jammu And Kashmir Industrial Policy,  2021-30: A Catalyst For Socio-Economic Transformation

Policy Update

Vishal Kumar

Background

The industrial trajectory of Jammu and Kashmir (J&K) has been shaped by its unique geography, political volatility and state-led economic model. The region adopted a state-led industrialisation strategy after the signing of the Instrument of Accession in 1947 to generate employment and strengthen industrial development. However, persistent political instability, climatic challenges and geographical remoteness constrained industrial development, resulting in a gradual shift towards individual-led entrepreneurship. J&K implemented successive industrial policies in 1995, 1998, 2004 and 2016 to promote industrial investment.

However, these policies delivered limited structural transformation due to weak policy continuity, limited institutional capacity and inadequate support for reviving existing industrial units. Following the abrogation of Article 370 and the reorganisation of the former State into the Union Territory of Jammu and Kashmir in 2019, the administrative and policy framework governing industrial development underwent significant changes. Within this context, the Jammu and Kashmir Industrial Policy (JKIP) 2021–2030 came into effect on 1 April 2021 to address these structural constraints and promote a sustainable, balanced and competitive industrial ecosystem.

Functioning

The JKIP 2021-2030 is anchored in the vision of transforming J&K from an “aspirational” to an “industrially advanced” region. The policy is implemented by the Industries and Commerce Department, Government of Jammu and Kashmir, in coordination with its directorates, industrial development corporations, and other concerned departments. It operates under the slogan “Tradition, Growth and Transformation,” emphasizing a fine balance between manufacturing, services and the region’s traditional core sectors. The government has shifted its role from a regulator to a partner and facilitator, aiming for “minimum regulation and maximum facilitation”.  The policy operates through the following key pillars:

1. Single Window System: The policy introduced the Invest JK Single Window System to improve the Ease of Doing Business (EoDB). The digital platform streamlines licences, permissions and approvals. The digital platform streamlines licences, permissions and approvals. As a result, it improves administrative efficiency by reducing procedural delays.

2. Land Allotment: The policy facilitates industrial development through the creation of a Land Bank and the establishment of modern industrial estates and parks on a ‘ready-to-occupy’ model. These initiatives improve access to serviced industrial land and enable the timely establishment of industrial units.

3. Priority Sectors: The policy identifies 16 priority sectors, including manufacturing, information technology and IT-enabled services (IT & ITeS), agriculture and food processing, healthcare and pharmaceuticals, tourism and hospitality and handloom and handicrafts. This sector-specific approach seeks to diversify the industrial base, attract private investment and generate employment.

4. Fiscal Incentives: The policy offers a lucrative package of incentives, including:
   1. GST-Linked Incentives: Units can receive up to 300% GST-linked incentives over 10 years. 
   2. Capital Investment Incentive: Incentives ranging from 30% to 50% of investment in plant and machinery, with caps up to Rs 7.5 crore. 
   3. Interest Subvention: A 6% interest subvention on term loans and 5% on working capital for existing units. 
   4. Operational Subsidies: 100% subsidy on the purchase of DG sets and exemptions from stamp duty and court fees. 

5. New Central Sector Scheme (NCSS) 2021: The policy is complemented by NCSS, 2021 with a financial outlay of ₹28,400 crore. It aims to provide long-term financial support for industrial development and strengthening the overall investment framework of the policy. 

The policy framework of the Jammu and Kashmir Industrial Policy (2021–30) is illustrated in Figure 1. It highlights the key policy pillars and their expected contribution to industrial and socio-economic development.

  Figure 1. Conceptual framework of the Jammu and Kashmir Industrial Policy (2021-2030).

Figure 1 illustrates how institutional reforms, industrial infrastructure development, fiscal incentives, and priority sectors collectively strengthen the business environment and attract private investment. These interventions support industrial expansion, employment generation, MSME development, and balanced regional industrial development, ultimately contributing to inclusive socio-economic transformation.

   Performance

The Jammu and Kashmir Industrial Policy 2021–30 has generated encouraging investment momentum since its implementation. The Union Territory has attracted investments worth ₹10,516 crore, although regional disparities in investment distribution remain significant. The following are the key performance indicators of the JKIP 2021-30:

1. Investment Growth: The Union Territory has attracted investments worth ₹10,516 crore since the implementation of the JKIP 2021-30. Moreover, the industrial investment increased from ₹376.76 crore in 2021-22 to ₹3,628 crore in 2023-24. This reflects a substantial increase in investment activity and growing investor confidence.

2. Subsidy Disbursement: The government disbursed ₹657.83 crore in industrial subsidies between 2022 and 2026. Of the 4,007 claims received, nearly 80% (3,187 claims) have been processed and approved. This indicates steady progress in implementing the policy’s incentive framework.

3. Regional Investment Distribution: Industrial investment remains concentrated in the Jammu division, accounting for over ₹16,000 crore, or approximately 80% of the total investment groundwork underway. The districts of Jammu, Kathua and Samba have emerged as the primary beneficiaries. This concentration highlights the need for more balanced regional industrial development.

