Srinagar: As the Government of Jammu & Kashmir undertakes a review of its Industrial Policy, the Valley’s apex industrial body, the Federation of Chambers of Industries Kashmir (FCIK), has called for an immediate reset of the Public Procurement Policy to ensure that the Union Territory’s unprecedented capital expenditure results in local manufacturing, factory employment and industrial capacity building, instead of largely flowing out of the region.
From 2020–21 to 2024–25, the Government of Jammu & Kashmir has spent over ₹1.58 lakh crore on capital expenditure, while an amount of ₹32,607 crore has been earmarked for the current year. In addition, a huge amount of spending is undertaken through Central Public Sector Undertakings (CPSUs), defence and paramilitary forces within the Union Territory.
Collectively, this sustained investment has the potential to multiply existing industrial capacity, create tens of thousands of factory jobs, and facilitate the establishment of thousands of new manufacturing units across Jammu and Kashmir.
“However, despite this massive public investment, local Micro, Small and Medium Enterprises (MSMEs) are facing an acute shortage of orders, and a large number of manufacturing units are either closed or on the brink of closure for want of supply orders,” FCIK said in a statement.
The chamber added that this distress does not arise from lack of government spending, but from procurement choices introduced without adequate assessment of their impact on the local industrial ecosystem.
FCIK pointed out that a significant portion of capital expenditure—no less than 50 percent—consists of industrial goods that are manufactured in factories well before construction activity begins. These include precisely the goods that nearly 25 percent of J&K’s manufacturing units were established to produce for public procurement.
“Even if just 25 percent of this industrial component had been sourced from local manufacturers, the present crisis of idle factories, job losses and underutilised capacity could have been largely avoided,” the statement said.
FCIK recalled that until 2017, successive governments recognised the structural disadvantages faced by industries in the region and addressed them through marketing and procurement support, cost equalization measures such as tax remissions, toll exemptions and related incentives.
The subsequent shift to GeM-based procurement, national-level e-tendering and large turnkey contracts, coupled with the withdrawal of cost-equalisation measures, has tilted the procurement ecosystem against local MSMEs.
FCIK further noted that the increasing reliance on turnkey and composite contracts has diluted MSME reservation benefits.
“Under such contracts, contractors procure industrial goods independently, effectively excluding local manufacturers and MSME-reserved items,” the chamber stated. The ₹12,000-crore Revamped Distribution Sector Scheme (RDSS), currently under implementation, cites as a stark example, where procurement has been routed entirely through turnkey mechanisms despite the presence of nearly 200 local MSMEs manufacturing electrical goods in J&K.
FCIK has proposed a three-tier Public Procurement Policy as part of the Industrial Policy review. The proposals include reviving SICOP as the nodal marketing and procurement agency for MSE-reserved and locally consumed items, reforming e-tendering and turnkey practices to ensure meaningful MSME participation, and mandating segregation of industrial goods from civil contracts.
FCIK has also proposed a major shift from ineffective price preference to purchase preference, ensuring assured orders to local manufacturers without imposing any additional financial burden on the Government.
Making a fervent appeal to the Omar Abdullah government, the FCIK emphasizes that capital expenditure in Jammu & Kashmir be leveraged not only to create physical assets but also to build and strengthen local industrial capacity.
The chamber pointed out that when public spending consistently bypasses local manufacturing, it leads to lost jobs, idle factories, and a weakened industrial ecosystem.
FCIK emphasized that a well-crafted Public Procurement Policy can ensure that government investment retains value within the Union Territory, generates sustainable employment, and delivers long-term economic benefits for the people of Jammu & Kashmir.