4. Micro, small and medium enterprises (MSMEs) Contribution: The industrial sector continues to be dominated by MSMEs. The sector contributes approximately 8% to the Gross State Domestic Product (GSDP) and employs nearly 90% of the industrial workforce. As of July 2026, over 9.4 lakh MSMEs have been registered in Jammu and Kashmir under the Udyam Registration Portal and the Udyam Assist Platform, reflecting the growing formalisation of the sector and the expanding reach of government support mechanisms 

While these performance indicators primarily reflect improvements in investment, industrial activity and policy implementation, their broader significance lies in their contribution to socio-economic development. Increased investment, expanding industrial capacity and stronger institutional support are beginning to translate into employment generation, infrastructure development and improved investor confidence across the Union Territory. 

Socio-economic Impact

The JKIP 2021-30 has begun to generate measurable socio-economic outcomes. Although the policy is still in its early stages of implementation, its long-term impact will depend on sustained implementation and institutional support.

1. Employment Generation: The policy aims to generate 4.5 lakh jobs over its ten-year implementation period. During 2023-24, employment increased from 10,506 to 26,032 jobs. This reflects the policy’s contribution to industrial expansion and livelihood generation.

2. Infrastructure and Connectivity: The policy has been supported by significant investments in infrastructure. Permanent campuses of IIT Jammu, IIM Jammu and AIIMS Jammu have been established. In addition, the Udhampur-Srinagar-Baramulla Rail Link is nearing completion. The project is expected to reduce logistics costs and strengthen regional connectivity by integrating local markets with the national economy.

3. Foreign Direct Investment (FDI): The policy has attracted notable private investment, including a ₹500 crore investment by Emaar for the development of a shopping mall and IT towers. The project is expected to generate more than 10,000 employment opportunities.

4. Social Inclusion: The policy has also contributed to greater socio-economic inclusion. Post-2019 reforms have facilitated the recognition of rights for communities such as the Valmikis and the Gadda Brahmins, supporting their integration into the region’s socio-economic development.

5. Improved Investor Confidence: The policy has strengthened investor confidence by improving perceptions of Jammu and Kashmir as an emerging investment destination. Enhanced policy support and institutional reforms have contributed to a more favourable investment environment for domestic and external investors.

Emerging Issues

Despite progress, several systemic challenges and “alarm bells” have been identified by experts and industrial bodies. These are outlined below:

1. Weak Monitoring and Accountability: The policy’s monitoring and oversight mechanisms have weakened over time. The multi-tier institutional model responsible for coordination at the district and provincial levels has become largely ineffective. This has reduced implementation efficiency and limited policy execution at the ground level.

2. Regulatory Complexity: MSMEs continue to experience regulatory and procedural challenges despite the introduction of digital approval systems. Green-category industries are still required to submit extensive physical documentation and comply with frequent regulatory requirements. These processes increase transaction costs and delay project approvals.

3. Regional Imbalances: Industrial development remains concentrated in a few districts, despite the predominantly rural character of the Union Territory. Only 17 % of industrial units are located in rural areas. Similarly, the concentration of NCSS registrations in a limited number of districts has constrained balanced regional development.

4. Policy Overlaps: The simultaneous implementation of the Industrial Policy 2016-26, the Industrial Policy 2021-30 and the NCSS 2021 has created overlapping provisions and administrative ambiguities. This has resulted in inconsistent policy interpretation and implementation across government departments.

5. Operational Constraints: Industrial enterprises continue to face operational challenges arising from climatic conditions and transport disruptions. Firms lose an average of 100 working days annually because of road blockages and adverse weather conditions. In addition, approximately 15% of surveyed industrial units were found to be non-functional.

6. Limited Research and Development (R&D): Firm-level investment in research and development remains limited. The absence of a strong innovation culture restricts technological upgrading, productivity improvements and the long-term competitiveness of industrial enterprises. 
7. Private Investment Sustainability: While investment proposals have increased significantly, sustaining private investment will depend on timely project execution, continued policy stability and efficient delivery of incentives. Delays in land allotment, approvals or subsidy disbursement could weaken investor confidence and slow industrial growth.
8. Skilled Workforce: The availability of an industry-ready workforce remains a challenge, particularly in high-value sectors such as information technology, pharmaceuticals and advanced manufacturing. Stronger collaboration between industry, universities and skill development institutions is needed to address skill gaps and improve workforce employability.
9. Climate Resilience: Jammu and Kashmir’s industrial sector remains vulnerable to climate-related risks, including floods, landslides, heavy snowfall and extreme weather events that disrupt transport, supply chains and production. Integrating climate-resilient infrastructure, disaster preparedness and sustainable industrial practices into the policy framework would improve the long-term resilience of industrial development.

Comparative Perspective: 

Unlike the industrial policies of Himachal Pradesh and Uttarakhand, which have historically relied on tax concessions and central incentives to offset geographical disadvantages, the JKIP 2021–30 combines fiscal incentives with institutional reforms such as the Invest JK Single Window System, a dedicated Land Bank and the ₹28,400 crore New Central Sector Scheme (NCSS) 2021. Similarly, while the North East Industrial Development Scheme (NEIDS) primarily focuses on capital subsidies and transport support, the JKIP places greater emphasis on ease of doing business, sector-specific investment promotion and long-term industrial infrastructure. This integrated approach reflects Jammu and Kashmir’s distinct administrative, geographical and developmental context. 

Way Forward

The early outcomes of the JKIP 2021-30 demonstrate encouraging progress in industrial development. However, sustaining this momentum requires targeted policy interventions to strengthen implementation, enhance industrial competitiveness and promote balanced regional development. The recommended policy actions are presented below: 

1. Revitalise Existing Industrial Units: Policy efforts should extend beyond attracting new investments to reviving the existing industrial base. A dedicated J&K Sick Unit Revival Policy, supported by concessional credit and a corpus fund for soft loans, would help rehabilitate non-functional industrial units, protect employment and improve industrial productivity. 

2. Simplify the Regulatory Framework: The regulatory environment should adopt a trust-based approach that emphasises self-certification and post-facto verification. Simplifying the Consent to Establish (CTE) and Consent to Operate (CTO) procedures would reduce compliance costs and improve the ease of doing business.

3. Promote Balanced Regional Industrialisation: Industrial development should be expanded beyond the existing growth centres. Establishing industrial clusters and fully serviced industrial estates in underserved districts would reduce regional disparities, encourage local entrepreneurship and generate employment opportunities across the Union Territory. 

4. Establish a Unified Policy Framework: Consolidating overlapping industrial policies into a single, coherent framework would improve administrative clarity and implementation efficiency. This would also reduce policy ambiguities and ensure greater consistency across government departments.

5. Develop Future-Ready Industrial Infrastructure: Industrial estates should be equipped with reliable power supply, renewable energy systems, digital connectivity and efficient logistics infrastructure. Such investments would improve operational efficiency and attract long-term private investment.

6. Strengthen Market Access and Branding: A dedicated ‘Made in J&K’ branding initiative, combined with greater marketing support for MSMEs, would enhance the visibility and competitiveness of locally manufactured products in domestic and international markets.
7. Strengthen Academia-Industry Collaboration: Stronger collaboration between universities, research institutions and industrial enterprises is essential to promote innovation and technology transfer. Such partnerships would facilitate applied research, support skill development and improve the competitiveness of local industries.

These recommendations would strengthen the implementation of the JKIP 2021-30. They would also promote a more competitive, resilient and inclusive industrial ecosystem. The long-term success of the policy will ultimately depend on effective implementation, institutional coordination and balanced regional industrial development.  

References 

1. Akmali, M. (2026, April 7). Regulatory hurdles strangle J&K MSMEs. Greater Kashmir. https://www.greaterkashmir.com/business/regulatory-hurdles-strangle-jk-msmes/
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3. Daily Excelsior. (2026, January 11). FOIJ proposes suggestions for industrial policy. https://www.dailyexcelsior.com/foij-proposes-suggestions-for-industrial-policy/
4. Greater Kashmir. (2026, May 9). Govt engages Kashmir Inc on ease of doing business, industrial reforms. https://www.greaterkashmir.com/business/govt-engages-kashmir-inc-on-ease-of-doing-business-industrial-reforms-11815460
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7. Kashmir Life. (2026, February 13). Rs 657 cr industrial incentives disbursed in four years in Jammu and Kashmir: Govt. https://kashmirlife.net/rs-657-cr-industrial-incentives-disbursed-in-four-years-in-jammu-kashmir-govt-425077/
8. Qalander, S. (2025, December 31). Revisiting industrial policy: A strategic reset for Jammu & Kashmir’s industrial growth. Greater Kashmir. https://www.greaterkashmir.com/opinion/revisiting-industrial-policy-a-strategic-reset-for-jammu-kashmirs-industrial-growth/
9. Rashid, A. (2024, July 14). Jammu & Kashmir: A promising FDI hub in the making. Rising Kashmir. https://risingkashmir.com/jammu-kashmir-a-promising-fdi-hub-in-the-making/
10. Rohmetra, A. (2024, April 23). Industrial investment, railway push, tourism uptick: How Jammu has changed post Article 370 abrogation. ThePrint. https://theprint.in/india/governance/industrial-investment-railway-push-tourism-uptick-how-jammu-has-changed-post-article-370-abrogation/2051385/
11. The Week. (2025, March 11). J&K attracts more investment after the abrogation of Article 370, with ₹10,516 crore worth of investments since 2019. https://www.theweek.in/news/india/2025/03/11/j-k-attracts-more-investment-after-abrogation-of-article-370-10-516-crore-worth-investments-since-2019.html
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About the Contributor:

Vishal Kumar is a Research & Editorial Intern at IMPRI. He is currently pursuing a master’s degree in Political Science at the University of Jammu, Jammu and Kashmir. His research interests include Political Economy, Public Policy, governance and political Philosophy.

Acknowledgement:

The author would like to thank IMPRI and the reviewers for their valuable feedback, continuous support, and encouragement throughout all activities to date.

Reviewed by:

Tanvi Nerurkar and Riddhi Suthar.

 Disclaimer:

This article is intended for academic purposes only. The views expressed are those of the author and do not necessarily reflect the views of IMPRI or any government institution.

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